Life insurance: unnecessary expense or essential financial protection tool?
The idea that life insurance is “just an expense” often comes up in conversations with clients or prospects. It’s based on a common perception: “I pay premiums but get nothing in return.” Yet this view completely overlooks the true purpose of life insurance — protecting your loved ones, preserving your wealth, and ensuring the continuity of your financial plan in the event of premature death.
Life insurance isn’t an expense like a phone bill or a subscription. It’s a risk management strategy — like a seat belt: you hope you’ll never need it, but you’re grateful to have it when the unexpected happens.
2. Irreplaceable protection in the event of premature death
The primary purpose of life insurance is simple: to provide an immediate lump sum to those who depend on you financially. This amount can be used to:
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repay a mortgage or debts;
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replace lost income for the spouse or children;
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fund the children’s post-secondary education;
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cover funeral expenses and taxes upon death;
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protect a family business or buy out shares.
According to the Financial Planning Institute (FPI), the need for life insurance is fundamental in any financial plan, particularly for young families, entrepreneurs, and individuals without significant liquid assets at death.
2. A policy that can also serve as a savings vehicle
Contrary to what many believe, not all life insurance policies are “money down the drain.” Permanent life insurance policies, such as whole life or universal life insurance, include a cash value component that can grow tax-sheltered.
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serve as a long-term investment lever;
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be used to transfer wealth outside the estate;
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provide additional retirement income through withdrawals or policy loans;
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serve for tax or estate planning purposes.
In this context, life insurance becomes a wealth-building asset, not just an expense.
Like saving, diversification, or estate planning, insurance is one of the pillars of financial health. It is not a “luxury” option, but a safety net to protect established plans.
It is not only useful for those with children; it is also a strategic tool to:
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couples with unequal incomes;
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business owners or self-employed workers;
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retirees wishing to cover taxes at death or leave a net inheritance;
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individuals with significant debt or a co-signer.
One of the main advantages of life insurance is the predictability of costs. You pay a monthly or annual premium, generally fixed, to insure yourself against an incalculable risk: premature death.
The cost is all the more affordable when insurance is purchased at a young age and in good health. A term life insurance policy of $250,000 can cost as little as $15 to $25 per month for a 30-year-old non-smoker. This amount is often less than what one spends on coffee or digital subscriptions.
If you are uninsured and die suddenly:
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your spouse might have to sell the house or go into debt;
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your children’s education could be jeopardized;
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your heirs could face a hefty tax bill;
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your loved ones would have to pay your debts and funeral expenses.
In this context, the absence of insurance is not a saving. It’s a transfer of burden.
Saying that life insurance is a useless expense is like saying a fire extinguisher is useless until there’s a fire. Life insurance is not a luxury—it’s a pillar of financial security, an act of responsibility, and a strategic tool.
And above all, it’s not a purchase for oneself. It’s a gesture for those we love.
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AMF, Life Insurance – Information and Obligations, 2022
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Statistics Canada, Expenses Related to Deaths and Estates, 2022
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Assuris, Why Life Insurance Is Essential, 2023
