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Five Common Misconceptions When Purchasing Life Insurance
May 17, 2024

If the thought of purchasing life insurance overwhelms you, this article will provide you with tips to give you clarity on some of the fundamentals of life insurance planning. Since confusion can lead to missing key information, we will discuss how to avoid five common life insurance misconceptions.


#1 Group insurance is all I need

First, group life insurance from your employer is unfortunately almost never enough coverage to protect your family in the event of your death. In addition, group coverage will only last as long as you are employed, and job security is rarely certain. While most group coverages offer an option to convert group life insurance to personal insurance when you leave your place of employment, it’s rarely an ideal time to be adding new expenses to the family budget, and at older ages, purchasing new personal life insurance can be costly. A professional insurance advisor can show you how group and personal insurance can work together to ensure that your family’s standard of living and plans for the future are fully protected in all circumstances. For more information on what to expect when putting together a comprehensive insurance plan, watch this Smart Talk video.


#2 I have plenty of coverage

Next, not purchasing enough life insurance is an all-too common problem that many people face. Most people underestimate how much money is needed to provide their family with financial security in the event of their death. Although there are commonly used rules of thumb when it comes to determining how much coverage your family needs, such as multiplying your income by ten, these are often inaccurate. 


#3 Term insurance is the least expensive coverage

Term insurance is popular among young people as the premiums are relatively low because as the name suggests, it protects you from the financial impact of death for a set period. This type of insurance is preferred for parents who would like to support their children financially for 5, 10, or 20 years in case they pass away while the children are still dependent. That being said, although term insurance comes with many benefits such as low premiums, these premiums escalate exponentially once the chosen term is over. Although term insurance still has its place in many people’s lives, if you are looking for long-term coverage, purchasing only term is not economically efficient. 


#4 I Have A Policy, I’m Done

Life insurance is arguably the most important purchase decision you will ever make. Once you buy it, it is crucial to review your policy and contract every three years to ensure that it still aligns with your current lifestyle and your needs. For example, if your beneficiary was a spouse that has died or that you’ve separated from, you must change your designated beneficiary, as you want your death benefit to go to the appropriate person. Additionally, your needs may change overtime which requires you to verify whether or not the policy you purchased still fits with your current and anticipated future needs. For this reason, we recommend having an adaptable life insurance policy that can adjust to you and your everchanging lifestyle.


#5 I Have Plenty of Time to Buy Life Insurance

Since there exists a strong relationship between your age, health, lifestyle and your insurance premium rates, waiting too long to purchase life insurance can be an expensive mistake. The younger and healthier you are, the lower your premiums will be for both term and permanent insurance. In this Smart Talk video, you’ll see some of the insurance needs you’re likely to have throughout your lifetime, highlighting the importance of building an affordable and flexible insurance plan early on that will last through all of your life’s adventures.


For more information on needs-based insurance, contact Filomena Viele.

Disclaimers 


Echelon Wealth Partners Inc. 

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute the author's judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them. 


Insurance products and services are offered by life insurance licensed advisors through Chevron Wealth Preservation Inc., a wholly owned subsidiary of Echelon Wealth Partners Inc. This material is provided for general information and is not to be construed as an offer or solicitation for the sale or purchase of life insurance products or securities mentioned herein. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please seek individual financial advice based on your personal circumstances. Please note that only Echelon Wealth Partners is a member of CIPF and regulated by IIROC. Chevron Wealth Preservation offers products sold through members of Assuris who are 

regulated by OSFI. 

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