10 key reasons why a person needs life insurance

Life insurance is designed to protect a person and their family from the financial burdens of an unexpected premature death. There are many kinds of insurance (including both disability and critical illness insurance) however, the basic and most important is considered to be life insurance. Death in the family can lead to heart-breaking emotions and additional stress. Although nobody can be replaced, life insurance provides financial peace of mind for dependants in case of premature death.

Life insurance can help the family meet expenses for a while, protect dependant parents, or secure the children or spouse. It can also secure other financial obligations which could include funeral expenses, unsettled medical bills, mortgages, business commitments, meeting the college expenses of the children, and so on.

How much insurance a person needs would vary, depending on lifestyle, financial needs and sources of income, debts, and the number of dependants. Scheduling a meeting locally just outside of Hamilton at our office in Dundas, an expert and licensed insurance advisor can complete a needs analysis to determine not only the correct amount, but a solution that best fits your situation.

Typically when clients visit us, they have already determined they require a level of insurance protection. Recently however, I was visited by a client from Oakville who said although she believes strongly in life insurance to protect her family, her sister felt she did not have a need for coverage. Which got me thinking there are many reasons a person would want life insurance coverage and below I discuss 10 reasons why.

  1. Life insurance correctly planned will on premature death provide tax free funds to deal with monies due, mortgages, and living expenses. It offers protection to the family you leave behind and serves as a cash resource.
  2. It secures your hard earned estate on death by providing tax free cash which can be utilized to pay estate and death duties and to tide over business and personal expenses. Such assets such as rental properties, vacations homes and cottages can be retained without the need to sell in order to offset estate taxes.
  3. Life insurance can have a savings or pension component that provides for you during or before retirement. It be used as apart of a retained earnings strategy which allows for tax free growth of cash value within a corporately owned account or used as an alternate tax free vehicle to a Tax Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP)
  4. Some policies can have additional riders (benefits) like coverage for critical illness or term insurance for the insured or the spouse or child of the insured. These help protect against additional potential risks.
  5. Having a valid life insurance policy is considered a financial asset which can possibly be used as collateral when the policy has sufficient cash value. Other more advanced financial planning techniques such as an Immediate Financing Arrangement (IFA) or an Insured Retirement Annuity can also be used to maximize this unique financial asset class.
  6. In case of bankruptcy or lawsuits, the cash value as well as death benefits of an insurance policy is typically exempt from creditors, creating an asset class which is potentially creditor proof.
  7. Life insurance can be planned such that it will cover just your funeral expenses, with guaranteed no medical life insurance products readily available.
  8. Life insurance today can guarantee coverage for tomorrow. Majority of term life policies in Canada have guaranteed renewal and convertibility options which without medical allow a policy holder to convert a term life insurance policy to a permanent life long policy (typically if converted by age 65).
  9. Insurance protects your business from financial loss or any liabilities in case a business partner dies. Life insurance can be critical for business continuity in the event of premature death. The policy can help fund recruiting and hiring of a replacement, paying off debt, and reassuring customers and employees the business will stay open
  10. It can contribute towards maintaining a family’s life style when one contributing partner suddenly dies. It can ensure your family is taken care, be that by ensuring your partner lives a fulfilling retirement or paying for your children’s education and child care.

As an important part of your financial plan, life insurance provides peace of mind for any uncertainties in life.
Insurance is vital to good financial planning and security but you would need to assess your personal risk and long term commitments.

Contact Protect Your Wealth today to learn more about our insurance coverage options! We proudly service clients in Ancaster, Burlington, Dundas, Hamilton, Oakville, Waterdown and the surrounding areas.