Term Insurance for Families

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Understanding Life Insurance: What You Need to Know

A few weeks ago, one of my clients shared his concerns about life insurance. He and his wife felt it was time to revisit their coverage as they’re at an age where planning becomes crucial. If you’re in a similar situation, here are a few questions to consider:

1. Do you have a spouse or children?
2. Are you concerned about how your family will manage financially after you’re gone?
3. What type and amount of debt are you currently carrying (e.g., mortgage, credit cards, student loans, personal loans)?
4. How will your final expenses be covered?
5. Do you have a business partner or other dependents who rely on you?

Life insurance generally falls into two categories: term life insurance and permanent life insurance. For most people, term life insurance is the most practical solution.

Term Life Insurance offers coverage for a specific period—typically 10, 20, or 30 years. Some policies can even extend to age 85. This type of insurance is ideal if you need protection for a defined period, such as until your children are out of college or your mortgage is paid off. Term life insurance usually provides the most coverage at the lowest initial premium, making it a good option for those on a tighter budget.

When evaluating your life insurance needs, there are generally two areas to consider:

1. Immediate Cash Needs: This includes final expenses, debt repayment, bequests, and setting aside funds for your children’s education or rainy day savings.
2. Income Replacement: Ensuring that your family maintains their standard of living for as long as necessary.

For example, let’s consider Fred, a 40-year-old non-smoker. Fred is concerned about his family’s future if something were to happen to him. After reviewing his financial situation, we determined that he needs:

• Immediate Cash Needs: $450,000 to cover funeral costs, his mortgage, and a car loan.
• Income Replacement: $1,700,000 to replace his $85,000 annual income until his youngest child turns 25 and completes their education.

Total Recommendation: $2,150,000

Once we calculate your insurance needs, I search for the best options from leading life insurance companies in Canada to find a term length that fits your needs and budget. After selecting the right plan and ensuring you’re satisfied with the recommendation, we begin the application process.

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For a review of your life insurance needs, whether new or existing, feel free to reach out to me at john@panago.info.

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