6 reasons why people don’t buy life insurance
There is really no way to argue that most Canadians need life insurance and most have either no coverage or not nearly enough.
This fact has been well known for years yet people continue to avoid setting up a policy to protect their loved ones. Why is that exactly? Let’s look at the most common reasons people avoid setting up life insurance:
1. Misconception of the cost of insurance
Many people think that life insurance is prohibitively expensive but it really doesn’t cost that much. $500,000 of term insurance for a 30-year-old non-smoker would only cost around $18/month for a female or $24/month for a male.
2. They figure that they’re healthy and don’t need it
The sad fact is that many people put off setting up their coverage until it’s too late. The time to apply is while you’re healthy and have no medical concerns. This can help assure your future insurability.
3. Assumption that their employee benefits are sufficient
Employee benefit plans usually only provide life insurance in the amount of one-to-two times annual salary which is nowhere near enough to help pay off your mortgage, other debts, provide for lost income and help raise your kids. In addition, you will lose this coverage when you change jobs, something that most Canadians will do at least a few times during their lifetime.
4. They will wait until after their kids are born
I find myself telling many fathers to be that if their wife is pregnant, that child is still coming if they get hit by a bus tomorrow. If you don’t already have life insurance in place, you must set it up as soon as you learn that you’re expecting. There is no need to wait for the expectant mothers either — most life insurance companies have no issue with setting up coverage on someone while they are pregnant.
5. Insurance is too complex or confusing
Sure, many life insurance agents will try to sell you an elaborate (and expensive) Universal Life or Whole Life policy but for many people, a simple term life insurance policy makes way more sense and is not very confusing at all. You setup the insurance for the length of term and amount that you want and as long as you keep paying your premiums, the coverage stays in force. 6. Lack of trust This is a big one and I certainly understand why many Canadians have no idea who to trust. The insurance industry has been loosely regulated for a very long time and there are a lot of insurance salespeople out there who will happily trick you into paying a larger premium than necessary so that they earn a bigger commission. Finding a truly independent advisor who will explain all of the options to you and shop around to every insurance carrier is key here.
At the other end of life, there are a few reasons why you may no longer require life insurance. For example, if your kids are grown up, the house is paid off and your retirement account is fully funded, you may not require life insurance anymore. If you don’t fit all those criteria just yet, what’s your excuse?
The good news is that buying fully underwritten life insurance that’s been shopped across all major carriers just became a whole lot easier. Insurance companies will now let you compete applications online and the entire process only takes a few minutes. Check out insuringcanadaonline.com to get a quote!
Brett Millard is the owner of SPEIR Wealth Management in Kelowna. Reach him at brett@speirwealth.com.