Carrying a life insurance policy is essential to securing your future finances, and a quality policy can benefit everyone. Life insurance can help support your family in the event of your passing; it can supplement the loss of your income or be tucked away for your dependents’ futures. However, millions of people go without life insurance protection simply because they are unaware of its affordability.
It is a common misconception that life insurance policies come with a substantial price tag. Still, the truth is that policies come in many variations and have a wide range of price points. Life insurance likely costs far less than most would believe. For example, your life insurance policy may cost less than your daily cup of coffee.
Between our streaming services, gym memberships, and caffeine habits, we spend more money than we realize on a day-to-day basis. These prices seem minor in the moment, but the costs add up, and before you know it, you have an $80 per month coffee expense. However, people usually stop and pick up their morning coffee and order out for lunch without a second thought, all while being weary of the cost of a life insurance policy.
How Much Life Insurance Would I Need?
Life insurance policies come in a wide variety, and luckily, almost everyone can find a policy that fits both their lives and wallets. Anticipating the exact amount of life insurance you will need can be difficult; however, you and your life insurance broker can work together to estimate your coverage needs.
When calculating your life insurance needs, you will want to start with your long-term financial costs, then subtract the value of your assets from that amount. The remaining amount is roughly how much life insurance coverage you will require from your policy. However, it should be noted that with higher coverage comes higher premium prices.
Calculating your Financial Obligations
When calculating your future financial needs, you will need to make a list of your current and future expenses. If you were to pass away, your income would no longer be there to assist in bills, debts, or school expenses. Properly planning the amount of coverage your family will need will help determine how affordable your life insurance policy will be.
Calculating your future finances may include:
- The amount owed on your mortgage
- Your annual salary is multiplied by the number of years you think your dependents and spouse may need supplemental income
- Other debts
- Future planning, such as college expenses for your dependents
- End of life costs
- Charitable donations
Once you have determined the estimation of your future financial needs, you can deduct the worth of your liquid assets. These could include your savings accounts, college funds, or other insurance policies. Whatever amount of money that your assets do not cover would be the ideal amount of coverage.
Does My Age and Health Factor Into the Price of My Life Insurance Policy?
When you purchase a life insurance policy, you will more than likely be required to receive a physical exam from a general practitioner. This exam, along with your age, are factors used to gauge how much your life insurance premium costs might be. The younger and healthier you are, the less costly your monthly premiums will be.
It is all too familiar for young people in their 20s and 30s to think that life insurance for themselves is unnecessary. However, the truth is that buying a life insurance policy when you are younger can help you lock in a great rate while also providing coverage in case of your untimely passing.
What is The Average Price Difference Between Whole Life Insurance and Term Life Insurance?
Term Life Insurance and Whole Life Insurance are two of the most common policies on the market, and while they both offer great coverage, there are some key differences you should consider when shopping for your policy.
Term life insurance policies provide a set payout amount for a pre-determined number of years while accruing no cash value. Whole life insurance, however, offers coverage for the entirety of your life and can accrue cash value that you can borrow from.
Whole Life Insurance sounds like the ideal choice, but the price difference between the two policies can vastly differ. In Canada, some whole life premiums have been up to 8 to 10 times higher than term life insurance policies, which can be an issue for those looking for a more budget-friendly policy.
How Affordable is Life Insurance?
One primary reason people are away from purchasing life insurance is their incorrect perception of premium prices. Someone may be weary of monthly life insurance costs but likely does not think twice about grabbing coffee before work each day.
The average life insurance policy is more affordable than you might think, and the benefits are substantial. On average, a medium coffee costs around $5. Five days a week, that order comes out to $100 a month on coffee. In contrast, most life insurance policies in Canada cost between $15 to $100 per month. The life insurance policies at the higher end of the price scale are those with considerable coverage or those that cover people with pre-existing health conditions.
Final thoughts
Life insurance can offer excellent security and future financial protection in the case of your passing and buying a policy sooner rather than later may be in your best interest. Many people put off purchasing their life insurance policy due to their assumptions about the cost. However, with the help of an experienced insurance broker, like those at Hometown Life Insurance, you can find the policy that will best suit you. Some life insurance policies may cost less than a cup of coffee a day, and everyone should purchase life insurance at those rates.
If you would like to know more about the cost of life insurance policies, contact the licensed brokers at Hometown Life Insurance at 289-606-0103. Our experienced team will be happy to answer any questions you may have.
