For many people understanding what life insurance is really about and if they really need it or not can be confusing. Well, I was no different. I actually had purchased some life insurance when I was in my early twenties. I don't remember even why I had it and frankly, I can't even recall who my advisor was, nor did I ever hear from him again. Sound familiar to some of you? Another reason I am in the insurance industry, but that's another topic.
I didn't consider life insurance until I had children, which for me was at age 34. In hind sight, I wish had purchased insurance when I was younger (like I have done for my children). I could have secured a plan with a higher death benefit for substantially less money then, but who knew. Well, I sure do now as it has become my specialty to understand life insurance and how to make it not only help protect us from the worst, but also help our family plan financially for the long term.
Most of us usually learn about life insurance from our parents.
Whether that information is good or bad, you will never know. In our family, my parents never really understood life insurance so it wasn't even a topic that I can remember - well at least not until the day my dad died at age 64. Sometimes it takes tragedies to make us realize that we are mortals. If you think back you probably know someone who recently has died from cancer, stroke, heart attack, or even in an accident. I have had to face several of these situations in the last six months.
So what is life insurance?
The easiest way for you to understand is to close your eyes and think to yourself...
If I were to die today what would happen, and how would I want to leave my family financially?
Life insurance is a financial commitment made by an insurance company that upon your death will pay a specified amount of money to your beneficiaries and/or estate. Now all companies do have their own rules and contracts, so I won't be getting into specifics in this article. Be aware that not all insurance is the same.
That was simple, right? Wrong.
Now think to yourself... what happens when I die?
Ask yourself a few questions:
- Will I leave my family with any debt like car loans, credit cards, or family loans?
- Do I have money still owing on a house in a mortgage or home equity line of credit?
- Will the income I make from my job stop? We all know our income stops at death. Now think about what your income is currently paying.
- What does my income provide for? Food, rent or mortgage, retirement savings, children's education, transportation, etc..
- Have I saved up enough money for me and my spouse to retire on?
- Have I saved up enough money to fund all of my children's future education?
- When I die what is my potential tax bill?
As much as we don't really want to think about death, it is ultimately inevitable. We all have to realize that how we leave our family financially is completely in our control. Life insurance can be a great way to take care of the worst case scenarios and it can be used as part of your long term financial success if you don't die prematurely. The choice is yours.
Not sure how much life insurance you should have?
Many people we have met really didn't understand how to determine how much life insurance they should have. Well, we have a tool for that to help guide. Just check out the Manulife Insurance Needs Analysis. If you need some help just send us a message and we would be happy to walk you through it.
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