Insurance For Young Families

Brad Ward 25 Apr 2018

When you are a parent of a young family, you have a million and one things on your mind including feeding and clothing your children, keeping a home and providing some time for fun. The furthest thing from your mind is that life may throw you a curve ball and you pass away or become disabled and unable to work for a while.

You know it’s important to look after immediate needs for your children – but what about protecting their future as well. If you put the right insurance in place, you won’t have to worry about an expected event hurting them financially. 
Have you ever heard of a family who lost a parent? How did the family cope with the loss of that income? How did the financial stress affect them in an already emotionally difficult time?

What will the government do for my family?

Thank goodness for public health care and our social safety net. At least we as Canadians have a government health system that can help us if we are ill or unable to work. But is it enough? The government provides a certain level of coverage, but it has its limits. It may not be enough to pay for certain prescriptions or replace your income in the event of death or disability. 

Will my company take care of me?

The next level of coverage is coverage through your employer. Will this be enough to help your family maintain their lifestyle? Sometimes disability benefits through your employer are taxed, and you might only receive 50% of your income. Can your family survive on a lower income?

The coverage through your employer is a good start but is it enough to help your family maintain their present lifestyle? To properly protect your family, you have to look at your lifestyle and your needs and determine if the coverage you have at work is enough. 

Consider moving to full protection with a private insurance provider. An insurance provider can help you determine your true insurance needs. Putting the right amount of life, disability, and critical insurance in place can help to protect your family for years to come. 

Fully protecting the family income

One of the most valuable assets you have as a parent is the ability to earn an income. You may be a mechanic, a lawyer, an engineer or a nurse. You trade time for dollars.

If you are a 30-year-old earning $50,000 per year, your total earning potential to age 65 is $2,700,000. If you are healthy and working in a profession that is a desk job, chances are what you pay for your disability coverage could cost you as little as a dollar a day. That is very little to pay for all that protection!

When we are young, we often think that we are indestructible, and nothing will happen. But do you really want to take that chance? Statistics have shown that Canadians have a 1 in 4 odds of becoming disabled for 90 days or more before age 65.

For a young family with little assets or emergency funds, it is very important to put some insurance in place to ensure your family can still live well in the event of a death, disability or critical illness.  Having adequate insurance is especially important for the major breadwinner.

If coverage is not in place, it can get be tough for a young family when the unexpected happens. It may mean selling the family home or downsizing. Would you have to borrow from family or use your credit cards to pay the bills if you had to renovate your home for a wheelchair? Would you be able to quickly sell assets if you needed to pay for cancer medication?  Could you handle financial pressure if your family’s major source of income was suddenly gone? 

Having disability insurance in place can give a spouse the financial ability to take time off work to help the other spouse recover. It can also help you maintain your retirement savings. With disability coverage, your chances of healing are improved because you are not under added financial stress. 

Protecting the family’s well-being

Young families have little ones who depend on them. Planning for their financial future is important. To determine your life insurance needs, you should first think about what the immediate needs of the family would be if you passed away. This could include your final expenses, paying off debts, etc. After that, start thinking about future needs such as tuition for your children.

If your children are very young, then you could provide money to help replace your lost income up until the youngest turns age 25 and is self-supporting. Thinking about your family’s needs is a personal thing so sit down with your significant other and a licensed insurance agent and work out your total life insurance needs.

Don’t be afraid if your life insurance requirement total is $1,000,0000. The cost of a $1,000,0000 Term 10 for 25-year-old can be as little as a dollar a day.

Protecting yourself in a critical situation

When you are young, you may think that critical illness is the least likely thing that will occur to you.  But 3 out of 4 Canadians aren’t prepared for critical illness and 50% worry they will not be able to pay for their expenses if they become sick. Seventy-three percent of Canadians either have experienced a critical illness (like a heart attack, life-threatening cancer or a stroke) or know someone who has. You can take the financial burden on your shoulders yourself of put the risk over to an insurance company.

Putting a little amount of coverage in place doesn’t have to cost a lot. A $10,000 critical illness policy for a 20-year-old non-smoking female can cost as little as $7 a month.Because money can be tight when you are young, you should think about putting a little away in savings from each paycheck and putting a small amount of insurance coverage in place to build your security basket. As your income and wealth increase, you can increase your level of insurance coverage.

Most insurance policies can have options added to give you the ability to increase coverage without health checks. If your health changes, you can still protect your family’s growing lifestyle.

Life happens – sometimes for the worst. And even young families can protect themselves if they put the right insurance in place. Let help your young family get the right coverage today.

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