Des Carter made the decision to take out life insurance five years ago when he and his partner were looking to buy their first home together after learning a hard lesson when his mother passed away without insurance.
“It really taught me the importance of protecting yourself and your loved ones, so I knew life insurance was non-negotiable,” said Carter, who is a Canadian living in London.
The 36-year-old digital health program manager wanted reassurance that his partner wouldn’t end up with the burden of debt if something happened.
“Life insurance isn’t necessarily for you, it’s for the people you leave behind,” said Millie Gormely, financial consultant and certified financial planner at IG Wealth Management in Thunder Bay, Ont.
Gormely said there is no single answer as to when young Canadians, like millennials and millennials, should buy life insurance and that depends on the circumstances.
“Life insurance is more about whether or not you have someone to protect or whether there is a reason to protect your long-term wealth for estate purposes,” Gormely said.
For example, if you have a spouse or children, the question to ask yourself is how would they be financially affected if you were no longer there, she said.
With insurance, you’ll probably want to make sure you can pay off your debts and funeral expenses, as well as replace your income for a period of time.
“Let’s say there’s a scenario where a baby is in the picture,” Gormely said. “If you weren’t here anymore, what insurance would you need to replace your income until this child turns 18? “
Young, single Canadians with no kids, debt or mortgage generally don’t need life insurance unless they plan to leave a certain amount in charity, Gormely said.
“Can this be useful? Gormely added. ” Absoutely. But you don’t have to, unless you’re trying to protect a risk.
Iftikhar Mahmood, a certified financial planner at CreateWealth Planning in Markham, Ont., Said an advantage to buying life insurance earlier is that it’s usually cheaper because you’re less likely to have developed problems. serious health problems.
Mahmood, for example, took out 20-year, $ 1 million term policies for his two children costing $ 600 each per year at the age of 22 and 19.
“Rejuvenating it ensures that you qualify for coverage before critical illness occurs, which can lead to [lower] rating or an outright cut for a fully underwritten policy on the road, ”he said.
Mahmood and Gormely have both been careful to note that depending on a person’s circumstances, disability and critical illness insurance may be even more of a priority than life insurance.
“The chances of a young person dying) in a car accident are not impossible, but it is not likely. What is much more likely are the chances of becoming disabled and unable to work,” Gormely said. .
“Sometimes we think the coverage we get through the Workplace Safety and Insurance Board or our employers will be adequate, but that’s not the case. younger, and especially if you are working a little more physically, it is very important to look at disability insurance whether you get it or not. “
Carter knew that getting life insurance was important for financial reasons and for peace of mind.
“I don’t think about it too often, but it’s nice to know it’s in place.”
This report by The Canadian Press was first published on September 21, 2021.