Why Is Life Insurance Important? Here Are 10 things You Didn't Know

Posted on November 14, 2018

Have you been reluctant to know about life insurance because you're intimidated by the lingo? Don't be embarrassed - it's totally understandable.

The insurance world is filled with buzzwords you may not understand as a layman. But this shouldn't stop you from learning about something as vital as life insurance.

Every year, almost 9 out of 1000 individuals residing in Canada pass on. Why should this concern you?

You can never tell when you'll be part of the statistics, and you don't want your dependents to suffer because you're gone.

Why is life insurance important? Here are 10 useful things to know about life and life insurance.

1. Life insurance is a financial safety net

You work hard to earn a living and meet the financial needs of your family. But unfortunate events like death can leave those you care about struggling financially once you're gone.

Taking out life insurance is a great way to ensure the financial needs of your family or other dependents will be met after your demise.

Your insurer will step in to pay for your funeral expenses, as well as all the important things you'd have wanted to pay for in the future.

These may include your mortgage, your children's education, your family's day-to-day bills, unpaid debts, maintenance for a stay-at-home spouse, and many more.

2. Life insurance is for anyone with dependents

Contrary to common belief, life insurance isn't only designed for people raising their own families. Anyone who has other people relying on them for financial support should buy this type of insurance.

Whether or not the people you want to benefit from the coverage are related to you is immaterial and irrelevant.

3. Life insurance is affordable

Sure, life insurance can get expensive, but that doesn't mean it's unaffordable.

The cost of life insurance coverage varies depending on the particular needs and priorities of the individual taking out the policy. Check out various life insurance examples by comparing quotes online.

Knowing who and what matters most to you, and discuss your exacting requirements with a life insurance specialist. They'll help you choose a package that suits your situation at an affordable price.

4. You need to pay life insurance premiums to remain covered

Do you need to pay premiums for life insurance your whole life? Yes, you do - but only if you purchase permanent life insurance.

If you don't want to pay premiums throughout your life, you can opt for the term life insurance option.

With this type of life insurance, you only need to pay premiums for a specified amount of time, say 10, 20 or 30 years, for example. You can renew or convert your policy to a permanent plan at the end of that specific term.

5. Employer-provided life insurance can't match your own life insurance

As part of employer-provided perks, some employers pay a small amount of life insurance coverage for their employees. This employer-paid coverage is called group life insurance.

As you can imagine, this type of life insurance coverage seldom meets the needs of most households. Plus, employment can end at any time.

Life insurance depends on individual needs and priorities. That said, it is critical for employees to take out private life insurance.

6. Life insurance proceeds aren't tax deductible

Generally, beneficiaries of a life insurance policy receive tax-free payouts. This means that whoever receives the death benefit won't have to pay taxes and will receive the full benefit of the policy you took out.

7. Life insurance isn't all about money

Many people think life insurance is all about payment of premiums and receiving of the death benefit.

They tend to overlook the non-monetary benefit of the peace of mind they'll enjoy knowing their loved ones will be cared for when they die.

Taking out life insurance is a great way to show your love for those you care about.

8. You can buy life insurance any time you like

While you can take out life insurance at any stage of your life, it's best to get it sooner rather than later.

If you purchase the coverage while you're still young, you're likely to accumulate a decent amount of money before it's time for payment of the death benefit.

It's always a good idea to get started as early as possible.

9. You risk losing out on the benefit of life insurance if you don't pay up on time

Life insurance coverage is like any other a contractual agreement between two parties. You pledge to pay your premiums on time for the promise that your insurance provider will pay a death benefit to your dependents when you pass on.

Failure to pay your premiums in full and on time might prompt your insurer to cancel your coverage.

10. Life insurance providers require you provide accurate information about your life

Yes, life insurance providers will pry into your life, but with your permission and for good reason, of course.

Like other types of insurance, life insurance must adhere to the principle of utmost good faith. This principle calls for honest and complete disclosure of important information relating to a particular insurance undertaking.

If you don't supply your insurance provider with accurate details regarding your health and life, they may refuse to honor their end of the deal.

If this happens, the biggest loser will be you and the would-be beneficiaries, of course.

Ready to Buy Life Insurance After Finding Out Why It Is Important?

There you have it - the answer to the question, "why is life insurance important?". With the right life insurance, you can work knowing your loved ones will be well-cared for when you're gone.

But taking out life insurance can be unnerving, especially if you don't know how to sail through the unchartered waters of life insurance.

Embracing the reality that everyone will pass on someday and that you need life insurance is a good place to start.

Feel free to contact us for more information on what to know about life insurance.

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