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FINANCIAL FOCUS: Millennials may need to boost life insurance

If you’re a millennial – born between 1981 and 1996 – you’re either in the very early or relatively early stages of your career, and as the old song goes, you’ve got a lot of living to do.

Still, it’s not too soon to think about a financial issue you may have overlooked: the need for life insurance.
Millennials need to ask three key questions when it comes to insurance:

When should I purchase insurance?

The answer to this question depends somewhat on your stage of millennial-ism. If you’re a young millennial, perhaps you just completed your post-secondary education, are single, and living in an apartment, your need for life insurance may not be that great. After all, you may well have other, more pressing financial needs, such as paying off your student loans. But if you’re an older millennial, and you’ve got a mortgage, a spouse and, especially, children, then you unquestionably need insurance, because you’ve got a lot to protect.

How much do I need?

According to advisor.ca a 2014 report from financial services research company LIMRA found almost half (45 per cent) of Canadian households were under-insured, including 52 per cent of millennials. You might have heard that you need life insurance worth about seven or eight times your annual salary. And while this isn’t a terrible estimate, it doesn’t apply to everyone, because everyone’s situation is different. A financial professional can look at various factors – your age, your marital status, number of children, size of mortgage, etc. – to help you arrive at an appropriate level of coverage.

Keep in mind, also, that your employer may offer life insurance as an employee benefit. However, it might be insufficient for your needs, especially if you have a family, and it will probably end if you leave your job.

What type of life insurance should I get?

Many people initially find life insurance to be confusing, but there are basically two types: term and permanent. As its name suggests, term insurance covers a given time period, such as 10 or 15 years, and provides only a death benefit. It’s generally quite affordable, especially when you’re young and healthy. Permanent insurance, on the other hand, offers a death benefit and a savings component that allows you to build cash value. Consequently, the premiums are higher than those of term insurance. Again, a financial professional can help you determine which type of insurance is most appropriate for your needs.

Thus far, we’ve only been talking about life insurance. But you may also need other types of protection, such as disability insurance, which can replace part of your income should you become ill or incapacitated. And you may eventually want to explore long-term care insurance, which can help cover you for the enormous costs of an extended nursing home stay.

You should at least consider all forms of insurance as part of your overall financial strategy. The future is unknown, and as a millennial, you have plenty of future ahead of you.

We can help

Your Edward Jones advisor can look at your needs and help you choose the right insurance for you, right now.

Kevin Dorey is a financial advisor with Edward Jones. Based In Tantallon, Dorey specializes in helping individuals reach their serious , longterm investment goals. He can be reached at 902-826-7982 or kevin.dorey@edwardjones.com. Edward Jones is a member of the Canadian Investor Protection Fund.

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