Do you need life insurance with no partner or children?

BY ANDREW STEWART

We are all aware that life insurance is essential if you have a partner or children who depend upon you for monetary support. The most frightening thought for me is a family having to move from their home, go hungry or beg for assistance on a GoFundMe page just because they didn’t have life insurance to protect them from a premature death.

But if you don’t have either is there still a need to have life insurance coverage? Here are some key questions to ask yourself to help determine that answer.

Does an aging parent depend upon you for financial support?

I have plenty of clients who are helping out with bills, care taking and transportation for their mom or dad. This is especially true in single family homes were the mother or father had to work multiple jobs to pay the mortgage and feed the family, which prevented them from saving adequately for their own retirement.

Has anyone been a co-signer for you?

If someone has helped you out by co-signing a loan for you such as mortgage, rental unit, student loan or credit cards this person is responsible for your debt if you’re unable to pay the balance even after your death.

Do you want to start a business?

Some lenders will approve a business loan if you have an insurance policy for the amount of the loan and use the policy as collateral for the bank. Collateral assignment of life insurance is a conditional assignment appointing a lender as the primary beneficiary of a death benefit. Many lenders do not accept term life policies as collateral because they do not accumulate cash value and the term of the policy may be too short to accommodate the loan. Collateral assignments make sure the lender gets paid only what they are due. If the bank is named as the beneficiary on the insurance policy, they would be paid the full death benefit even if some of the loan had already been paid off; leaving nothing for the deceased’s other beneficiaries. If you are applying for life insurance to secure your own business loan, remember that there is no reason to make the lender the beneficiary.

Do you have money saved for your final expenses?

If you passed away unexpectedly do your parents or siblings have enough money to be able to take care of funeral and burial without it hurting them financially? The average cost of a funeral in Canada is between $8,000 and $10,000. Even if you do have money saved, have you taken the necessary steps to make sure they can access those funds? When someone dies and it’s not a join account, their bank accounts are frozen. and its balance will be divided up according to the deceased’s will or the intestate succession laws.

Do you plan on having children and a partner in the future?

If you are currently dating and having those conversations or even thinking about adoption, getting a life insurance policy now may not be such a bad idea. Your age and health are two of the biggest factors affecting life insurance costs. If you’re young and healthy you can buy a lot of coverage for very little money. For example, a healthy 30 year old man could buy $750,000 of term life insurance that will last 30 years for as little as $45 per month. A woman of the same age could buy the same policy for $38 per month.

So if you answered yes to one or more of these questions you are in the market for life insurance.