As monthly expenses get tighter and debt loads increase some people may find it tempting to cancel their life insurance coverage in order to save on paying the premiums. This ‘solution’ however can lead to financial consequences later on.
Should your health status change, you may find that in the future premiums will be more expensive, and can potentially cost more than what was initially saved; especially for those who purchased their coverage at a young age and/or when they had excellent health status.
Financial protection, especially in regards to the wage-earners in the family are even more essential now.
Should an unexpected death occur, it is important to have coverage in order to cover not only the funeral expenses but to make sure that the family has enough money for living expenses, paying off debt, etc. For families with children, the remaining parent may want to take an extended leave from their employment, as well as have the financial resources to pay for additional expenses such as childcare, nanny, etc.
Health insurance is also a wise financial move at the same time. Sudden expenses, i.e. prescription medications, can quickly add up. This total amount per month can easily exceed your premiums, especially with the high prescription costs in some provinces. This coverage is also contingent on health status as well; should a health problem occur you may not be entitled to the same premiums as you once were if you cancel your existing coverage.
Term Life Insurance
For Canadians who insure their mortgage through the lender, consider using term life insurance instead.
Choose a term life policy that is compatible with the amount of time that is owed on your mortgage. Not only is this generally a less costly expense, but it offers added benefits. Most mortgage insurance policies only cover the existing balance that is owed (thus decreasing coverage over time); a term life policy retains its full value throughout the duration.
Term life also gives financial control over to the policy owner; mortgage insurance is only used to pay off the mortgage should the mortgagee die. Term life offers the beneficiary full control of the money; this can be used to pay off the mortgage, pay off other debts, etc.
Especially at a time of need, this flexibility can be essential. There are term life policies that can be converted into whole life insurance once the term has expired, thereby giving the policyholder continuing protection. Many of these policies do not require a new medical questionnaire to be filled out; therefore the rates will be consistent with the health status provided originally.
This can be a great way to not only save money at the present time but also in the future when the rates will possibly be higher.
Contact Baker & Baker Benefits
Go through your monthly budget carefully when decided when and/or where to economize.
Any items that are essential to your financial security and well-being should not be cut from your budget if at all possible; try and find other ways to save money. This can include not spending as much on items such as entertainment, clothing, vacations, etc. which, while possible causing inconvenience, will not impact your long term goals.
To review your life insurance needs for the best financial protection contact us today 1-866-369-4474