Top Reasons to Consider Family Term Life Insurance
No matter what your dreams for the future look like, they depend on your ability to earn an income and provide for yourself and your family. And term life insurance is an affordable way to fill the income gap in the event of your death.
What is term life insurance?
Families come in all shapes and sizes and family life insurance planning is the best way to make sure everyone is protected most cost effectively. Whether you’re a single parent or one half of a partnership, caring for an infant or the head of a large brood, you likely want the same thing as every other parent – security and protection for the ones you love. Which means it may be time to consider family term life insurance!
Because no matter what your dreams for the future look like, they depend on your ability to earn an income and provide for yourself and your family, especially if you’re on your own or are the primary income earner. That’s why most financial advisors recommend term life insurance as an affordable and essential way to fill the income gap in the event of your death.
Why families need term life insurance
Here are the top six reasons why you should consider making family term life insurance a financial priority.
1. Income replacement
On a napkin or using your phone, add up how much money you’ll bring home – after tax – for the next 10, 20, or 30 years. Term life insurance is an easy way to replace some or all of your household income. Many working adults use the “ten times rule” to estimate their needed coverage. This rule suggests replacing at least ten years’ worth of your salary. Learn more about how much life insurance you may need.
2. Living expenses
Imagine how an insurance payout would help your family cope with the high cost of living, today or in the future. Even if you are not the primary income earner, take a moment to estimate the cost of having to outsource everything you do to keep the family unit functioning. It’s probably way more than you think — one big reason why moms need life insurance.
3. Debt repayment
A tax-free, lump-sum death benefit (i.e., a payment made to designated family members, other loved ones, or the charity of your choice after you die) gives your family the option of wiping out high-cost debt, like your mortgage, or at least reducing it to a more manageable level. Either way, you’ve given your family options to discuss with a financial planner.
4. Future expenses
A portion of the money your loved ones receive from a term life insurance payout can be invested for the future, perhaps in a registered education savings plan for your kids or added to your surviving partner’s retirement plan.
5. Affordable coverage
Term life insurance coverage for a young parent who’s in reasonably good health is very affordable in comparison to the amount of income it will replace if you die. Here’s how to determine how much life insurance you need.
6. Peace of mind
Once you take care of the immediate need to protect your family’s income, you can focus on other things you want to accomplish over your long and healthy lifetime. That includes wealth-building plans that require decades to reach your end goal.
Ways family term life insurance can cover your family and protect your assets
As family members age, their needs change and so should your family life insurance plan. Price is something to look at when you compare various providers, but the ability to customize each policy is often the deciding factor. Here are some things to think about:
Riders
Ask your advisor what kind of riders (i.e., coverage that gets added on to an insurance policy to provide additional payouts under specific circumstances) you can add to each insurance policy to make it more comprehensive. For example:
- A child term rider can guarantee coverage for your children once they become adults
- Accidental death coverage automatically increases the amount of your payout in the event your death is an accident
At Serenia Life, we call these “riders” additional optional benefits – and they must be selected at the time of purchase. So make sure to ask your advisor about them!
Flexibility
A lot can happen over a decade or three. As your income and financial responsibilities increase, you may want to expand coverage. For example, a substantial rise in income or the purchase of a family cottage would likely trigger the need for more coverage.
Reliability
Reputation and stability are important when it comes to choosing an insurance provider that you plan to rely on for decades. Be sure to read reviews covering topics like customer service and how quickly the company responds to claims. At Serenia Life, we’re proud of an incredible claims history that includes an approval rate that consistently exceeds 99.9%¹.
Layering policy term lengths to match different needs
Term life insurance policies are typically sold in 10, 20, and 30-year terms, and you can own more than one. This allows you to match policies to specific needs. For example, one policy could match the length of time between now and when your mortgage is paid off, while another is timed more in line with your retirement date .
A Serenia Life advisor can help you run the numbers and assemble the parts of your family insurance plan so that it fits like a glove and makes the best use of your budget.
Is family term life insurance worth it?
Given the versatility and the wide range of coverage options, term life insurance is probably the most affordable and effective way to provide a layer of financial protection for every generation of your family.
Keep in mind that life insurance is only one piece of a holistic financial plan and should be combined with a long-term investment strategy so that you might outgrow the need for coverage toward the end of your career. That would be a sure indication of financial success.
Other life insurance options: Whole life insurance
Families who want to combine insurance benefits with their long-term wealth-building strategy often work with an advisor to explore a form of permanent coverage called whole life insurance.
Whole life insurance is a type of permanent life insurance that provides lifelong, guaranteed coverage, plus the opportunity to invest money for the future and withdraw it at any time, tax-free. This type of permanent coverage complements the other parts of your financial plan and is commonly used to dial down your household exposure to investment risk.
Here’s how it works
Whole life insurance guarantees that your beneficiaries (i.e., the person(s) you choose to receive your life insurance payment in the event of your death) receive a death benefit (i.e., a payment made to designated family members or other loved ones) at the time when you die, as long as the policy is active.
And a portion of the payments gets set aside in an investment account that can increase in value for decades and provide you with access to tax-free withdrawals while you’re still alive.
If you’d like to learn more about whole life insurance, talk to a Serenia Life advisor about your situation and see if it’s right for you.
Why choose Serenia Life for family term life insurance?
As a member-based organization with roots that go back nearly 100 years, we encourage kindness by sharing a portion of our profits through community outreach, fundraising, and unique member benefits that help Canadians support their family, their community, and the causes they care about. The more we grow, the more we can give.
We provide members with access to a growing collection of member benefits that make a positive impact on their lives and the lives of others, such as:
- $1,000 post-secondary scholarships
- $250 seed funding towards fundraising events
- Free digital wills (value: $189), or money towards drafting/updating a will through a lawyer
- and much more
View a full list of our member benefits.
Get a family term life insurance quote
Getting started is a simple matter of booking a 15-minute call with a Serenia Life advisor and getting a free quote. We’ll help you choose the best coverage now, and we’ll be here to help you adjust your policy whenever your situation changes.
