If life insurance is on the horizon, then an important step is figuring out how much life insurance you will need.
The truth is it can be difficult to pinpoint the exact amount of coverage you will need for your life insurance policy. But you can make a good estimate if you consider:
- your current financial situation
- how much coverage your loved ones may need in the future
From there, you can get quotes for how much your monthly premium will be for the amount of coverage you want. The key is to secure enough coverage to provide a financial safety net for your loved ones while ensuring your premiums remain affordable.
Here’s how to determine how much life insurance you may need:
What Do You Need Coverage For?
When you pass away, what would you like your life insurance policy to cover? Your plan often depends on the answer to this question. These are just some of the expenses, debts, or other wishes that a life insurance policy can help with when you pass away.
Income Replacement – If your loved ones (spouse, children, ageing parents, etc.) depend on your income to maintain their livelihoods, then the benefit from a life insurance policy can help them stay afloat. Without your income they may have to make sacrifices and not be able to keep up with lifestyle expenses.
Mortgage – Your home is one of the largest purchases you’ll make in your life. If you haven’t paid off your mortgage and believe you will still have mortgage payments to make in the future, then consider how much coverage will be needed for your loved ones to continue making these payments.
Funeral and Final Expenses – In Ontario, funeral and final expenses can be costly. Don’t leave your loved ones to foot the bill. Plan ahead by ensuring your life insurance benefit can cover your funeral and final expenses.
Children’s Education – If you want to pay for your children’s post-secondary education then consider how much tuition, living expenses, and other needs will be. In Canada, the cost of post-secondary education is on the rise. According to Maclean’s magazine in Canada the average annual cost of post-secondary education is $19,498.75.
Leave a Legacy – You may want part of your life insurance benefit to go to a charity or organization that is close to your heart. Keep in mind how much you were hoping to leave behind for this organization and get coverage accordingly.
Ways to Determine How Much Life Insurance You May Need
- Life Insurance Calculator
Life insurance calculators are popular tools that can help you determine how much coverage your loved ones may need. Depending on the calculator, you simply input information such as immediate cash needs, your current income, savings, assets, and existing life insurance, then the calculator will crunch the numbers to provide an estimate of the required coverage should you pass away.
- Speak to an Insurance Broker
An insurance broker is your best resource for determining how much life insurance you may need. Unlike a life insurance calculator, they will take a personal approach to understanding your current financial situation and financial goals for the future. Based on your answers, they can provide you with a more accurate estimate for coverage. You can also feel at ease by asking them any questions or sharing your concerns.
The Risks of Not Having Enough Coverage
By not getting the appropriate amount of coverage, you can put your loved ones at financial risk. That’s why it’s important to understand how much life insurance you may need while applying, so that you can have peace of mind that your loved ones will be fully protected.
Find the Right Insurance Broker
There are several life insurance companies to choose from in Ontario. Understanding your options starts with determining how much life insurance you will need to safeguard your loved ones should you pass away unexpectedly. Consider companies that are offering affordability at the right terms and are financially stable.
Ultimately, one of the best ways to find top insurance companies and the best rates, is by working with an insurance broker. Ensure you choose a reliable and professional insurance broker that will work in your best interests.
Our team is highly knowledgeable and experienced in helping you find insurance options that will fit your lifestyle seamlessly. Get in touch and we’ll help you explore the best life insurance solutions for your needs.