Life insurance is one of the most important purchases you will ever make. Not only does it give you peace of mind now, but it also provides comfort and security for the people you care about.
Whether you’re thinking about getting life insurance for the first time or already have a policy, you may encounter some common misconceptions. Let’s dispel them and ensure you get the coverage that will best protect your loved ones.
Myth #1: My employer offers group life insurance, so that’s all I need.
While your employer’s group life insurance is a nice benefit, it often doesn’t provide enough coverage to protect your family in the event of your death. It also may last only as long as you are employed with that company.
Talk to an insurance advisor about how your group insurance could work together with a personal policy to fully protect your family for the future.
Myth #2: I have more than enough coverage.
Many people underestimate how much money is needed to provide their family with financial security in the event of their death.
Everyone’s situation and needs are unique. Sometimes simple benchmarks are used—like multiplying your income by 10—to calculate how much coverage you require. These formulas can be inaccurate and may not account for all your needs. For instance, in addition to the loss of your income, your life insurance should cover your debts, such as a mortgage and loans and future expenses, like your children’s education.
Find out how to calculate how much life insurance you need.
Myth #3: Buy term insurance—it’s the least expensive coverage.
As its name suggests, term insurance provides coverage for a defined period of time. Its premiums can be relatively low at the outset, making it particularly appealing. Parents also often prefer term insurance, knowing it can provide support for their children while they are still dependent.
Term insurance does offer several benefits and can be the right choice for certain situations, but, once the initial term is over, those low premiums frequently escalate exponentially. So if you’re looking for long-term coverage that grows with you throughout your lifetime, term insurance isn’t the economically efficient choice.
There are a few different types of life insurance. To find the one that best fits your goals and life, talk to your insurance advisor.
Myth #4: I already have a policy, so I don’t need to think about it anymore.
Once you’ve purchased your policy, it’s natural to file it away and forget about it. But life changes, and your policy should keep up with those changes. Here are a few scenarios that would require a policy update:
- You need or want to change your beneficiary.
- You welcome a new baby.
- You purchase a new, more expensive, home.
We recommend that you review your policy and contract every three to five years, or when a significant life event occurs. This will help you determine if the policy still fits your current lifestyle and anticipated future needs.
Myth #5: I’m still young, so I don’t need life insurance right now.
In fact, the best time to buy insurance is when you are young and healthy. Since life insurance premiums are determined by several factors, including your age, lifestyle and overall health, the premium will never—or rarely—be cheaper than it is right now.
And, even if you don’t have a partner or dependents yet, you may have debt—such as student loan, mortgage, or credit card debt—that you don’t want to burden family members with if something happens to you.
Building an affordable and flexible insurance plan early on will provide peace of mind to you and your loved ones.
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Frequently Asked Questions
You can find more information about insurance solutions here . At this time ATB does not offer life, critical illness and disability insurance. Your ATB Wealth advisor may be able to work with your external insurance advisor to ensure you have the right coverage for your financial future.
ATB Wealth® (a registered trade name) consists of a range of financial services provided by ATB Financial and certain of its subsidiaries. ATB Investment Management Inc. and ATB Securities Inc. are individually licensed users of ATB Wealth. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.
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