Do I really need life insurance?

No dependents? You may be better off without

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From the December 2016 issue of the magazine.

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Q: I am a single 70-year-old woman with a reasonable mortgage of about $115,000 on my home. I have no family and no dependents. On my limited budget I find life insurance on my mortgage is a cost I would rather do without. Do I need life insurance? And if so, then what for?

—Katerina, Halifax

A: You raise a good point Katerina. In general, life insurance is most necessary when you have dependents who would be impacted financially by your death. Typically, life insurance is used as a way to pay off a large debt, such as a mortgage on a home that you want to leave to your heirs. In many of these cases, a term life insurance policy is often the most inexpensive choice and the full face value of the policy pays out on the policy holder’s death. (This is also a great option for many families who often get mortgage life insurance instead, which is more expensive than term life and the payout declines as the face value of the mortgage declines.) Other popular reasons for having life insurance include: Income replacement for dependents; to pay off debt like a mortgage or a line of credit; to create an emergency fund; to cover final expenses incurred upon your death; for estate planning reasons or to leave money to a favourite charity. If none of these apply to you and none of these circumstances are part of your overall financial plan, then save your money. You do not need life insurance.

Ask an Insurance Expert: Leave your question for Lorne Marr »
Lorne Marr, is the founder of LSM Insurance, an independent Canadian Life Insurance Brokerage company in Markham, Ont.


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