Fact CheckedA question I get constantly is: Is life insurance worth it?
….and it makes complete sense. This is an essential purchase and a big commitment. So I would be surprised if people DIDN’T ask this question.
Despite being an independent life insurance agent, I will give you the answer I would give if I quit Policy Architects today.
This is how I run my business. Many people are out there competing for your dollars. Although we constantly expand our business, we see our model as more than that.
Our motto is to give sincere advice and steer people towards the products they need rather than those offering the best commissions.
We see you as a client for life, which means we will be in touch throughout your term. We want to know if you aren’t happy because this is NOT the energy we want to leave in an already difficult world.
With that out of the way, let’s discuss the value of life insurance and why I would sell it to my kids.
Scam Alert – Life Insurance Agent Entering the Room
Is Life Insurance Worth It? Well, let’s start at the beginning.
I honestly was a little hesitant to get into the life insurance business. We all know the stereotypes: the smarmy guy or gal dressed to the nines with a great watch who slides into the chair next to you, trying to sell an expensive whole life policy at your Aunt Rhoda’s wedding.
This caricature now makes me laugh. I know so many awesome agents that it’s tough to reconcile myself with this image, but that said, there are times when it’s justified.
Here’s a personal story. I was working with some elderly clients, and they had another agent contact them. This agent convinced them he had a less expensive policy and convinced them to ditch my selection.
Well, as it turns out, they had medical issues that prevented them from qualifying for the alternative coverage, and they called me immediately to find out what could be done.
Sheesh. There are some bad apples, but they are the exception, NOT the rule.
For the most part, life insurance agents are honest, and their products are solid—but as with everything, there is a caveat. It would be best if you had an agent who understands the products they are selling, someone who has access to the best insurers, and an agent who understands the differences between companies as they pertain to your medical situation.
Is Life Insurance Worth It? Unequivocally YES! But You Need the RIGHT Insurance
Virtually ALL the horror stories I have heard come from people who didn’t do their homework. They typically slip their phone number into a Contact Me page and speak to an agent sight unseen.
This leaves your destiny up to whoever gets your lead. This means you don’t know if they are new agents, have unlimited experience, or are tied agents.
I want to give you some background on why I started Policy Architects. I knew upfront that I didn’t want to work for a life insurance company. This would mean I could only sell their products (as a tied agent).
If you have been following me, you know I review Canadian companies. This is because there are so many products and insurers to choose from.
But you need to know this upfront: not all companies are created equal regarding medical issues.
…and if you do your due diligence, this seemingly simple choice can translate into savings in the tens of thousands of dollars over your term.
This made it important for me to become an independent agent representing the best companies in Canada and offering the most competitive rates.
Picking The Right Company For You
The key is selecting the right company for you, and it’s not straightforward. Many clients want instant pudding, so they go online to search for “rates.” I think this is terrific, but know that just because those rates are advertised doesn’t mean you qualify for them.
Each insurer has its own niche and underwriting process. So, if you have a medical condition like Type 2 diabetes, you won’t apply to the same insurance company as someone in peak physical shape.
We also have to weigh the type of life insurance you want (permanent or term), which is dictated by your budget and whether you want coverage until the day you die or just for periods of vulnerability.
The next step is to look at your goals—where will you be in 10, 20, or 30 years? What kind of cash does your family realistically need to move forward after your death? Do you need any add-ons, like disability insurance or critical illness coverage?
Anyway, if we go through everything in great detail, you will get a terrific policy you can afford—one that will protect your family for years.
GoFundMeIsn’t a Guarantee &
Life Insurance Protects Your Loved Ones from Financial Devastation
Sadly, my wife and I know people who have sustained a significant loss without life insurance, and it was a mess.
If the coronavirus has taught us anything, it’s how financially vulnerable we all are. When paychecks stop, we risk losing everything.
Because of the global nature of the virus, banks and the government have assisted us, but that’s not the case when someone dies. There is no runway when people pass away – bills don’t stop, and debt doesn’t evaporate.
So what happens? The deceased’s estate pays the obligations; the rest is left to you. Often, that’s not much.
My wife had an acquaintance who lost her husband in a freak accident. He didn’t have life insurance – but he left behind three kids, a stay-at-home mom, and debt. Thankfully, she had community support, and people pitched in so they didn’t sink into bankruptcy, but this is the exception, not the rule.
So why do I love life insurance?
“In fact, many Canadians are facing unprecedented anxiety about their finances, their physical health and their loved ones’ well-being. The April edition of Morneau Shepell’s Mental Health Index found that 81 per cent of Canadians indicated the pandemic has impacted their psychological well-being negatively.”
Life insurance becomes key topic for advisors’ clients amid COVID-19, Globe and Mail
1. Life Insurance Pays Debt & Keeps Your Family In Their Home
Most of us have mortgages and credit cards, and these obligations continue after death. If your spouse owes hundreds of thousands, these debts must be satisfied. After losing a primary breadwinner, things can get sticky if you want to keep your house and lifestyle.
Life insurance guarantees your family the funds to continue – even when you are gone.
Another expense people often overlook is the cost of the funeral. It’s not cheap to bury someone. Cremations cost upwards of $ 5K, and funerals upwards of $15K. Ouch.
2. Life Insurance Keeps Your Promises
One of the most challenging things to consider when planning your final days is your kids. What if you die before they grow up? It’s heart-wrenching to think about all the promises you’ve made going unfulfilled.
My oldest son wants to go to a big university to play basketball. My wife and I talk about the financial realities of this all the time. It will cost a bomb, but we want him to realize his dreams.
But what if I die before we save enough? This is a possibility. Life insurance keeps your promises when you aren’t there.
3. Life Insurance Keeps the Tax Man Away
Do you have an estate? If so, CRA will come knocking—while you are alive and when you die. Life insurance is a terrific tool for those with some expendable cash.
There are all kinds of creative ways to use life insurance to shelter your money if you have exhausted all other traditional methods AND to make sure your loved ones are covered when you die.
4. Life Insurance Keeps Businesses Afloat
Do you have a business? Life insurance can cover key people to make sure that a sudden death doesn’t end everything,
It can also be used to cover loans to make improvements or expand.
As if that were not enough, great benefits, including life insurance, can be used to entice top-level employees.
5. Life Insurance Allows For Grieving
Losing someone you love is one of the most challenging things you will ever do. If you add financial devastation to the mix, it becomes unbearable.
I know people who have had to return to work after only a few days because they couldn’t afford to take more time away from their jobs.
No one should experience that sort of financial pressure when grieving. Life insurance allows you to take your time.
6. Life Insurance Keeps Families Healthy
The stress and pressure of a death do terrible things. You are a stay-at-home parent, and the primary breadwinner dies. You still have very young children at home. Now what?
Do you get a job? Is there any job to keep the money flowing?
Maybe – but what about child care? Will your wages cover those costs and leave enough for the bills? Maybe – or maybe not.
Life insurance keeps families together and reduces stress.
Is Life Insurance Worth It? YES!
Well, I guess it comes down to this – I would buy life insurance and recommend it to my loved ones even if I didn’t work in the industry.
It is a no-brainer. The best part? It’s VERY affordable.
Most of my clients buy term insurance to cover an unexpected death. Term insurance is an incredible product because it provides extensive coverage for low premiums.
But that’s not all we offer. If you want to protect your family from the cost of a burial, check out small final expense policies. They are easy to qualify for and super affordable, too.
If you are one of the lucky ones and have an estate, permanent coverage may be a great fit. While it’s more expensive, you get coverage ’til the day you die. It’s also a terrific tool for financial planning.
I am proud to be a life insurance agent and would recommend it to anyone with debt and dependents. Call me today if you have questions or want to review some products. I’d love to help.
