Skyler Chartrand
Licensed Financial Security Advisor — Simple Route Financial
MBA, BA Econ — Laurentian University • LLQP Licensed • Former USW Local 6500 member • Born and raised in Northern Ontario
In my work with Northern Ontario families, I keep seeing the same mistakes over and over again. Some cost families thousands of extra dollars. Others leave gaps in coverage that only become obvious when it's too late.
The good news? Every single one of these mistakes is completely avoidable. Let me walk you through the five biggest life insurance mistakes I see, and more importantly, how to avoid them.
❌ Mistake #1: Not Having Enough Coverage
This is the most common mistake I see. Someone buys $100,000 or $200,000 in life insurance because it "sounds like a lot of money," but they haven't actually calculated what their family would need if they passed away.
Here's the reality: if you have a mortgage, kids, and an income that your family depends on, $100,000 won't last long. Think about it: that might cover the mortgage for a few years, but what about replacing your income? Paying for childcare? Funding your kids' education?
Why This Happens
Most people underestimate their coverage needs because:
- They focus on one expense (like the mortgage) instead of total financial needs
- They choose a "round number" that feels right without doing the math
- They think "something is better than nothing" (which is true, but not the full picture)
- They're trying to keep premiums low without understanding the trade-offs
What to Do Instead: Start with a simple guideline: 10x your annual income plus your mortgage balance. This isn't a perfect calculation (we'd need to look at your specific situation for that), but it's a much better starting point than guessing. For example, if you earn $70,000/year and have a $300,000 mortgage, you're looking at around $1,000,000 in coverage, not $100,000.
❌ Mistake #2: Buying Life Insurance from Your Bank
When you get your mortgage, the bank makes it really easy to add "mortgage insurance" right there at the closing table. It seems convenient. It seems smart. But here's what most people don't realize: bank mortgage insurance is almost always a bad deal.
The Problems with Bank Mortgage Insurance
- The bank is the beneficiary, not your family. If something happens to you, the money goes straight to paying off your mortgage. Your family doesn't see a dime of it.
- Your coverage decreases as you pay down your mortgage. You keep paying the same premium, but you're getting less and less coverage every year.
- The underwriting happens AFTER you die. You can be paying premiums for years, only to have your family's claim denied because of a health issue the bank discovers after the fact.
- It's often more expensive. Because everyone gets the same rate regardless of health, healthy people end up subsidizing higher-risk applicants.
- It's not portable. If you switch banks or refinance, you lose your coverage and have to reapply (at an older age with potentially worse health).
What to Do Instead: Get personal term life insurance instead. With personal coverage, YOU choose the beneficiary (your family), the coverage amount stays level, you're underwritten upfront (so there are no surprises later), and you can take it with you if you move or refinance.
In most cases, personal term insurance is actually cheaper than bank mortgage insurance, especially if you're young and healthy. I've written a detailed comparison of these options here.
🏡 Homeowners: Don't Overpay for Bank Insurance
Download our free guide that compares bank mortgage insurance vs. personal life insurance. See exactly why personal coverage is almost always the better choice for homeowners.
Get the Free Guide❌ Mistake #3: Choosing the Wrong Type of Life Insurance
Not all life insurance is created equal. The two main types, term life insurance and whole life insurance, serve very different purposes. And unfortunately, a lot of people end up with the wrong one.
Understanding the Difference
Term Life Insurance covers you for a specific period (usually 10, 20, or 30 years). It's affordable, straightforward, and perfect for covering temporary needs like your mortgage or income replacement while your kids are young. When the term ends, the coverage stops (though you can often renew or convert it).
Whole Life Insurance covers you for your entire life and includes a cash value component that grows over time. It's significantly more expensive, sometimes 10-15 times the cost of term insurance for the same death benefit. It's designed for estate planning, leaving a legacy, or complex tax strategies.
Why People End Up with the Wrong Type
Here's what often happens: someone gets sold on whole life insurance because it sounds more "permanent" or because they're told it's an "investment." But they end up paying $400/month when they could have gotten the same death benefit with term insurance for $50/month.
The problem? They can't afford enough coverage because whole life is so expensive. So they end up with $250,000 in whole life when they actually need $1,000,000, and they're paying through the nose for it.
What to Do Instead: For most young families and working professionals, term life insurance is the right choice. It gives you maximum coverage at an affordable price during the years when your family needs it most.
Whole life has its place if you have estate planning needs, want to leave money to your kids, or have maxed out other tax-advantaged savings options. But for basic family protection? Term insurance is almost always the answer.
❌ Mistake #4: Waiting Too Long to Get Coverage
I get it. Life insurance isn't fun to think about. It's easy to put it on the "I'll deal with it later" list. But waiting can cost you, literally.
Why Waiting Costs You Money
Life insurance premiums are based on your age and health. Every year you wait, your premiums go up. Here's a real example:
- A healthy 30-year-old male might pay $45/month for $500,000 in 20-year term coverage
- That same person at age 45 might pay $120/month for the same coverage
Over 20 years, waiting from age 30 to 45 costs an extra $18,000 in premiums. And that's if you're still healthy at 45.
The Bigger Risk: Health Changes
But here's the real problem with waiting: you don't know what your health will look like in five years. I've worked with people who waited to get life insurance and then developed diabetes, high blood pressure, or other health issues that either increased their premiums significantly or made them uninsurable altogether.
Once you have a serious health condition, it's much harder (and more expensive) to get coverage. In some cases, it becomes impossible.
What to Do Instead: Get your coverage in place while you're young and healthy. Even if your budget is tight, it's better to start with something than to wait for the "perfect" time. You can always increase your coverage later as your income grows, but you can never go back and get the lower rates you qualified for when you were younger.
❌ Mistake #5: Only Insuring One Parent
This one frustrates me because it's rooted in an outdated way of thinking about families and work. I see it all the time: a couple insures the "breadwinner" but not the stay-at-home parent (or the lower-earning spouse).
Why Both Parents Need Coverage
Let's say one parent works full-time earning $80,000/year, and the other stays home with the kids. Most couples insure the working parent. Makes sense, right? That income needs to be replaced.
But here's what they're missing: if the stay-at-home parent passes away, the working parent still needs to work. Who's going to watch the kids? Who's going to cook meals, do laundry, help with homework, and handle all the household responsibilities?
The financial cost of replacing a stay-at-home parent's contributions is significant:
- Full-time childcare in Ontario: $1,000-$2,000+ per month per child
- Housekeeping services: $500-$1,000+ per month
- Meal prep and other services: Hundreds more per month
Or the working parent would need to reduce their hours (losing income) to handle everything themselves. Either way, there's a significant financial impact.
What About Dual-Income Families?
Sometimes I see dual-income couples where they only insure the higher earner. Same problem: both incomes contribute to the family's lifestyle and financial obligations. Losing either one creates hardship.
What to Do Instead: Insure both parents. The coverage amounts might be different (you might have $1,000,000 on the primary earner and $500,000 on the stay-at-home parent), but both lives have financial value that needs to be protected. The cost is minimal (often less than $100/month total for both parents) and it provides complete family protection.
The Bottom Line
Here's the thing about these mistakes: they're all easy to avoid if you know what to look for. Let me recap the five mistakes and what to do instead:
- Not enough coverage: Use the 10x income + mortgage guideline as a starting point
- Bank mortgage insurance: Get personal term life insurance instead
- Wrong type of insurance: Choose term for family protection, whole life only for specific estate needs
- Waiting too long: Buy coverage while you're young and healthy
- Only insuring one parent: Protect both parents with appropriate coverage amounts
Life insurance doesn't have to be complicated. It just needs to be right for your situation. If you're making any of these mistakes right now, don't beat yourself up. Now you know what to fix.
Disclaimer: The information provided in this article is for educational purposes only and does not constitute financial advice. For personalized recommendations based on your specific situation, please contact me directly at [email protected].