Things to Consider When Buying Life Insurance

There are a wide variety of things to consider when making the important decision to buy life insurance to protect your family if something un-towards should happen to you or even if you live to a very long and happy age and expire by natural causes.

Under either scenario you would want your family to be protected and to be sure that you left behind enough to ensure that your family has the funds they need to continue living the lifestyle they have become accustomed to and to ensure that they are never in danger of losing the home you shared or the things you worked so hard for during your life.

These are the reasons that life insurance is so very important. And when considering buying that insurance there are some things that you should take into account to ensure that those things are taken care of properly and efficiently.

The very first thing to consider when buying life insurance is the amount of coverage that you will require in order to make 100% sure that your family receives the protection that you want them to have.

Sit down and take a long hard look at exactly what the future holds for your children and family as a whole. Are your children planning on going to college or university in the future?   If so, how had you planned on funding that expense?   Do you have outstanding mortgage debt that you would want covered in the event of your demise?   These are the things you need to fully consider.   Use an online calculator or consider contacting an insurance broker to help you figure out exactly how much coverage you will need to pay off all of your outstanding debt and leave enough to get the kids through their post -secondary educational pursuits and still leave enough to cover all of the funeral costs and again leave enough to let the family live comfortably during the transition phase.

After you have decided on the amount of coverage you will next need to decide which type of insurance to commit to.

Basically there are two types of life insurance.   Term and permanent.   The basic difference between the two is the way the premiums are structured and the length of coverage you receive.   As the name implies, term insurance means that you will generally pay a little less in premiums but you are only covered for a select period of time.   Whereas with permanent you will pay higher premiums but you will be covered for your entire life with no worries about whether you will have to re-qualify if you end up with an illness.   The premiums will usually be a little higher for this type of coverage.

Be sure to do your homework and speak to your accountant and an insurance broker to find out exactly what you need to be sure that you have the coverage and type of insurance best suited for your family and situation.


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Sam Seidman, CPA, CA, LPA
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Toronto, Ontario
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