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A Step-by-Step beginner’s Guide to Buy Life Insurance

A Step-by-Step beginner’s Guide to Buy Life Insurance​

Author: Aman Ahuja

Posted on: June 22, 2020
life insurance aman ahuja

Before I even begin to share the how, I want to congratulate you for even considering buying your life insurance. It’s a big step towards being financially responsible. It’s official –– you’re an adult!

Jokes apart, buying life insurance is serious business and it requires a bit of research. This post is a step towards your research and hopefully you will learn a thing or two. great place to start the process of buying life insurance. The important thing to keep in mind is that your life insurance plan is not really for you; it’s for the people or a charity you love.

As with everything else in this world, it costs a monthly or annual payment called ‘premium’ to buy your life insurance. You know, just like Netflix! The only difference is that this money is being saved to help out your loved ones after you’re gone.

This might sound a little morbid or boring but, please know that this is the best thing that you could do for people who are dependent on you. Maybe, it’s your parents, siblings, kids,spouse or your favourite charity.

Now, let’s get started!

Step 1: Decide What Kind of Life Insurance You Need
There are multiple products for life insurance in the market and they all can be confusing. Before you even try looking for the right plan for you, you need to decide between two types of life insurance products: term life insurance vs. permanent life insurance.

As the name suggests, ‘term life insurance’ is limited to a term of years whereas ‘permanent life insurance’ isn’t limited to a period and its death benefit is guaranteed. Now, you might be thinking that why would anyone need term insurance. Nobody knows when they are going to die. However, there are some peculiar instances when one might prefer it. For instance, you have 20 years left on your mortgage and your children will be out of college by then. In that case, you may want a 20-year term-life policy to cover that period.

While term insurance might be a good and cheaper start, it is not recommended if you’d like to use the money you pay to the insurance company to work for you at a later stage i.e. get some or all of the premiums back or more. Then you would consider getting permanent insurance with cash values. Sounds, simple? Let’s move on.

Step 2: Decide How Much of Life Insurance You Need
Most insurance companies say a reasonable amount for insurance is six to 10 times the amount of annual salary. Another way to calculate the amount of insurance needed is to multiply your annual salary by the number of years left until retirement. So, if you make $50,000 a year, you need at least $500,000 in coverage. However, it is recommended that you discuss with a Financial Security Advisor who would do a full financial needs analysis to confirm how much life insurance you must buy for your beneficiaries.

Step 3: Find Your Perfect Insurance Company Match through your Financial Security Advisor
Once you have completed step one and two, the next step is finding a Financial Security Advisor who is licenced and experienced to give you multiple quotes for your life insurance so that you can compare. This might not be your perfect love story but, you would need someone you can count on.

The insurance company that you buy your insurance from also has to be dependable. If something happens, they should be able to pay the promised claim to your beneficiaries.

Step 4: Optional Add On: Critical Illness & Disability Insurance
Now, you might say, “But if I already have life insurance, why should I add optional coverage?”

  • As per Health & Stroke Foundation’s 2014 Report on the health of Canadians, more than 90% of Canadians who have a heart attack and more than 80% who have a stroke and make it to the hospital will survive.
  • Did you know that you could lose $20,000+ if you develop a critical illness in lost wages alone? The good news is that you don’t have to spend a fortune to get critical illness insurance. You can just add it on top of your existing insurance plan. The same goes for disability insurance. It’s definitely worth considering!

If you just skimmed through the whole article and just read the headings, that’s okay! We’ve got you covered. The quickest way to get your insurance is getting in touch with a Financial Security Advisor and booking your FREE consultation. Please feel free to book your no-obligation consultation with me so that I can share some life insurance quotes with you and answer all of your questions.

— Aman Ahuja
Financial Security Advisor
aman@einsured.ca
Life | Critical | Super visaa>

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