We’ve all grown up with someone somewhere telling us to own our own homes versus rent and the benefits of that.
It’s no different when it comes to life insurance.
You need to be the owner of your own life insurance policy.
Many people think that because they have coverage through their employer for life insurance or through their mortgage that they have proper coverage.
The reality is this.
You don’t own your life insurance policy through your mortgage lender (or such as Manulife Protection Plan) and you definitely don’t own your life insurance policy through your employer.
The reality that 2020 taught us is this: there are zero guarantees when it comes to employment.
This means if you are laid off, fired, quit your job OR if your employer decides they no longer can afford your benefit plan, you will have no coverage and no say in the matter.
Now, yes, you can go and apply, however note it’s best to be young and healthy when you apply for life insurance.
If you have any pending surgeries, medications or chronic health conditions, you may be rated (paying a higher premium) or declined for life insurance, after all, life insurance companies take the gamble that you are going to live a long time and don’t want to insure ill health – that’s why it’s best to lock in your rate when you are young and healthy.
Important to note: if you have only mortgage insurance, that only covers your mortgage. Nothing else. No credit cards, loans, car loans, funeral or final expenses, not to mention leaving anything extra behind for your family to maintain their lifestyle. You can’t break off a piece of your paid off house to buy bread, you will need to refinance if you require money to pay for the other debts and expenses.
Did I mention most people don’t even know the exclusions on their mortgage insurance?
Here’s the other thing.
When you own your own life insurance policy you are in the driver’s seat. You control the policy.
This means you control when it cancels (unless it expires, but that is an upfront contractual obligation) and you also control if you want to convert your term coverage to permanent life insurance as well.
Traditional Underwritten Life Insurance, that you own, will pay out for almost all types of deaths. There are very few exclusions. Even suicide pays out after 2 years owning the policy.
When you depend on your mortgage insurance (which typically expires when your mortgage term expires and you will need to reapply) or when you depend on your employer’s life insurance policy (which is also typically very small amounts of life insurance) you are giving financial control over to the “hoping gods” – hoping that you will have coverage when you will need it most.
Don’t take that chance.
Own your own life insurance policy, own your own critical illness policy.
Make sure you have coverage in place when you need it most.
Because the second you need the coverage, it’s already too late to buy it.
~ Written by Lisa Elle, BMgmt, CFP, FCSI, CHS, CPCA, EPC, CEA, CCS, RIS