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What is family insurance?

Family life insurance isn’t a product you buy from an insurance provider. Rather, it’s a way of thinking about the kind of coverage you need, how much you should spend, and when you should adjust for things like a change in income, the birth of a child or grandchild, or starting your own business.

A multi-generational approach to life insurance for families allows you to set your children and grandchildren up for success in ways they could never do on their own. That’s because decisions you make early on about financial protection and wealth building almost always benefit them in the long term.

When you work with an advisor, the planning process becomes easier. They will do the heavy lifting, calculate what you need, and help you assemble all the pieces of your financial plan. As time goes by, they’ll help you make adjustments.

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What type of family life insurance plans are available in Canada?

The great thing about a family life insurance plan is that it can be personalized to meet your needs, can include a wide variety of policy types, and is built to work within your budget as part of an overall financial plan.

Here are four of the most common types of insurance a planner might recommend in one combination or another, depending on your circumstances, to provide complete family protection.

Term life insurance

Term life insurance is an affordable option for most people while they’re working and relying on employment income. It can be purchased in lengths of time, called the term. For example, Serenia Life offers Term 10, Term 20, and Term 30 policies.

The idea behind term life insurance is simple. You estimate your earning potential between now and retirement, and figure out how much insurance coverage you’d need to replace some or all of it. At some point, you may no longer need coverage because you’ve retired or you feel your loved ones will have enough money and other assets to support themselves in the event of your death.

Here’s a simplified way to determine how much life insurance you need.

Permanent life insurance

Permanent life insurance never expires once you have paid all the monthly or annual premiums (i.e., the amount you pay for an insurance policy). Some families prefer this option for two reasons:

  1. The death benefit is guaranteed. Knowing that your family will get a tax-free, lump-sum payment in the event of your death, you may feel more comfortable spending money while you’re alive – since you won’t have to worry about whether you’ll leave enough behind.
  2. You build wealth in the cash portion of your policy. A portion of the premiums you pay for permanent coverage, which includes whole life insurance, is invested for you and becomes part of your net worth. This money can be left to increase over time, or can be used along the way to pay for things like education expenses for your children.

If you’re considering whole life insurance as part of your long-term plan, or as a way to give your children or grandchildren an early leg up in life, talk to a Serenia Life advisor about solutions such as 20-Pay Whole Life. It offers a guaranteed death benefit, premiums that will never increase, and coverage for life when the policy is paid up in 20 years.

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Critical illness insurance

Canadians enjoy access to basic health care through their provincial and territorial insurance plans. While the healthcare system picks up many of the costs of care, anyone who has been diagnosed with a serious illness will tell you that out-of-pocket expenses can add up fast from the time treatment begins to the end of your recovery period.

Critical illness insurance was created to help people manage unexpected costs without having to sell their assets or dip into savings. The one-time, tax-free payment you receive can be used any way you want. Here are just a few of the expenses you could incur in the event of a serious critical illness, such as a heart attack or stroke.

  • Lost income due to missed work
  • Medication and extended medical treatment not covered by your health insurance plan
  • Travel expenses to and from treatment
  • Overnight accommodation for special care
  • Modifications to your home
  • Physical or emotional therapy
  • Home care

If you don’t spend the entire amount of your payout, you can add what’s left to your long-term savings or just take a vacation, knowing you have the financial means to recover at your own pace.

Disability insurance

Disabilities do not have to be major to keep you out of work and unable to earn a living. Without some way to replace your income, you will have to use your own money to keep up with expenses and that could set back your financial plan by years or decades if you were to lose all the growth potential of compound interest.

If your disability was serious, and you couldn’t work between now and retirement, you’d be giving up substantial income. Disability insurance is designed to step in with replacement income for as long as you need it. For example, in the event of disability, you could receive about 65 per cent of your current income until you can return to work, or until you reach the age of retirement.

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Do I need life insurance for my family?

The short answer is YES. The longer answer is that you should have a family insurance plan that balances everyone’s needs – one that can adapt when things change. This is why it’s a good idea to create your plan with the help of an advisor. Be sure to set a date to renew it every two to five years or whenever there’s a significant life event such as a change in jobs, an increase in income or debt, or the birth of a child.

Here’s an overview of how a family might approach life insurance planning as a multi-generational team, to make sure everyone’s needs are anticipated and financial risk is minimized.

Who Considerations
You and your partner

Whether you’re a one- or two-income family, you likely rely on your total income to keep things running smoothly on the financial front. Even if one of you is the principal bread winner, you can’t discount your partner’s contribution to your family’s financial health. As parents, the death of one partner will likely trigger new expenses, such as increased childcare costs. And if you both contribute to paying off the mortgage, it may prove challenging to continue making these payments on a single salary.

An advisor can help you determine the right amount of coverage for both spouses that provides income replacement to meet your needs.

Single Parent

The same need to replace income makes life insurance essential for single parents who rely on one income to provide most everything their children need. Find out why moms absolutely, positively need life insurance.

Your children

Life insurance for children doesn’t mean you expect anything bad to happen to them. It’s more about planting seeds that could grow into financial opportunities much later in life. For example, by purchasing something as simple and affordable as a whole life insurance policy for kids means guaranteed coverage later in life, regardless of any medical diagnoses. Plus, the cash value* portion of this type of policy can turn into a lifetime wealth-building tool.

If you’d prefer an option where there’s an end in sight when it comes to your monthly payments, consider purchasing a guaranteed 20-Pay Whole Life policy. After the premiums are paid up in 20 years, your child remains covered for life. And they can dip into the cash value¹ if and when they need to.

Your grandchildren

Grandparents are often in the enviable position of being able to divert some of their retirement income towards insurance payments that either take the pressure off their grown children, or go straight toward long-term wealth builders like permanent life insurance coverage. See how grandparents are taking advantage of simple insurance strategies to oversee the transition of intergenerational wealth.

 

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Where can I buy a policy?

Term and permanent life insurance policies are widely available through financial institutions and insurance providers. You can do it yourself online, deal directly with a provider, or engage an insurance broker who will shop around for you and typically get you the best overall combination of coverage.

So, is life insurance worth it?

Life insurance remains one of the most common ways to lower financial risk in your life. It replaces income, buys you time to recover from illness or injury, and can provide generations of tax-free wealth-building opportunities. But you may not be convinced you need it … yet. The only way to know for sure is to have an independent insurance advisor run the numbers to ensure you’re getting what you need at a price you can afford.

Why Choose Serenia Life for Family Life Insurance?

As a member-based organization that’s been around for nearly 100 years, we encourage kindness by sharing our profits through community outreach, fundraising, and unique member benefits that help Canadians support their family, their community, and the causes they care about. The more we grow, the more we can give.

We provide members with access to a growing collection of member benefits that make a positive impact on their lives and the lives of others.

Benefits, such as:

  • $1,000 post-secondary scholarships2
  • $250 seed funding towards fundraising events
  • Free digital wills (value: $189), or money towards drafting/updating a will through a lawyer
  • and much more!
  • View a full list of our member benefits.

Together we continue to make a difference.

Get a quote for insurance for your family

Whether you’re buying life insurance for the first time or making adjustments to your current plan, it’s always a good idea to work with an advisor trained to assess your family’s specific needs and structure coverage in a way that makes sense for you.

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Read more articles about family life insurance

Disclaimers

1 Cash values are accessible via a withdrawal, policy loan, or surrender. These may be subject to taxation and a tax slip may be issued. Accessing the policy’s cash value will reduce the available cash surrender value and death benefit.

2 Serenia Life Financial’s member benefits and program are not contractual. They are subject to change and maximum funding limits.