At some point in our lives, most of us consider the need for life insurance. This can be a delicate subject as it forces one to look at their mortality and in some cases, initiate emotionally-loaded conversations with their loved ones. Knowing this, some individuals avoid the subject altogether—a common but inadvisable decision that can have unfortunate consequences.
Deciding to put a life insurance policy in place is the first step to your family’s security and peace of mind, but there are plenty of others. Here’s a basic overview to help you—please speak to your financial advisor or an insurance professional for personalized advice.
Where to Begin
The first thing is to arm yourself with a list of questions in anticipation of a get together with a life insurance advisor. It’ll help get the conversation started and give you an opportunity to identify the key issues that are on your mind.
10 Basic Life Insurance Questions:
We’ve pulled together a list of basic questions which is by no means definitive. Think of this as a starting point when you first meet with an advisor or insurance agent.
1. What type of insurance do I want or need? Your advisor should present you with a list of the range of products available, along with descriptions and the pros and cons of each depending on your personal circumstances.
2. Do I require a ‘needs analysis’? This depends on how complex your situation is. For example, the amount of insurance needed to cover the value of your mortgage or other large debt(s), as well as to cover income replacement, estate planning or taxation requirements on your demise. These are all important considerations.
3. Should my advisor integrate life insurance with my existing wealth management plan? Your insurance advisor will probably want to link life insurance with your overall financial goals and strategies. This could involve coordinating with other advisors such as your accountant, lawyer and wealth management team.
4. How does life insurance fit in with my overall financial plan? An advisor will help show you how life insurance plays a role as part of the foundation of a financial plan. Helping clients to take care of important items like replacing income, paying off debt, establishing or protecting an estate are just a few issues for discussion.
5. Are there exclusions I should be aware of that could change my contract? You need to know/discuss what they are in order to reduce the likelihood of surprises for your beneficiaries upon your death.
6. Are there other riders or add-ons that I should consider with my coverage? Insurance is all about the details. Be specific when listing and including information. This is where professional help can be exceptionally reassuring.
7. Should I be considering anything else other than simply life insurance? An insurance review should be all-encompassing in terms of your needs. Ask for an analysis of income replacement for such things as disability, critical illness and long-term care.
8. Why might my life insurance possibly not pay out? A life insurance advisor can help clients navigate all life insurance provisions including any exclusions and how they could affect payouts.
9. What’s my advisor’s service model? Ensure your advisor has a firm commitment to annual reviews of your policy and a clear communication strategy. Also review all team members’ credentials and designations.
10. Which option is right for me? There are a number of options to choose from, with term life insurance and whole life being the most popular. Costs depend on criteria such as your age, health and lifestyle habits. Whether you need whole or term life insurance is for you and your advisor to decide. Here’s how they differ:
- Term insurance covers you for a specified period of time, paying a set amount to your beneficiaries over that term. You can renew at the end of the term.
- Whole life insurance or permanent life insurance usually has higher premiums because it covers you for your entire life. There are investment components to whole life and variations to it, such as universal life. Whole life builds value over time and has cash-out options.
We’re here to help
The bottom line is this: if you have a family, a mortgage, you own a business or have other financial liabilities, it’s essential to talk to your financial advisor about purchasing life insurance. In the end, you don’t want to burden your family with unnecessary financial hardship or precipitate misunderstandings amongst other family members upon your death. Please contact us to learn more—we’d be glad to answer your questions and provide recommendations that suit your needs.
*Home, vehicle, marine and travel insurance services provided through Coastal Community Insurance Services (2007) Ltd.
All insurance products are subject to the limitations, terms and conditions in the applicable policy or insurance contract in force at the time of purchase or enrollment and applicable legislation. The products sold through Coastal Community Financial Management Inc. are not guaranteed or insured by a deposit insurer.
Coastal Community Private Wealth Group is a division of Coastal Community Financial Management Inc., which is a subsidiary of Coastal Community Credit Union. Coastal Community Financial Management Inc. is a licensed life insurance agency offering financial planning, life insurance and investments.