Mortality is a difficult concept, and an even more difficult conversation. The COVID-19 pandemic brought illness, fear, and untimely deaths to hundreds of thousands of people worldwide, forcing people across the globe to face mortality. Canada alone has faced over 1.4M cases of COVID-19 and over 26,000 deaths. The tragic loss of life affected entire communities as friends and families lost loved ones.
This unexpected loss of life caused hardships for many surviving families, revealing the necessity of life insurance. Hometown Life Insurance understands the burden a sudden loss of life can put on a family and is available to help you find the right life insurance solution.
Reasons to Carry Life Insurance
Life insurance is valuable even when the world is not facing a pandemic. If you have a mortgage, a family, debt, or assets, you should carry life insurance. Life insurance policies include a policyholder, the person whose life is insured, and beneficiaries.
If you have a family, life insurance can be used to leave an inheritance or replace a salary that your family may depend upon. If you have children, life insurance can help ensure that your children will be able to go to college and continue living in the family home. Life insurance can pay for funeral expenses or cover outstanding debts such as mortgages.
Even if you are not the primary financial provider for your family, you should consider a life insurance policy. The chances are that the contributions you provide to your family would be an unanticipated expense to replace with other service providers such as nannies.
If you are a business owner, it is also essential to carry life insurance to protect your business and employees.
Life Insurance Types
Life insurance is not a one-size-fits-all package. There are several ways to customize a life insurance plan to fit your specific financial needs. The policies vary in coverage, the policy’s duration, and the policy’s rate. Policy limits may be selected and customized, and so can the beneficiaries.
Term Life Insurance
Term life insurance is usually the more affordable option for life insurance. The policy’s duration is predetermined and may be set in increments of 10, 20, or 30 years. While the policy is not permanent, the coverage may be selected to cover your financial needs. When needed, a term life insurance policy pays a tax-free cash death benefit to your beneficiaries.
Whole Life Insurance
Whole life insurance is also referred to as permanent insurance. This type varies from term life insurance in that it does not have a limited policy duration. Another difference is that this type of policy has an investment component to draw cash even before a death benefit is needed.
Universal Life Insurance
Universal life insurance is like whole life insurance but focuses on investment. If you have universal insurance, your agent will provide you with advice about where to invest your life insurance policy’s cash value. While your agent may advise you on these matters, the investment options are your choice. This insurance policy also serves to help with savings and financial portfolio growth.
Business Owner Life Insurance
Small businesses struggled as a result of the COVID-19 pandemic. Canadian small businesses laid off as much as 80% of their staff, requested additional credit and reported overall decreased revenues. During such an uncertain time, businesses need extra protection if an owner or key person were to pass unexpectedly.
A business life insurance plan can address essential matters such as the business owner’s transfer of control and the taxes owed at death by a business owner. Life insurance will also address business shares if there are multiple inheriting children. A business insurance policy can also be beneficial if business loans are still outstanding at the business owner’s time of death.
The death of a key person or business owner may trigger taxes for both the owner’s death and a tax if the business must then be considered as sold upon that key person’s death. A business life insurance plan is vital to any business owner to cover the potentially high expense of these taxes.
Life Insurance Cost
The rates of a life insurance policy can vary. Remember that term life insurance is usually the most affordable, but that whole life insurance and universal life insurance provide cash growth or investment opportunities.
Rates will also vary based on age, amount of coverage, and the insured person’s health. As you age or your health declines, your rates may go up. Some life insurance plans may request a health exam as part of the terms of your policy. This exam will include a check on your blood pressure, weight, cholesterol, tobacco, or drug use. Your family medical history may also be factored into your health exam.
Like any other policy, a life insurance policy calculates risk and then rates it based on that risk. The risk of a healthy younger person dying suddenly is lower than the chances of an older person with high blood pressure. These factors and the amount of coverage needed will vary by person, and rates are therefore unique.
The COVID-19 pandemic produced many unexpected outcomes and taught us the importance of being prepared. To learn more about finding the right life insurance policy or policies, contact the Hometown Life Insurance experts at (289) 606-0103, or email us at [email protected]. Our licensed professionals will be happy to answer any questions you have.
Article Resources:
https://covid19-canada.com/statistics/
https://www.elmens.com/lifestyle/personal/types-of-life-insurance-in-canada-explained/
https://www150.statcan.gc.ca/n1/pub/45-28-0001/2020001/article/00018-eng.htm
