Welcoming a baby into the world is an incredible event that completely disrupts your routine. There are also some big financial changes, as new expenses are added on. As we celebrate new life, and even beforehand if possible, it’s important to think about the possible death of a parent and plan what you would do then. Life insurance could be a great tool to add to your kit, as it provides financial protection for your family in the event of premature death.
In this article:
What is life insurance?
The purpose of life insurance is to give your loved ones a non-taxable amount when you die. There are two types of life insurance: term and permanent.
Permanent insurance
Permanent insurance can be divided into two categories: whole life and universal life.
When referring to permanent insurance, whole life is usually what’s meant. This type of coverage is a great choice for people who want to pay their funeral expenses and taxes upon death, or would like to leave an inheritance. In all these cases, people want to be insured until their death; that’s why this type of coverage is called permanent.
Even though term insurance has lower premiums, permanent life insurance is a more economical choice if you want coverage for your entire lifetime. Instead of renewing your term life insurance several times over the course of your lifetime, which will make your premium increase each time you renew, taking out a permanent insurance policy locks in a fixed premium for your entire lifetime, with no increase even if your health deteriorates.
Term insurance
This insurance is intended for those with temporary insurance needs. For example, when you take on a mortgage or other large debt, or when you have children who depend on your earnings, term insurance is what you need, because that financial burden will disappear after a certain period of time.
It’s the most affordable type of insurance, allowing you to insure yourself for the length of time and the amount that you choose. If you die during the term of the insurance policy, your beneficiaries will receive the amount you insured yourself for.
This type of coverage also gives you flexibility: depending on your changing needs, you may decide to renew it when the selected term ends. You may also cancel it, change the coverage amount or convert it to permanent insurance.
For more information on the types of life insurance available, check out our article about the 6 types of life insurance.
Compare insurers with our online calculator to get the best life insurance premium for you.
Why buy life insurance as a parent?
Buying life insurance may be relevant when you’re about to become a parent to protect your family financially in case of premature death.
Life insurance gives you the peace of mind that you won’t leave a financial burden on your family in the event of premature death. Should this happen, your beneficiaries would receive a tax-free amount to repay your debts, such as credit cards, bills, lines of credit, student loans, car loans, mortgages, children’s education fees, as well as funeral or other expenses. It will also enable them to maintain a certain standard of living after you pass on.
Whether your family relies on two salaries to cover expenses or one parent stays at home, both people’s work is necessary to support your family. There would be serious consequences should one parent pass on, whether it be a lack of money to cover expenses or additional expenses to help with housing and children. Regardless of your situation, any tax-free amount is always welcome.
Still have questions about the life insurance offered by Matcha Insurance? Our financial security advisors are available to answer any questions you may have and to reassure you.
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How much does life insurance cost for mom or a parent?
Several factors influence the cost of life insurance:
- Your gender: life insurance is cheaper for women, because they have a longer life expectancy than men.
- Your age: the younger you are, the less likely you are to die. Insurance is therefore more affordable for young people.
- Amount of insurance: the higher the amount you choose, the higher your insurance premium.
- Type of insurance chosen: the premium for permanent life insurance will be higher than the premium for term insurance.
- Length of coverage, for term life: the longer your coverage period, the higher the price.
- Tobacco or marijuana use: smokers may pay twice as much for the same insurance coverage as non-smokers.
- Health and family history: your health and family medical history may influence the cost of your life insurance.
For example, here’s a comparison of monthly premiums for moms with different pofiles and coverage:
| Profile | Insurer 1 | Insurer 2 |
|---|---|---|
| Woman, age 35, non-smoker $450,000 10-year term life |
$17.46 | $17.69 |
| Woman, age 22, single non-smoker $100,000 10-year term life |
$6.84 | $7.83 |
| Woman, age 45, single mother of 2 children, non-smoker $50,000 10-year term life |
$12.26 | $12.42 |
When comparing the monthly premium to other household expenses, you can quickly see it only represents a small fraction of Quebecers’ average monthly budget.
Make an informed choice and compare!
Insurers may each offer you a different price for the same life insurance coverage, so it’s in your best interest to compare quotes. Matcha Insurance offers an online life insurance premium comparison tool to make your life easier! Compare now.
