Your thought process is appropriate - you are thinking about your family, not yourself… which is what life insurance is about. You may end up going to your local bank, or talk to a friend who knows someone who sells life insurance. Be VERY careful in the life insurance aspect. The first step is to ‘rent’ a life insurance policy that requires underwriting before the policy is issued called Term insurance (not credit card offers which is retroactive underwriting). You can always convert it into ownership piece-by-piece at a time later when it’s appropriate and affordable. The best-priced is the 10-year term… it only means that the rates will jump at a pre-determined rate every 10 years. You can drop it at any time - you aren’t locked in for that period like a lease. Don’t get caught up with ‘cash-value’ policies unless you have a really strong budget. These cash value policies only mean higher premiums, which means more commissions to the broker. Of course it’s in their !
interest to sell you policies with higher premiums.

You want to ‘bullet-proof’ your policy so that if (or when) the time comes, it actually pays out. The first two years of a policy are “contestable” by law… which means that even if a mistake was made innocently on the application, it won’t pay out because the insurance company can contest it. Your only defence is to give them “everything” on your health as they can sometimes go back in time and trace something undisclosed, which will void your policy (in the first two years). If you unknowingly missed something thereafter, then you’re ok. Go over whatever your agent ticked with a fine toothcomb. This is why replacing life insurance policies poses a risk to people who shop rates and shoot themselves in the foot thereafter. When the policy is finalized and delivered to you, ensure that you have “documented” with the broker that you have visited a doctor if you’ve seen one in the interim.

There is a saliva test – it tests for only three things: HIV, nicotine & cocaine. This is for smaller amounts in the $100K to $200K area. If you’re looking for larger amounts, then they ask for blood tests which provide a larger range of information. An insurance company is often helpless without these tests and have to rely on your word (called ‘good faith’).

Lastly, consider doing a “needs analysis”. This is an industry-standard calculation that will help you determine the exact amount - don’t be surprised because most think a $100,000 policy is enough. They consider the following factors: 1. Debts (like credit cards, line of credit and mortgages), 2. how much shortfall in income your family will experience in your absence and over how long, and 3. Other final expenses. Believe me, it adds up, so prepare yourself emotionally. Remember, it’s still cheap because you’re renting this coverage. Ownership is costly in the short-run.

Take it only a step at a time. Your agent will try to sell you “critical illness” insurance (more commission), which is for a small lump-sum amount if you get diagnosed with a life-threatening illness. Any hereditary problems, and you can easily disqualify or get a higher premium ‘rating’. I am not in complete favour of this policy - it is “expensive”… only if you’re making over $65,000 per year.

And of course, the disability insurance which is supposed to replace a portion of your income if you are unable to return to work due to an accident or illness. Don’t think it’s got anything to do with taking the week off… it’s more with 3 months plus. Unless you have a major income, don’t bother – it’s definitely worth it’s value, yet better off with your employer’s group coverage.

Finally, if you have a medical benefits package through your employer, you already have life insurance and very likely some other features. Review this before you pick up your own if budget is a strong issue.

Hope you’ve found this helpful.