Do I need life insurance? What are the different options?

Deciding whether you need life insurance and the type of insurance is important, especially if you have dependents. This video will help you understand why people purchase life insurance and also outlines the difference between term and permanent insurance to ensure you purchase the best policy for you.

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Video transcript

If you ask most people, their family’s financial security is one of their top priorities. Yet, many people are not sure whether or not they need life insurance. 

A simple way to know if you need life insurance is to answer the question do you have someone who would suffer if your financial contributions were no longer around? This could be anyone who depends on you — your spouse, your children, disabled family members or even aging parents. 

What are the different types of life insurance?

There are several different types of life insurance, but the commonality between all of them is that they pay out cash to your loved ones in the event that you pass away. If the unthinkable were to happen this can be their financial lifeline. Generally, life insurance falls into two categories: term insurance and permanent insurance. 

What is term insurance? 

Term insurance will provide your family with a tax free lump sum of money upon death. This is called a death benefit. It provides protection for a specific term. Many people pick a term that matches with a milestone such as their children graduating from university or a plan to retire at 65. Term insurance is simple, affordable and can meet your changing needs over time.

What is permanent insurance?

Permanent insurance also pays a death benefit to your loved ones if you pass away. It provides peace of mind by providing lifelong coverage, provided you continue to pay the recurring policy premiums. As you pay the premiums it builds value like an investment over time. This can be used in the future for things like a down payment on a house, university tuition or retirement. It is important to note that doing so will reduce your death benefit. 

Which type of life insurance is right for me?

You may be wondering which is right for me? Term insurance and permanent insurance aren’t mutually exclusive. It is a very personal choice and there are many possible combinations. You should choose insurance that you can afford and that makes the most sense for your family. 

It is best to speak to your financial advisor to learn more about the life insurance that fits your unique situation. Ultimately, one of the greatest gifts you can leave for your family is financial security.