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Let's be honest: life insurance isn't fun. It forces us to think about things we'd rather avoid—so it's no surprise, really, that most Canadians aren't covered.1 But avoiding life's biggest topics doesn't make them less real. Having the right coverage does.
There are people among us trying to live forever, but so far, at least, results have not varied. That's why it's crucial to protect the financial lives of the people you love by purchasing insurance that will meet their needs.
But how much will they need?
How much is enough?
And, importantly, how much will it cost?
We asked Vancouver-based Lawyers Financial insurance advisor Dave Hodgson the big questions about one of the most important purchases you'll ever make.
Q: IN YOUR OPINION, ARE CANADIAN LAWYERS ADEQUATELY INSURED?
A. In my view, most lawyers have insurance but not the amount that meets all their needs. Part of that's because people are unclear about what their needs are, which makes sense. We don't know when we're going to die, so we don't know what our financial needs will be when the time comes.
People can put off getting or updating their life insurance because they don't like thinking about it, but I also think people, for the most part, have good intentions about wanting to deal with this stuff—they just get distracted.
It's an easy thing to keep pushing back because we don't have a set deadline. So, it's my job to make sure that these things get done and people have a plan in place that will save their spouse or other family members a lot of trouble down the line. In my experience, people are always grateful once it's done and taken care of.
Related: How much coverage do you need? Try the life insurance needs calculator now.
Q: IS THERE SUCH A THING AS TOO MUCH INSURANCE?
A. It's impossible to say. Someone who's "underinsured" today might be considered "over-insured" six months from now. Our needs are constantly changing, so policy values are never going to be 100% correct. And because needs are so specific to everyone, it's impossible to say, for example, "Look at this person over there who pays X amount, I want to pay that, too." You don't know what their needs are compared to yours.
You'll only know if you're over-or-underinsured when you sit down and go over your plan.
Q: IF OUR NEEDS ARE ALWAYS IN FLUX, HOW OFTEN SHOULD WE meet with an INSURANCE ADVISOR?
A. It's always a good idea to review your insurance policy whenever you have any questions.
Generally, I like to check in with my clients every one to two years, but I also recommend clients get in touch every time they've gone through a life change, if they've got a new job that will pay some insurance premiums for them, for example, or the birth of a child.
Q: As the cost of living rises, how do you respond to clients who want to scale down their coverage?
A. Like I said, it's never a bad idea to schedule a phone call to review your life insurance plan, but in my view, honestly, if everything's going up then your life insurance should as well.
Think about why you have the policy in the first place. If you want it so that your kids' tuition will be paid for, well, then those college fees are going up due to inflation as well, so what you actually need is more insurance, not less, and that means a larger policy that will cover that increased cost.
Q: IS THERE ANYTHING YOU WISH CANADIAN LAWYERS KNEW ABOUT LIFE INSURANCE?
A. Most people are surprised about how affordable term life insurance is. I think sometimes people avoid setting up a plan because they really don't have any idea how low the actual costs are. They're worried that if they come in for a meeting, we'll try to sell them something, but we won't. We give out options and information based on each individual's or family's needs. You decide what to do with it. But I really do find that most people don't realize how cost-effective these plans can be.
Footnote
1 Insurance Business Canada, "How many Canadians have life insurance? Survey reveals all," February 7, 2022. The article cites a recent survey by Goose Insurance that suggests that only 48% of Canadians have life insurance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
