When people contact Bow Valley Insurance for a life insurance quote, we often discover that while life insurance is an important part of financial planning for most in Alberta, many people don’t know how to calculate how much they need. Others have life insurance but don’t know how much their policy is worth. Bow Valley Insurance, your insurance broker, can help you calculate how much life insurance you need and determine how much your current policy is worth.
Life Insurance Policies
If you don’t currently have life insurance, the younger you are the lower your premiums will be, and the less likely you are to have a health problem that could disqualify you when you apply. If anyone depends on you for support, you need at least enough coverage to take care of their expenses should you pass away prematurely.
If you already have life insurance in Alberta, read your policy carefully to determine how much coverage you have. Pay close attention to the Declarations Page. Your policy will stipulate how much your beneficiaries will receive under various conditions. Then, picture the quality of life you want your loved ones to have should something tragic occur.
Life Insurance in Alberta: Things to Think About
The goal of your life insurance policy is to provide coverage for your family so your financial obligations don’t become a burden for your loved ones. Consider the following:
- If you’re married, how much does your spouse contribute to your family’s monthly expenses and if you died prematurely, how much more would your survivors need to get by?
- Do you want to set aside funds through your life insurance in Alberta so your children can complete their education?
- Is there anyone else depending on your support, such as your parents, grandparents, brothers or sisters?
- If you’re a single parent, do you make or get support payments? Would these continue after the contributor’s death?
- If you’re a homeowner, do you want your mortgage to be paid off when you pass away?
- Do you have additional family members or an organization to whom you wish leave money?
- Do you want your life insurance in Alberta to play a role in your business or farm succession plans?
- Should your life insurance to pay part of the tax incurred when capital property is transferred to the next generation?
Which Type of Life Insurance is Best For You
If your main objective is to protect your family from the loss of your income, term life is probably your best option. However, if you wish to protect your family from estate taxes or from the desolation of your business after your death, universal or whole life is likely your best option.
How Much Life Insurance You Need
You can estimate the amount of life insurance you need; however, each individual’s financial circumstances are different and especially if you own an Alberta business, there are many variables to consider. An experienced life insurance broker will conduct a thorough financial needs analysis and may ask you for the following information to determine the right amount of coverage for you:
- Annual income your family would require (multiplied by the number of years the income will be needed)
- Amount of your savings and investments
- Value of current retirement plans
- Amount of your outstanding financial obligations (lines of credit and credit cards)
- Total amount to pay off your assets (mortgage and car loans)
- Value of any current life insurance in Alberta
- Your spouse’s annual income and tax rate
- Number of years your spouse expects to work
- Your final expenses (funeral and burial costs)
- College funds necessary for each child
Having children significantly increases the amount of life insurance you need. The overall cost of raising a child to the age of 18 typically adds up to $243,660. This doesn’t include the cost of a post-secondary education and means a monthly cost of $1,070 over the course of 19 years.
Your Life Insurance Broker in Calgary: Bow Valley Insurance
At Bow Valley Insurance, our brokers have access to multiple life insurance providers. This means we can compare rates to find you the best price for life insurance so your family can keep their Calgary home should the worst occur.