When it comes to financial planning, the first word to come to mind likely isn’t insurance; however, having the right insurance coverage should be one of the cornerstones of your portfolio. Most financial advisors and brokers champion life insurance as part of a diverse portfolio approach. So, why is coverage so important, and why shouldn’t it be missing from your financial plan?
Understanding the importance of coverage.
Life insurance is there for your family and loved ones in the event of a sudden passing. With coverage, your family will receive a lump-sum. This amount will vary depending on your policy; however, the average coverage per household in Canada is $423,000.1 This money can be used to help cover your mortgage, provide for your children’s education, or take care of your spouse in retirement. It’s been pointed out many times before: “Even the most solid investment and financial strategy can fall apart in the event of the untimely demise of a loved one. For that reason, most people look into getting a term life insurance policy when they get married and start a family.”2
"The average coverage per household in Canada is $423,000." 1
Major life events make coverage even more important.
Major life events are important triggers for purchasing coverage, so if you’ve experienced or will be experiencing any big life changes like getting married, starting a family, or buying a home, you should consider coverage. And more and more people are also starting to think and see life insurance as an investment, not just another cost. These products are “guaranteed to not lose value, and values don't fluctuate as unpredictably as some other types of investments can.”3 Therefore, it’s not only a smart financial play but a safe one, too.
How life insurance can fit with your pension.
Another important justification for investing in life insurance is how it can work in conjunction with your pension. If you unexpectedly pass, depending on your pension, your spouse may only receive a portion of it. It might come as a surprise, but unfortunately, pensions aren’t always guaranteed in full. So, if you have a pension, make sure you review it and are aware of how much is guaranteed to your spouse. If your pension will not be transferred in full to them, they may not have enough to live comfortably in retirement. Nobody likes financial stress at any time, but it can be particularly trying and taxing in the retirement years. And we know that 32% of Canadians who are planning for retirement are concerned about their standard of living.4 Having some life insurance coverage is a great way to supplement your other investments.
Are you now ready to make the investment and protect your loved ones with coverage? You can learn all about the benefits of CAA Guaranteed Issue Life Insurance by speaking to a Licensed Insurance Advisor. They’ll help you determine the coverage amount that’s right for you and have your application completed in no time.
1 clhia.com. “Canadian Life & Health Insurance Facts 2019 Edition,” 2019.
2 usnews.com. “How Insurance Can Fit in a Portfolio,” September 2019.
3 thebalance.com. “Is Life Insurance a Good Investment?” March 2019.
4 canada.ca. “Canadians and their Money: Key Findings from the 2019 Canadian Financial Capability Survey.” May 2020.