Term Life Insurance Coverage

Do you have a question about organising a life insurance quote? You are not alone. Many people have questions that they need to find answers for. However, in many cases those questions are the same. Read on for some answers to commonly asked life insurance questions.

From time to time we receive questions on the uses as well as the need for term life insurance, so today I am setting out one of the stories and my reply. Your questions and comments will be welcome at info@trustco.ca

TERM LIFE INSURANCE FOR 2 PERSONS

Question: "We currently have a 20 year first-to-die term life insurance policy for $100,000. We have 4 small children and own our home which is fully paid for.

We could invest in a universal life policy and borrow up to what we have contributed. We would not have to pay taxes but still be covered for the full amount minus the amount we would have borrowed. Is this a good idea?"

Answer: "You should have level term in an amount large enough to replace the current net family income. You don’t have enough term given four children, especially that term life insurance is so cheap; you should have at least $1,000,000.

But we don't understand why you are trying to save with a universal life policy. As your home is paid for, we are going to assume that you know how to manage money. And if this is so, a universal life policy is not the way to go, except for large amounts and long term investing.

If you have extra money, invest in an IRA in the US or an RRSP in Canada to get a tax benefit. And if you want to be able to borrow money, buy these products from an institution which will give you a line of credit.

Don't mix investments and term life insurance."

Hopefully, the real examples above have deepened your knowledge of term life insurance. Don't hold back when it comes to asking your own life insurance questions because asking questions and getting detailed feedback can quickly accelerate your learning in this area.

Ivon T. Hughes of The Hughes Trustco Group is a licensed Insurance Broker. Author of The Life Insurance Handbook. - Get a FREE Copy TODAY!
Email: info@trustco.ca Web: www.hughestrustco.com