When a couple decides to get married or move in together, they have many important decisions that need to be made. One of these is how the two will financially rely on one another once the relationship becomes permanent. Perhaps there will be plans for purchasing property or starting a family? But it does not stop there. Canadians who get married or move in together and co-mingle finances should also consider the debt each brings into the relationship. It should not stop there, though, as co-mingling finances also means carrying debt from previous relationships into this new life they have created. One of the best ways for Canadians to protect themselves and their partners is by owning individual life insurance policies. Each ought to list their partner as the beneficiary in case something happens. This article will address some of the reasons why Canadians who are recently married or living together may want to consider life insurance protection.
Key Takeaways
Life Insurance Helps Newly Married or Co-Habituating Canadians Plan For the Future in the Following Ways:
- Final expenses: A life insurance policy proceeds to provide your partner with money that can be used to pay off final costs like a funeral.
- Debts: Most couples bring debt into a marriage or relationship. Life insurance proceeds can pay off the debts at death, so your partner is not saddled with them.
- Pension maximization: Purchasing a life insurance policy at a younger age saves money and can help you retire. Retirees have the option to have their pension paid until they die or, for a lesser monthly payment, continue payments to their spouse. In addition, having a life insurance policy in force during retirement will pay out benefits to a spouse or partner, allowing the pensioner to take full monthly pension benefits at the time of retirement.
- Mortgage payoff: Many new couples purchase a home together, and rely on their incomes to make their mortgage payments. Proceeds from a life insurance policy can be used to pay off the balance of a mortgage, thereby allowing the surviving partner to live in a mortgage-free home.
- Care for aging parents: Many Canadians are the primary caregiver for their aging parents. Proceeds from a life policy can be used to pay for the continued care of a parent, should something happen to the primary caregiver.
- Care for a disabled spouse, partner, or child: Life insurance proceeds can be used to provide continued care for those caring for a disabled spouse, partner, or child.
- Supplement income: The cash value built up in permanent policies can help supplement retirement income.
- Living benefits: Many life insurance policies contain a provision where you can access benefits before you die to help with long-term care needs if you become permanently disabled.
- College education: Death benefits of life insurance policies provide income to pay for a child’s education. The cash value in permanent life insurance policies is available to pay for tuition as well.
- Terminal illness: Some life insurance policies offer a terminal illness rider that allows you to access the death benefit proceeds before death if you have a terminal illness such as cancer.
Is Life Insurance Expensive?
Life insurance, especially term life insurance, is very affordable. It is also beneficial at younger ages, since life insurance goes up as you age. However, many plans are available at almost any age, that protects you without breaking the household budget. Term life coverage is the most affordable type, while permanent policies cost more but offer lifelong protection. Permanent policies can be purchased with lower death benefit amounts, which reduce the premium. There are many affordable life insurance policy options for those who are newly married or just recently moved in together.
What Types of Life Insurance Policies Are Available to Those Newly Married or Newly Living Together?
Term Life Insurance
Term life insurance is a type of life insurance policy that covers you for a set period, typically 10 to 30 years. It is the most affordable type of life insurance for Canadian couples wanting to provide the maximum death benefit to their partners. Premiums are lower for shorter-term policies and higher for longer-term policies. For example, an annual renewable term policy offers the lowest premium initially, but goes up every year as you age. As a result, it eventually becomes costly over time. On the other hand, policies locked in 10 years, 15 years, 20 years, and 30 years provide a level premium for the set number of years. For example, a 10-year term policy has a lower premium than term policies that guarantee premiums and death benefits for a more extended time, such as 20-year and 30-year level term policies.
Permanent Life Insurance
Permanent life insurance provides coverage that lasts a lifetime. It comes in several types, including whole life and universal life insurance. Permanent life insurance is more expensive than term life insurance, but it has guaranteed payment. That can be important for seniors who want to make sure they have money to cover funeral expenses or for spouses, partners, or children with disabilities who need financial help after their parents’ death.
Are Medical Exams Required?
Depending on your age and the amount of coverage, you may not have to go through a medical exam to get coverage at an affordable rate. However, once you are in your 40’s and 50’s, you may have to go through an exam to obtain a preferred rate.
There are options for those with potential health issues, who do not like having their blood drawn, or who do not have the time for a medical exam. Many Canadian life insurance companies offer coverage without the need to go through a medical exam. Questions on the application and medical records from your doctor are used to determine coverage eligibility. Those in good health can often find coverage at an affordable premium without going through a formal examination. The death benefit application and your health history will often determine whether you can apply for coverage without a medical exam.
How Do I Find Out More?
Canadian couples who are newly married or just moved in together should plan accordingly when combining their finances. Find out more about planning for the future using life insurance by contacting one of the life insurance experts at Hometown Life at (289) 606-0103.
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