Personal Finance

life insurance -need advice on what kind to get

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  • Feb 22nd, 2010 1:21 am
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[OP]
Deal Addict
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Mar 23, 2003
3390 posts
469 upvotes
Hamilton

life insurance -need advice on what kind to get

ok, so I've never had life insurance. ( maybe I do have something with my work? but it can't be much! )
I'm 34 years old. Haven't smoked in a couple years.
No health issues I am aware of.

I wanted to get some life insurance just in case to leave to a friend and mom ( incase I go early! :) ) and brother, and pay any debts/mortgage I have when and if I get married. And childrens school debts, wifes debts, etc.... (if I ever have kids that is. )

So my question is....
Is this a good time to get some? should I wait longer??
What kind would suite me? Any companies that can be recommended???
What is TERM 10 TERM 20, etc...?
Basically, I know NOTHING about life insurance, and I figured this is as good a time as any to educate myself, and maybe get some since I am hoping premiums will not be too crazy since I am young and healthy right now.
I know I can prob. find some online, or go to my bank, but the minute they see I know nothing, I think they will vulture and take advantage of me, so here I am, askin you guys and gals.
8 replies
Sr. Member
Feb 15, 2006
604 posts
23 upvotes
Toronto
You need 20 year term... there are some smaller companies like Unity Life that have really cheap rates but I would pay the extra 1-2 month and go with a company like Canada Life or Equitable, they have superior CS!

You most likely have coverage at work and usually it is 1-2 times your annual salary. This is temporary insurance as you are only covered while you are working there. Some companies do offer portability of the coverage if you leave, but usually there are big restrictions on amounts and type of coverage.

Take into account your mortgage, debt, funeral cost and moneys left to family/loved ones.

You can call any insurance company and they will give you the phone # of an advisor or you can get one through a referral maybe from a friend or family member.
Deal Guru
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Nov 18, 2005
10810 posts
2150 upvotes
Kingston
******* wrote:
Feb 11th, 2010 10:40 pm
The amount of coverage you need will depend on your responsibilities and liabilities. You should have enough to cover your debts, i.e mortgage, loans, credit card debt, etc. ...and of course enough to bury you if the need arises.

After that it comes down to what your dependents will need in the event that you do pass away. This will depend on many factors. Your age, your spouses age, your childrens age, etc. You are basically looking at income replacement needs here.
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Since you currently have no direct dependents (I dont think, but correct me if im wrong) locking in your future insurability would be the biggest priority for you right now and as well as to have enough for you to cover your current debts.
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What you really need to do is try to establish the main purpose for the insurance coverage and then weigh the coverage amounts needed based on your liabilities and responsibilities. After this compare costs. Most companies will be within the same ball park. Any coverage over $250,000 will require a medical assessment. Stick with term 10 for now until your needs change.

cheers
Bwadd wrote:
Feb 12th, 2010 9:28 am
You most likely have coverage at work and usually it is 1-2 times your annual salary. This is temporary insurance as you are only covered while you are working there. Some companies do offer portability of the coverage if you leave, but usually there are big restrictions on amounts and type of coverage.

Take into account your mortgage, debt, funeral cost and moneys left to family/loved ones.
I agree with some but not all of the statements above.

Unless someone else is dependent on you paying the mortgage payments (eg living in the house you have a mortgage on) I don't think that getting insurance to pay off the mortgage makes sense since the sale of the house should cover the mortgage.

Covering your debts including the cost of a funeral is certainly something you may want to be insured for if you don't have savings to cover it.

Locking in insurability has some value, but you would be doing that in anticipation of having dependents in the future. So you have to make a choice on the trade-off between:
  • Paying premiums for insurance you don't really need until you have dependents.
  • Taking the risk that you will be less insurable in the future.
If you were looking at Whole Life insurance (not recommended) there would be an argument that you "pay them now or pay them later", but if are looking at 10-20 year Term insurance or even Universal Life, then you are really paying premiums for insurance you don't need just to lock in insurability. Might be a pretty expensive thing to do.
[OP]
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Mar 23, 2003
3390 posts
469 upvotes
Hamilton
lots of interesting reading.
ok, just to clarify my situation a bit.
I'm 34.
I am single with an above average pay. (or I think it is... ? )
I rent right now.
I have zero debt. No car payments, or any such thing. I own everything I need right now.
What would happen if I get a policy, say Term 20, and the 20years run out and I don't want to renew or pay more. Is the policy, and all those monthly payments lost??
Deal Addict
Oct 1, 2006
1912 posts
1081 upvotes
Montreal
You do not need life insurance at the moment. Once you got married and have kids you should get life insurance to protect them from severe financial hardship.
[OP]
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Mar 23, 2003
3390 posts
469 upvotes
Hamilton
Germack wrote:
Feb 13th, 2010 11:51 am
You do not need life insurance at the moment. Once you got married and have kids you should get life insurance to protect them from severe financial hardship.
true enough... but I figure at my age, and condition, my premiums would prob. be like $30 bucks a month which I won't even feel, and it would be good peace of mind for me in case something happens, my friends and family (brother/mother) would get a nice kick-back.
But ya, I'm also taking into consideration that it is more pointless for me right now.
The only thing that makes me ok with it is a low paying premium that I wouldn't even notice right now. ($30? or so bucks monthly...) and that would be a nice rate to keep say, when I'm 45-50 and maybe with family.
Jr. Member
Dec 4, 2009
121 posts
7 upvotes
Calgary,AB
******* wrote:
Feb 12th, 2010 10:50 am
Term 10 or 20 at the OP's age is actually not that expensive at all and can be well worth the cost to guarantee some insurability down the road. If the OP as he/she suggests plans on having dependents down the road (he/she is 34) then obtaining some form of insurance now makes complete sense as you don’t know what lies around the corner. It’s about risk management.
I agreed with "*******" statements. it about risk-management, and the cost of term 20 is not expensive.

ps:pay your Life Insurance "annually" rather than "monthly", you can save up to 9% on premium.

When you are settled in few yrs, then you still have options to add your spouse(first/last joint) or convert/increase your policy according to your risk...

for your above question: after the Term 20 expires, you better get a new policy** rather than renews the current policy.

**all depends on your health
Jr. Member
User avatar
Mar 30, 2005
115 posts
2 upvotes
Burnaby BC
Get a Term 100. pay for 10 or 20 years, and then your beneficiaries get whatever coverage you choose if anything were to happen to you. Whether it's 100,000 200,000 or more. Start younger, the premium is cheaper. Plus you don't have to think about it when you get older.
Newbie
Dec 12, 2009
7 posts
canada
Life insurance makes very little sense for you right now. Life insurance is meant to cover end of life expenses like mortgages and funeral costs, and provide for dependants. What's more, your beneficiaries need to have an 'insurable interest' in you (ie, they would suffer financially if you died). No life insurance company is going to cover a friend or non-dependant relative to any significant extent. For these reasons, you do not meet any of the critieria that would necessitate life insurance.

Furthermore, there is no financial benefit to getting insured before you need to. You pay lower premiums now because you are extremely unlikely to die; if you extend coverage for a long period, all you are doing is evening out the increasing cost over the long term.

If you are going to invest in an insurance product, then you would benefit much more from disability insurance. You are far, far more likely to become sick or injured and unable to work than you are to die (your chances are about one in three), and in such a case the financial damage to you and your family would be much more severe. Disability insurance is quite a bit more expensive at your age than life insurance is, but life insurance for you would be pointless.

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