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Life insurance: Do I need it and where do I start? We asked an expert

Are you young and healthy? Do you have a family, debts and a mortgage? Or can see retirement in the distant future? Whatever your lifestyle, you may not know much about life insurance and assume that you don’t need to think about it.  

But that isn’t the case. According to Jarrett Thompson, Managing Director, CAA North & East Ontario, Canadians should definitely educate themselves about what everyone should know about life insurance. If you missed the CTV interview with Jarrett, here’s what he had to say. 

When we think of life insurance, most people imagine a lump sum that goes to family to help pay the bills after someone passes. Is that accurate?

The term ‘life insurance’ doesn’t just refer to one kind of policy, but rather a whole range of options developed to suit a variety of financial needs as well as lifestyles and life stages.   

Life insurance has evolved enormously to include policies that do have the lump sum you mentioned. But there are also policies that can be drawn on in retirement, policies that help if you fall ill and need financial support while you recover, or disability insurance if you’re in an accident or can’t work anymore. 

When is the best time to get life insurance?

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It may sound strange, but the best time is when you’re young and healthy. Your age and well-being mean your premiums will be considerably lower than someone who is older and faces health challenges. Hanging on to those policies throughout your life means premiums stay the same.   

You may not have dependents yet, or even be married, but if you are a sole-income household, you might need replacement income if, for example, you have a critical illness and need a lump sum payment to cover expenses or health treatments not covered by OHIP. 

You might also want to consider disability insurance to cover your costs should you have an accident or illness. 

What’s the first step for someone thinking about life insurance?

Start by asking yourself two questions: What is my life stage and what do I want to achieve? Do I want a guaranteed lump sum or a policy that would support me through retirement?   

For example, term life insurance covers a specific period of 5-, 10-, 15- and 20-year terms, with a premium that stays constant.  

On the other hand, permanent life insurance is long-term coverage for your whole life including into retirement. Permanent life insurance also builds cash value, so that if you cancel at any time, you receive cash back. Plus, you can also take out a policy loan, using your life insurance policy as collateral.   

Choosing the right product will depend on your goals and where you are in life. 

Having sufficient life insurance is an important way to protect your family and secure their financial future. Regardless of your stage of life, CAA has a life insurance policy that works for you. You can book an online appointment with a CAA Protect advisor or speak with an agent at 1-800-709-5809. 

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