Ontario is the province of big money, and consequently, big price tags. Second only to Vancouver, Toronto has the nationís highest cost of living, and the surrounding Greater Toronto Area isnít much better. Ontario residents pay more on average for their life insurance than any other province in Canada, and its one essential cost that adds up into a giant hole in their wallets and contributes to a higher rate of loan issues and debt crisis.
While the fiscal conservative in us would compel us to save our money rather than invest: life insurance is still an important investment in a financially tight Ontario.
Life insurance is an investment which changes wildly depending on need and available funds. The best way to characterize your life insurance is as an emergency fund. While you may be compelled to choose a large round number and multiply when selecting your policy size, your coverage size isnít just an arbitrary value. Given the high cost of living in Ontario, you will want to determine your financial situation and your savings, and calculate the overall need of your family in the long term. While $200,000 in coverage seems appropriately high, a family living in downtown Toronto will see that benefit quickly erode much faster compared to a rural dwelling.
Employer life insurance benefits will typically offer three times your annual income, but that only considers income supplement. There are more costs, both predictable and unforeseen, that are going to factor into how long your benefit will last your family. Factors such as education costs, long term care, funeral expenses, and estate taxes will offer wildly different costs for different families, and it means you canít simply take your own income and extrapolate.
Choosing the right term is equally important. Brokers often characterize permanent life insurance as ďforced savingsĒ, yet Keynesian logic would suggest that too much saving will be a detriment to your living conditions. Daily living conditions being more costly, saving too much through investment plans, like whole life insurance, may throw Ontario buyers into more volatile financial waters. Whole plans offer a cash accumulation that you may borrow against, but that borrowing can run away with itself and result in you losing essential coverage.
Life insurance is better used as a tool to eliminate debt after you die, not as a means to facilitate more of it. Whole and other permanent policies have their place in the market for those who are canny investors and can pay into their policies to reduce taxes. The general population of Ontario, however, will find a simple guarantee for their familyís financial security is more prudent and more affordable. That often means a term life insurance policy, which is comparatively cheaper, more efficient, and less likely to incentivize costly borrowing. The purpose of a plan for most families is to settle costs, and setting aside a small amount every month can achieve that quite well. Pay into policies you donít need, and youíll likely end up with higher costs at the end of your life and less available security to provide for your loved ones.
And finding the right life insurance policy is as simple as shopping around. Ontario is the financial capital of Canada, and life insurance providers and brokers are our neighbors here. Prudent shopping, quoting, and evaluating will help you find the best policy by price point and by benefit. Many quote sites and providers offer quick and easy ways to gauge how much you can end up paying for particular policies. Some sites even allows you to calculate your financial needs to determine how much coverage you will be needing. These give a great estimation of the coverage you need, but planning your finances with your family will give you a closer, more accurate figure.
Ontarioís high prices are something of a paradox.
We all want to tighten our belts and save every penny, but putting off essential needs will only rob us of financial opportunities and security in the future. Finding a cheap life insurance policy is essential but planning a smart life insurance policy will see a greater return in the future, when itís needed most. As personal debt climbs ever higher in Ontario, life insurance will ensure that debt isnít carried past your lifetime, and your family can enjoy better financial security.