Do you need life insurance when buying a house in 2022?
Buying a new home is one of the most financially momentous decisions you’ll ever make.
Sponsored by PolicyMe – Life Insurance made easy. Get a quote online in seconds without pressure, upselling or obligations. Family-First features include: Couples save 10% off their first year. Every policy has Child Coverage, no extra cost.
Sponsored by PolicyMe – Life Insurance made easy. Get a quote online in seconds without pressure, upselling or obligations. Family-First features include: Couples save 10% off their first year. Every policy has Child Coverage, no extra cost.
Once you finally close on your dream home (or at the very least, a home you’ll be happy in for a few years), you’re immediately confronted with many other pressing financial decisions.
For example, now that you have a house, you’ll probably need house insurance to protect your investment.
But maybe the most important decision you’ll make in terms of your long-term financial security is whether to buy life insurance when buying a home, so your family is protected in the event of unfortunate circumstances.
Types of life insurance to consider
Whether you need to buy life insurance depends on a lot of factors: your age, your lifestyle, your financial situation and whether you have people who are financially dependent on you. There are two main types of life insurance: term life insurance, which you buy for a specific period, and permanent life insurance, which covers you for life and is usually more expensive.
Generally, the younger and healthier you are, the less you’ll pay for life insurance.
For instance, if you buy life insurance while you are in your 20s, you will pay a much lower monthly price over the course of your coverage period than if you buy it when you are in your 40s. This can be a significant consideration for new homeowners who have many of the aforementioned expenses to deal with. And if you have a young family, buying life insurance ensures they will have at least some level of financial protection should something happen to you. This peace-of-mind may be worth the monthly premium.
Unfortunately, the monthly premium is an expense you need to fit into your budget at a time when you’re already adding large new recurring expenses like a mortgage. And depending on what kind of life insurance you buy, the money you spend on premiums is gone forever. Some people may think it’s better to funnel that money into long-term investments. Nor is there a guarantee you will qualify for life insurance. If you have a pre-existing medical condition, some insurance companies may be reluctant to offer you coverage.
Where to buy life insurance
If life insurance is the right choice for you, you need to decide where to buy it. There are big insurers, such as Canada Life and Manulife, that sell insurance directly to consumers through a network of advisors that often work on commission. There are also smaller firms that function as third-party administrators, selling insurance on behalf of a larger wholesaler. Toronto-based insurer PolicyMe is a good example of this model, with coverage amounts ranging from $100,000 to $5,000,000. This means that you can take advantage of PolicyMe’s strong financial backing and the perks of independent administrators.
Larger insurers tend to have a long application process for buying life insurance. You speak with an advisor, answer a series of questions to figure out whether you qualify for insurance and then meet with a nurse for a medical assessment. With PolicyMe, the application process is entirely online and takes only 20 minutes. You’ll get an instant decision.
Insurers like PolicyMe differentiate themselves by making the application process as straightforward as possible. One way they do this is by avoiding unnecessary meetings. PolicyMe representatives don’t work on commission, but they will speak to you for free about a suitable policy and answer any questions you may have. This can happen before or after you buy insurance.
Cost is a key factor when buying life insurance – especially if you are also making mortgage payments for the first time in your life. PolicyMe says the prices of its term life insurance plans are on average 5% cheaper than other Canadian insurers. Of course, like any other major financial decision, it’s a wise idea to collect more than one quote when buying life insurance.
Major financial decisions tend to occur at the same time as big life milestones, like buying a home or starting a family.
If you’ve just purchased a home and are thinking about also buying life insurance to provide some added financial security, it’s important to weigh the pros and cons of different types of life insurance and how much money you can afford to spend on buying it. Insurers such as PolicyMe eliminate a lot of the red tape associated with larger insurers. If you are focused on saving both time and money, it may be a good place to start your search.
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