Life insurance is the most unselfish purchase you will make in your life. Life insurance is all about your survivors future.

If this will be your first insurance policy then I suggest that you and your partner grab a coffee and read through all this material carefully. This will take some time, but I will provide you with all the information you need to know about life insurance and how it will affect your family.

Life insurance protects your dependents financially in the event of your premature death. It permits your survivors to:

• shoulder the immediate expenses associated with a death (funeral costs, medical and other outstanding bills, as well as legal fees, probate fees, and income taxes to the date of death).
• 
  cover long-term expenses of raising a family (living costs, education, and retirement income for a spouse).
  
• maintain their standard of living.

As you progress through the life cycle, health, income, expenses, family responsibilities, goals and dreams change. Your need for life insurance may also change. Here are some examples:

• Children or single people without dependents may not have a pressing need for life insurance, but may prefer to insure while healthy.
• A single person or dual income childless couple may decide to carry a small policy to cover final expenses and any outstanding debt.
• A single income couple may want to arrange enough protection to provide an income for the unemployed spouse.
• A business owner may need additional insurance to fund a “buy-sell” agreement, or loss of a key person in the business.

Beginning with the birth of a child and following through the childhood years, the expenses of raising a family and paying off a mortgage, farm or business loan can be heavy. The loss of earnings at this stage of the life cycle can pose a strong threat to a family’s financial security.

When both spouses contribute to the family, or business income, both should be insured. If the death of a spouse would create a need for childcare and housekeeping services, or additional business labour costs, additional insurance may be necessary.

When children grow up and begin to leave home, income and business equity have usually peaked. Insurance needs will likely be reduced, unless desired for estate planning reasons to leave a larger legacy for heirs. In the retirement years, a family’s expenses usually shift downward. However, there may still be a need to provide income for a disabled child and/or the surviving spouse.

There's a great program below to help you do your calculations, but before we get there you should bear in mind that a death in the family is an emotional time. The survivor/s need a recovery time before being able to cope with what was "normal daily life". How long this is, is up to the individuals, but should be considered in your calculations.

Determining the amount of insurance you need is really not difficult. You have to decide what debts you want paid off. Then what your monthly expenses are and whether these would change if you, or your spouse weren't around. Remember, if you have small children, will childcare be necessary? Check out the step-by-step worksheet.

Once you have these figures the hard parts done. Calculate how much capital is needed to handle your monthly income needs and how much for debt repayment.

Insurance is an inexpensive means of creating capital or income for use some time in the future - either when you need an income because of disability or capital to pay off debt when you die. If your employer offers a group insurance plan, the coverage this offers may be enough to cover your life and disability insurance needs. But, if you change employers, you will lose this coverage, although you do have a 30-day option to continue the life insurance portion of the plan without medically qualifying, but at a much higher cost. So some personally owned insurance could allow you more flexibility in the future by guaranteeing your insurability. This personally owned insurance should not be tied to mortgages or loans as you would lose these when the debt is paid off or if you moved elsewhere.

The main focus for many singles is creating assets and savings for their future so tax savings and investment vehicles are important to them. See the Tax Savings Section for more information.

Normally, both spouses need to be protected in the event of a death, disability or illness, even if both spouses are not bringing in a pay cheque. Both spouses contribute to the working and expenses of the family, even if it's not a direct payment. Childcare for example may not be necessary now, but if one of you is gone, this may become a necessary expense.

The majority of people use Term Insurance to cover their insurance needs while they still have dependents at home. These years tend to be high expense years with the need for lots of insurance protection. It's usually also a time of rising income and therefore taxes. This is a good time to be putting extra cash into a "rainy day fund", RRSP's and children's education funds.

There is another type of insurance, Permanent Insurance. Where term insurance is a product which fits short term needs (e.g. mortgage insurance) permanent insurance will remain with you for your whole life and produce a cash value which can be left for your survivors or borrowed against.

Normally, both spouses need to be protected in the event of a death, disability or illness, even if both spouses are not bringing in a pay cheque. Both spouses contribute to the working and expenses of the family, even if it's not a direct payment. Childcare for example may not be necessary now, but if one of you is gone, this may become a necessary expense.

Buying insurance for children has some very definite advantages for your children; however, having the right coverage for the breadwinner should always come first.

Insurance can be purchased for children in two ways; as a rider on the parents' policy, or, individual contracts. Riders offer low initial amount of coverage and then as specific time times in their lives, ages 18, marriage, etc., when they can purchase larger amounts without having to provide health evidence.

Mortgage Insurance is often confused with the insurance you must buy when you get a mortgage - CMHC. This insurance is to protect the lender should you default on the mortgage payments, not to protect you.

True mortgage decreasing term insurance is tied to your mortgage. As you pay off your mortgage, the amount of protection correspondingly decreases. If you die, the mortgage is paid off. Because it pays out only on death, its life insurance, whatever it may be called. The important factor to consider is where you buy this insurance. If you buy it from your mortgage lender and at some time move your mortgage, you will lose your insurance and have to medically qualify again. If you die, your beneficiary has no choice but to pay off the mortgage. Sometimes, this isn't the best decision.

It is recommended that you not use this type of insurance to cover your mortgage debt, but instead include the amount to pay off the mortgage in the calculation of your personal insurance needs. This will give you mortgage protection no matter how many times you change lenders and your beneficiary can decide whether the mortgage is paid out or carried on, rather than the mortgage lender.

Critical Illness insurance is fairly new to the North American market. Its purpose is to provide capital in the event you are diagnosed with a life threatening illness. It's the brainchild of Dr. Barnard who realized that with heart transplants they could save many people who would have died in the past. But although they saved patient's lives, the costs destroyed them financially. Critical Illness differs from disability insurance in that it pays a lump sum rather than a monthly income and only when diagnosed with one of the illness stipulated in the contract..

Because this insurance is new, it is harder to get and your genes and family health history play a large role. This is one time when being an adoptee can work to your advantage because you will qualify strictly on your own health history.

Disability Insurance pays you a monthly income if you are sick or injured. This is different from Critical Illness Insurance that pays a lump sum and only if you are diagnosed with one of the illnesses specified in the contract.

If you're an employee with Group Insurance coverage including weekly income and long term disability coverage, you really don't need individual disability, unless it's to cover a specific debt. If this is not your situation, you will definitely want to consider disability insurance.

Before reducing your life insurance costs you need to understand what determines the cost. There are a many factors, here are a few:

• the risk you pose to the company
• the policy's death benefit
• whether your policy will have a cash value

The risk you pose is determined by your lifestyle and your current health condition and risks you afford yourself. For those with a healthy low risk life style insurance companies often offer a low risk category called Preferred Risk. These policies are often a much better deal - offering the same coverage for a much lower cost.

A single life insurance policy instead of several small ones will save you money. Each policy includes a certain amount to cover overhead. You can reduce your costs by increasing a single policy with a rider rather than a second or third policy.

Another way to reduce costs is to merge your partners policy with yours. A First-To-Die policy covers both partners. The death benefit is paid to the surviving spouse when either one dies. Often the premiums are much lower than if you buy two individual policies.