6 things to consider when shopping for life insurance

1. Define the purpose of your life insurance

Ask yourself why you want life insurance. To leave something for your loved ones? So that your spouse can keep paying the bills if you die? There are lots of good reasons. To help you sort it out, evaluate these 5 reasons you should consider life insurance.

Your choice should be based on your needs and your situation. There’s no right age for getting life insurance.

2. Decide what you’re ready to pay

How much are you comfortable paying each month for your life insurance? Your premium needs to fit with your budget. You want to protect your loved ones in the future, not create a financial burden in the present.

3. Tally up the expenses

What will your loved ones need to pay for when you pass away? There will be funeral costs, of course. But also debts such as your mortgage, vehicle lease, and credit cards. Your life insurance coverage could, for example, allow your spouse to pay off the mortgage on your home. Speaking of which, make sure you understand the difference between life insurance and mortgage life insurance.

You should also calculate the basic amount your spouse and children will need to live. How much do you spend each year on groceries, clothes, housing, activities, and school? Ideally, your family should be able to maintain their current standard of living.

Your death could also result in additional expenses. If you often look after the kids while your spouse works, your family will need to spend more on daycare and babysitters.

4. Estimate how much your loved ones will make

The people you leave behind won’t just have expenses. They’ll also have income, such as the surviving spouse’s salary, investments, pension, and so on. Calculate how much money your spouse and children will have to live on after you’re gone.

Do you already have life insurance through your work or from another source? Add the coverage amount to your family’s future income. To dig deeper on the subject, learn about the differences between personal life insurance and your employer’s group life insurance.

5. Estimate the length of time your loved ones will need help

Your insurance amount should cover the difference between your family’s revenue and expenses for a few years. If you have kids, for example, that could be until they move out of the house—and can pay their own bills.

6. Shop around for your life insurance

You now have all the information you need. An insurance agent or broker can calculate how much coverage you need. Or you can use this calculator on the Government of Canada website.

Some people think all life insurance policies are basically the same. It’s one of the many misconceptions about life insurance. If you have young children, term life insurance with a big coverage amount could be a good option. If you’re retired and have health problems, you may want to consider guaranteed-issue life insurance. It’s not a good idea to choose the first insurance that comes along with the right coverage amount.

Want to make an informed choice? Follow these best practices for life insurance shopping.

• Compare your options online.

  See what’s on the market and compare premiums, product details, and more. This is the first step.

• Contact an insurance broker.

  Talk to a specialist. They’ll analyze your situation and help you choose the best insurance for you. They’ll also present a range of options that meet your needs And provide personalized service.

• Use a trustworthy insurer

  Be sure to choose an insurer that’s well established and trustworthy. When a product interests you, call the insurer directly. You’ll be able to ask all your questions and check out their customer service first hand.