The Valley Wire

Never too early to plan

Why millennial­s might want to start looking into life insurance

- CATHERINE METZGER-SILVER catherine.metzger-silver@edwardjone­s.com @SaltWireNe­twork Catherine Metzger-Silver is a financial adviser with Edward Jones in Kentville. Connect with her on Facebook at EJ Advisor Catherine Metzger-Silver, by email at catherine.m

If you are a millennial — anyone born between 1981 and 1996 — you’re either in the very early or relatively early stages of your career and, as the old song goes, have got a lot of living to do.

Still, it’s not too soon to think about a financial issue you may have overlooked, like the need for life insurance. Millennial­s need to ask three key questions when it comes to insurance:

WHEN SHOULD I PURCHASE INSURANCE?

The answer to this question depends somewhat on your stage of millennial­ism.

If you’re a young millennial and have perhaps just completed your post-secondary education, are single and living in an apartment, your need for life insurance may not be that great. After all, you may well have other more pressing financial needs, such as paying off your student loans.

But if you’re an older millennial and you’ve got a mortgage, a spouse and especially children, then you unquestion­ably need insurance, as you’ve got a lot to protect.

HOW MUCH DO I NEED?

According to advisor.ca, a 2014 report from financial services research company LIMRA found almost half (45 per cent) of Canadian households were underinsur­ed, including 52 per cent of millennial­s.

You might have heard that you need life insurance worth about seven or eight times your annual salary. And while this isn’t a terrible estimate, it doesn’t apply to everyone, because everyone’s situation is different.

A financial profession­al can look at various factors like your age, marital status, number of children, size of mortgage, etc. to help you arrive at an appropriat­e level of coverage.

You should also keep in mind that your employer may offer life insurance as an employee benefit. However, it might be insufficie­nt for your needs, especially if you have a family and will probably end if you leave your job.

WHAT TYPE SHOULD I GET?

Many people initially find life insurance to be confusing, but there are basically two types — term and permanent.

As its name suggests, term insurance covers a given time period, such as 10 or 15 years and provides only a death benefit. It’s generally quite affordable, especially when you’re young and healthy.

Permanent insurance, on the other hand, offers a death benefit and a savings component that allows you to build cash value. Consequent­ly, the premiums are higher than those of term insurance. Again, a financial profession­al can help you determine which best suits your needs.

OTHER FORMS OF FINANCIAL PROTECTION

Thus far, we’ve only been talking about life insurance. But you may also need other types of protection such as disability insurance, which can replace part of your income should you become ill or incapacita­ted.

And you may eventually want to explore other kinds of insurance such as long-term care insurance, which can help cover you for the enormous costs of an extended nursing home stay.

You should at least consider all forms of insurance as part of your overall financial strategy. The future is unknowable and, as a millennial, you’ve got plenty of future ahead of you.

 ?? STORYBLOCK­S PHOTO. ?? Millenials are at an age where many should start looking into financial protection­s like life insurance. Consider the following tips to ensure you’re fully protected.
STORYBLOCK­S PHOTO. Millenials are at an age where many should start looking into financial protection­s like life insurance. Consider the following tips to ensure you’re fully protected.
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