Choosing the right kind of life insurance for each stage of your life

This primer will help you choose the best policy for where you are at in life

Life insurance provides peace of mind supplying financial security to your loved ones when you are no longer alive to take care of them monetarily. The type of life insurance you need depends on several factors including what stage you are in life, your responsibilities, and your financial situation. While there’s no single solution given that every person’s circumstances are unique, there are some common elements within each life stage that determine your needs and the best type of insurance to cover those needs.

LIFE STAGE: You’re a single young adult in your early 20s, starting your career with no family responsibilities.

You may think given that you’re just starting your career and have no dependents that you don’t need life insurance. Having life insurance can help provide you with an early start on achieving financial protection should the unexpected occur.

Your 20s is the best life stage to get insurance as it is the most affordable when you are young and healthy.

Depending on your situation, what debt obligations you have, or available budget, a permanent life insurance policy may be a type of life insurance to consider for this stage of life. As its name indicates, this policy stays with you for your entire life, providing lifelong financial protection while you are young and healthy. This type of policy also offers opportunities for premium stability, access to funds and financial options – helping with your near and long-term financial goals. A non-participating whole life insurance plan can provide potential savings after a certain number of years (typically after three to five years). These savings could be used in a variety of ways. You can pay down life insurance premiums in the future, borrow against it if you’re buying your first home or if there is a financial emergency, you can access the cash value of the policy instead of liquidating other savings.

LIFE STAGE: You have young children or are thinking of starting a family; you may already own a home and have a mortgage and other debts.

As a young family, you have both long-term and short-term expenses. At this stage of your life, your responsibilities are centred on covering your debts, maintaining a standard of living and being able to afford postsecondary education for your children in the future. With these goals in mind, the life insurance you consider should focus on affordability and the impact an illness or disability would have on your ability to earn an income and reach your financial objectives. Term insurance offers a relatively cost-effective solution to provide protection on debts like lines of credit or mortgages and are an essential component of financial planning at this stage of life. Another type of insurance you may want to consider is, Critical Illness or Disability Insurance. With Critical Illness Insurance and Disability Insurance, you can rest assured knowing that the financial freedom you are working hard to secure will not be put at risk in the event of an illness that will deplete your savings or disability that limits your ability to earn an income and income potential. During this phase of your life, saving and planning for the future is important. Critical Illness and Disability insurance are two ways to keep those plans on track and not derail your saving goals.

Depending on your circumstances, however, to achieve your goals, you may want to consider a layered approach that combines both short- and longterm solutions as it may be the most cost-effective strategy. If you’re unclear what mix of term and permanent insurance would work best for you and your young family, a licensed life insurance advisor can help you determine the best coverage policy.

LIFE STAGE: You’re in your late 40s or early 50s and settled as a family. You have kids that are older, but who are still dependent on you financially. Your mortgage is largely paid off and you have savings and money put aside for retirement.

Estate planning at this stage of your life helps protect your loved ones in the event of your death. Life insurance plays a key role in that plan, a mix of permanent and term insurance can help provide security of knowing your family will be protected and continue their standard of living without having to tap into your savings should anything happen to you. An annuity is another solution that can be useful for future planning at this stage. It will pay a regular income at a future date based on the amount invested during the accumulation phase when you can make periodic payments or a lump sum payment that will meet your income goals later in retirement.

Unsure what policies are best for taking care of your family at this stage of life? A licensed life insurance advisor can help you tailor a policy that works best for you and your family.

LIFE STAGE: You’re retired or planning on retiring soon. You’re debt-free and are empty nesters. You may have healthy investments for your retirement years.

At the retirement (or close-toretirement) stage of your life, it’s time to revisit those estate plans you made earlier and ensure they still align with the legacy you want to leave to your family. Thinking about final expenses and the end of your life can be tough but planning ahead can provide peace of mind to you and your family and alleviates the burden on your family to make complicated decisions at a difficult, emotional time. Permanent insurance options are one way to ensure your family doesn’t have to shoulder the cost of your funeral and burial costs, a small amount of permanent life insurance could help cover these expenses. If your health is a concern, you can indeed find health coverage. There are many affordable, comprehensive insurance options that don’t require a medical exam or bloodwork. Typically, you just need to answer a few questions to qualify, and the application process can be completed in about 20 minutes.

Life insurance policies are not one-sizefits-all. These guidelines are meant to help you consider the different types of policies available, which can be tailored to best meet your needs depending on your life stage.

Life insurance policies are not one-size-fits-all. These guidelines are meant to help you consider the different types of policies available, which can be tailored to best meet your needs depending on your life stage. Your personal circumstances will determine what coverage makes the most sense for you and your family – a Licensed Life Insurance Advisor at CAA can help ensure you find the best personalized plan. Connect with an Advisor by calling 1-888-444-6711, book an appointment online at caaforlife.ca.