How much life insurance should I have?

Over the years, we have met with clients in every spot on the life insurance spectrum. Some clients  have quite a lot of insurance, they feel it's better to be safe than sorry. Others feel that mortgage insurance is good enough. Some haven't really considered it at all and many are just relying on the coverage they have through work. So which of these scenarios is the right one? Can you really have too much life insurance? 

First of all, the main question we need to ask when considering life insurance is, "If something were to happen to you today, would your partner and/or dependents be okay?"

With this as a launching point, we can begin a review. How much coverage do you need and how much coverage do you currently have? Once we have this information we can identify gaps and tighten them up.

Let's dig into the various options.

Mortgage Insurance

Having mortgage insurance in place is definitely better than nothing. The problem with mortgage insurance is that every time you make a payment you are decreasing the principal. So you're actually decreasing the amount of insurance coverage you have as you go.

The other challenge is that if you move your mortgage to another institution for a better rate, you will have to re-apply for that mortgage insurance. If something happens that renders you uninsurable, you might all of a sudden be in a position where you don't have any coverage at all.

Work Insurance

Coverage through work is good and many people have a basic level of coverage through their employer. But the challenge occurs when people get let go or change jobs or employers. Depending on where you end up, you may or may not have coverage, especially if you are a consultant.

Personal Insurance

The benefit of a personal insurance policy is that you own it. This gives you the flexibility to do what you want and not worry that life changes are inadvertently putting you in a position where you won't have coverage.

Summary

If there is a big difference between what you require and what you have, this presents an opportunity to top up or replace some of the insurance you have.

If you have any questions about your coverage, how much insurance you should have and the different types of insurance available, please reach out to us. 

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This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Jamie Powell is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Canada Life Assurance Company.