These days, it seems that Canadians have to work harder to make ends meet. According to an August 2011 article in MoneySense magazine, a family can expect to spend approximately $243,660 to raise a child from newborn to age 18. That figure does not cover the cost of a post-secondary education, which can run into the hundreds of thousands of dollars, but it does cover the average expenses for a mortgage or rent, food, childcare, healthcare, vehicle operation and maintenance, and finally, recreational activities for each child.
So it makes perfect sense that the average debt load is increasing for Canadian families, and that Canadians are working longer and harder to keep up with those expenses. But are they protecting their families by insuring their increasing debt loads?
What is “Debt Load”?
In terms of family finances, the “debt load” or “household debt” is defined as all of the money the adults of one household owe to any financial institutions. This includes any consumer debt — such as bank overdraft, credit card debt, and financed loans like car purchases or personal lines of credit — and mortgage loans. According to Statistics Canada, today’s average family household debt load is a whopping 164.6%. In fact, Canadian Businessmagazine reports that the average non-mortgage debt load for Canadians reached $27,355 in the third quarter on 2013. That is a scary statistic. What it means is that too many households are carrying too much high-interest debt, like credit card debt, and in a fickle economy that can be dangerous.
Are Canadian Families Prepared? — Expecting the Unexpected
With the increasing debt load, life for many Canadian families hangs in a precarious balance. As long as the breadwinners remain in good health and maintain gainful employment, the status quo remains. However, this leaves many Canadians families unprepared for an unexpected event like a job loss, a disability, or even the death of primary wage earner. There are a few very important things that Canadian families can do to protect themselves against life’s unexpected events.
Insuring the Debt Load
Obviously, the best thing any Canadian family can do is work together to bring down their household debt load and enlist the services of a financial planner to keep them informed them of their options for protecting their family financially.
A life insurance policy is a great starting point. Term life insurance is affordable and can provide short-term protection for an immediate need like a mortgage in the event that the insured dies. Term life insurance can also be used to replace the income of a primary wage earner. There are also other types of life insurance, such as whole life, permanent life, and limited pay life insurance plans, but the plans provide long-term coverage against death at a much higher premium. As long as the premiums are paid, the policy will always remain in force. A disability insurance plan is another good option for protecting a family against an unexpected event. A disability could mean medical expenses and lost wages. For a Canadian family, that type of loss can be financially devastating. A small disability insurance plan can help to avert that kind of ruin.
Preparing financially for every circumstance is so important in this economy. But with all of the other expenses Canadian families have to pay, it can be difficult to convince them insuring their debt load is a good investment.
For more details on life insurance to protect your debt load, please contact us at 1-866-899-4849 or visit our term life insurance quote page.
