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How much life insurance do I need?

couple talking to a woman
Life insurance has many purposes. Primarily, insurance looks after your family or dependents if you’re no longer there to provide for them.

The amount of insurance you need depends on many factors, including your occupation, lifestyle, income, assets, debts, the needs of your dependents, and affordability. Insurance needs are unique to the individual and may change as your life circumstances change. Only an insurance advisor can help determine what’s right for you. But here are some of the things they will consider.

What you do in your day-to-day career is a consideration for insurers. Canadian Armed Forces members have an element of risk in their occupations, which is considered when determining the best insurance policy for you and your families. SISIP Financial offers life insurance policies with no exemptions for war and dangerous occupations.

You may also have some employee benefits in place. Your insurance advisor can help you find the best policy to match your occupational needs and complement the coverage you have through your employer.

Life can be adventurous, and you’ll want a policy that takes into account your pastimes. Maybe you’re a boating enthusiast, or you like rock climbing. Perhaps you spend your time off touring on all-terrain vehicles or snowmobiling. Insurance is a risk mitigation tool and you can choose coverage that takes into account your active lifestyle. Life insurance through SISIP Financial supports your lifestyle and offers policies that don’t exclude dangerous hobbies or occupations.

If something happens to you, you don’t want your family to struggle to pay money owing. A mortgage is often one of the biggest debts people carry. You may also have student loans, a line of credit or a car loan. When determining how much coverage you need, these are top factors. If you have a $200,000 mortgage, a $15,000 student loan and owe $8,000 for your car, your policy will ideally cover that $223,000. Keep in mind that mortgage insurance will pay off the amount owing to the bank, while a life insurance policy pays your beneficiaries.

Income replacement
If you’re the primary provider for your family, income replacement is an important consideration when determining your coverage. Depending on the individual and myriad factors that you can discuss with your advisor, a general rule is to consider five to ten years of salary replacement. If you earn $50,000 annually, you may choose a policy that offers $250,000 to $500,000 in income replacement.

Family members
Spouses consider scenarios if either one is left behind, and your advisor can determine appropriate coverage for each of you. Insurance is intended to cover financial loss in the event of a death. If you have dependents, they can be added to a policy as a rider to cover basic funeral costs, but they may not require the same level of coverage.

Life insurance policies are customized to the individual. As you choose your coverage, your insurance advisor can also help you select an affordable premium that works with your monthly budget.

Depending on the type of policy you choose, insurance can be included as part of your investment portfolio.

This article is for informational purposes only.

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by SISIP Financial, for the benefit of SISIP Financial a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.  Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.