How much life insurance should you buy in Canada?

The insurance industry makes it very easy to separate us from our money if you're not careful you can easily find yourself with far more of the wrong type of insurance than you need if it's any consolation though you will you have made your broker really happy now I have been through this question for my own family my priorities changed when I entered new phase like fatherhood and growing in my professional like so I did like to share my thinking and walk you thought the issues  I considered when making my insurance decisions let's start by under standing. what types of life insurance there are and why you might need them there are two main types of insurance policies term insurance and permanent insurance and term insurance policy is a policy that you pay for a set number of years and it expires when that number of years is up it's the cheapest type of insurance you can get and it sells typically in 10 or 20 year terms you can also buy shorter or longer terms. if you want depending on your needs this.

type of insurance is good for protecting your families from risks that will eventually go away so what you're really protecting against is the risk that you pass away before having saved enough money to put your kids through school pay for your family's life style and retirement or pay off your debits once you have saved enough to pay off your debits put your kids through school and pay for your retirement you won't need the insurance anymore that's why you buy it for a set number of years or for a specified term now a permanent insurance policy on the other hand will essentially have you paying premiums for life so that you're covered for life these are commonly known as whole life or universal life policies you're guaranteed to collect on this type of insurance so long as you always make your payment as a results as a results these policies are more expensive than term policies permanent policies can also have an investment component you can accumulate an investment value inside these policies overtime.

Which will increase the eventual payout of the policy over and above the original face value with a whole life policy. you have no control over the accumulation of the investment value it's baked into your premiums and you get whatever you get you surrender the investment decision making to the insurance company with universal life insurance you can to choose now much you want to accumulate in the investment component and how its invested permanent and policies are often sold as great investment vehicles because the investments grow tax-free. I don't like the idea of accumulating investment value inside an insurance policy mainly because the costs on the investment component are so high that they offset any tax benefits you might get so why might you need permanent insurance primarily to keep the peace in your family once you're gone policies like this are used to protect your heirs from having to sell assets in your estate that they may prefer to keep let me give you an example you and your spouse have a house in the city and a cottage in the country but you don't have much of an investment portfolio.

When the last of you or your spouse passes away there'll be a big tax bill on one of the two properties the properties aren't likely worth the same amount either if you want to make sure there's enough money in your estate to pay the taxes and equalize your children for the unequal values of real estate that they'll inherit permanent insurance can be a really helpful tool your heirs go to keep the houses and everyone receives the same value from your estate discretion is another big plus with permanent policies again to keep the peace in your family when you're gone think of this scenario. You have children from your first marriage and would like them to be treated equally with your current spouse one of my favourite clients ex to is the virtue of his permanent insurance policy because it equalizes his kids who a results of his first marriage with what he believed for his current wife often times particular in second marriage situations things can arise where insurance can be a very helpful way to manage these challenges and keep things balanced do you have any experience or questions about insurance. Use this information to make data-driven decisions....