Are you one of the 20 million Canadians who have life insurance. are you still thinking about it? Or, are you one of those who "doesn't believe" in life insurance?

Obviously, life insurance has nothing to do with faith! Rather, it's a tool to help financially protect your family if you should die. According to the Canadian Life and Health Insurance Association (CLHIA), the average amount insureds left their beneficiaries in 2006 was $148,400.

Life insurance is not the only way to protect your family: You can also save money and set it aside. The problem with this, however, is that we don't know how much money we'll need, because who can predict the future?

A comparison

Michael is a 35-year-old professional and a non-smoker. He calculated that upon his death his family would need $250,000 to meet their most urgent financial needs and avoid short term financial problems. Michael is prepared to set aside $1,400 a year for this.

The table below illustrates the two choices available to him: Buying life insurance or putting the equivalent of the premium into a savings account.

* Gross rate of return of 6% and marginal rate of return of 40%

To accumulate $250,000, Michael has to save for over 55 years. This is likely impossible, considering he is already 35 years old!

In this case, the situation is clear: It is while Michael is still young that his dependents need him most and that his life insurance premium is more of an investment! So, he decides to buy life insurance.

Who am I?

To make this decision, Michael first reviewed his financial and personal situation. Before shopping around for life insurance, either for the first time or because you are reconsidering what you already own, the first thing to do is analyze your situation, as Michael did.

What coverage do you have now? There would be no point in considering your mortgage expenses if you already have loan insurance. You may also have group life insurance coverage through your employer. Therefore, consider your entire life insurance portfolio.

You must also include two other essential elements in your analysis: your family situation and your budget. Who depends totally or partly on you? And how long will they be dependent upon you? Draw up your financial profile using Desjardins Financial Security's Budget calculator: income, expenses, savings and debts.

With this information in mind, you are now in a position to decide how much life insurance you need and what premiums you can afford in keeping with your family obligations. There is another calculator that can help you with this one.

Choose the insurer and the product suited to you

It still isn't time to buy. You still have to choose a life insurance provider from among the 106 Canadian companies. Together, these companies paid out 6.2 billion dollars in death benefits in 2006. To make the right choice, evaluate the company's reputation as well as the services it offers and the quality and cost of the products.

Most of your work is done! Now all you have to do is choose the type of insurance that's best for you. You can choose term life insurance, permanent life insurance, universal life insurance or consult our guide. 

Our qualified representatives are here to help you every step of the way.