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How Much Life Insurance Should I Take Out?


Oct 28, 2021 4 min read

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How much life insurance to take out
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    There are several methods for figuring out how much life insurance to take out. But let's start with the basics. Before figuring out anything, there are 4 questions that you must ask yourself:

    1. If I happen to die prematurely, do I have enough to pay off my current debts?

    2. Do I want my partner or kids to pay it off out of their own pockets?

    3. Do I want my funeral and post-mortem expenses to be paid once I'm gone?

    4. Do I want to leave a heritage for my kids?

    We know these questions are tricky and no, it is not something we often think about.

    But let's face reality here: the majority of people can't afford their own debts, and if something unfortunate had to happen to them, their family would have to pay the price.

    Fortunately for you, life insurance can answer all these questions.

    How Does Life Insurance Help Me Financially?

    Life Insurance can pay off your debts, such as your mortgage, outstanding loans, credit cards, or any other type of loan that has to be paid back upon your death.

    If you have dependents who rely on your income, life insurance is essential. If you died prematurely, you would have trouble covering your expenses without a monthly paycheque. With life insurance, your dependents don't have to worry about meeting daily expenses since it takes care of everything from paying bills and mortgage payments to helping with day-to-day things like food and school.

    Life insurance is designed to help you make all these possible, and it has been the most convenient way of making sure that your dependents are taken care of after your death.

    So now that you've got the basics down, let's take a look at how you can figure out how much life insurance coverage you need.

    How much coverage should I take out?

    Now that you know what life insurance is all about, it's time to figure out how much coverage you need.

    The amount of money your life insurance policy will pay out is called the sum insured. When you pass away, the life insurance amount is the actual cash value (or term value if it's a lifetime policy) provided by your insurance coverage.

    To figure out how much life insurance you'll require, consider two things: debts and savings/assets your beneficiaries might use to meet future financial obligations such as school tuition for your kid's education.

    Now, of course, you shouldn't be doing all of that all by yourself. Fortunately for you, you can get help from experts and figure everything out in less than 5 minutes with Emma.

    What kind of coverage do I need?

    There are many types of life insurance, but let's stick with the main ones. There are three main types of coverage that you could consider:

    • Term life insurance

    • Whole life insurance

    • Universal life insurance

    Term Life Insurance

    This is a form of life insurance that lasts for a specific length of time, such as ten years. The term length depends on the firm providing this sort of life insurance policy, but it is generally 10, 15, 20, or 30 years long. The duration of the policy's rate lock period might differ each time. This is when you'll discover if your insurance policy will be renewed for another year or cancelled. Rates are guaranteed not to rise during this locked-in rate term, so there's no need to worry about them increasing because you're a great client.

    Whole Life Insurance

    What differentiates whole life insurance from term life insurance is that it has a guaranteed cash value accumulation. In certain cases, it can have an increasing death benefit over time. Life insurance policies can be kept for as long as you live, and they are not limited in terms of time. Because the date of issue is so far in the past, these life insurance plans have predetermined premiums to keep up with inflation costs and other increases in living expenses.

    Universal Life Insurance

    This life insurance policy offers a flexible premium that may be adjusted as needed. In other words, this type of life insurance does not have a set price. Because of this, you can change your premiums as needed and affordable, giving you greater flexibility than whole life insurance plans based on cash value accumulation. Individuals who buy universal life policies may take advantage of the greatest possible cash accumulation throughout the term of their policy.

    Emma Life Insurance

    Emma is an online life insurance platform that allows Canadians to compare life insurance providers and policies from their computers or mobile devices. Emma helps Canadians get a life insurance policy in less than 20 minutes.

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