20 Sep How much life insurance do you need?
When buying life insurance, it’s important to take into consideration your annual income, debt and net worth.
Life insurance is something you don’t buy for yourself — you buy it for the benefit of others. When should you think about buying it? Certainly, when you get married, have children or have someone who is dependent on your income. Then the question is: How much do you need?
Take a common-law couple in their early 30s we’ll call Carly and Jack. They have been in a relationship for three years and recently purchased a $350,000 two-bedroom condo in a Toronto suburb. But what if Jack suddenly died? It currently takes both Jack and Carly’s incomes to afford their $2,000 monthly mortgage payments and condo fees. Carly could sell the condo and downsize but she’d like to avoid that hassle. So, the couple decided to get life insurance to protect their new home. That way, Carly or Jack would have the money to pay off their mortgage if something happened to one of them.
Many people believe the coverage provided by their employer is sufficient. But let’s do the math. Your employer’s group insurer would likely pay your beneficiary three times your annual salary, at most. If you earn $70,000 a year, that’s $210,000. Let’s say you have a husband and two young children counting on that income for mortgage payments, daycare costs, education savings and day-to-day living expenses. It won’t take long for that lump sum to disappear.
So how much do you need? To read the rest of this article by SunLife, CLICK HERE. If you have any questions be sure to contact Harry or David.