Will you die? Of course, the answer is yes. But as predictable as death is, the next question is the one that no one can know exactly is - when? A 2015 BMO survey revealed that more than half of all Canadians are concerned that their death will put their family’s financial stability in jeopardy. Yet, only 43 per cent (less than half of all respondents) said they already had or planned to purchase life insurance within the next 12 months. Your death could happen tomorrow, within the next year, or in 35 years. The unpredictability of when is exactly why life insurance exists. It is intended to protect your current or future heirs from that unknown moment and support them through the time after your death.
How life insurance helps
The goal for insurance benefits is to replace the income that you didn’t have the opportunity to earn due to death. This ‘income replacement’ helps your remaining family in several ways:
Final Farewell Expenses
Don’t forget that the funeral business is a business. Funeral and burial costs can easily add up to thousands, even tens of thousands of dollars. So, at a time when your family is suffering emotionally, they shouldn’t also have to suffer financially. Life insurance can cover these final farewell expenses.
Pay Estate Taxes
The debts of an estate (including income tax) must be paid out prior to your beneficiaries receiving money. Having life insurance available to pay these debts and taxes is essential to avoid jeopardising assets or funds you have built up in retirement or other investments that you intended to go to your heirs.
Children’s Expenses
If you are a two-parent family with children, two incomes are taking care of the needs of your children. Should that suddenly drop to one income due to the death of a spouse, how are the needs of the children, like food, healthcare, sports activities and future education expenses, going to be met? If a single-parent family, it becomes even more critical to have life insurance set up to support the children should you not be available to care for them yourself.
Replace Spousal Income
If there are no children or children are no longer living at home, there are still a myriad of expenses for the remaining spouse if one dies. How will your remaining spouse maintain the home, vehicle, healthcare needs, or other outstanding debt? Perhaps your spouse will need to pay for outside support on tasks that used to be shared - like yard work, house repairs and maintenance, laundry or cooking.
Pay Off Debt
In addition to providing income to cover everyday living expenses and future needs such as education, there are still additional debts such as a home mortgage or car loans that need to be covered.
Business needs
There are other areas that life insurance can benefit your surviving family, such as buying back shares of a business that you owned or partially owned. The insurance may also help handle the debts of the business. All of this may ultimately prevent your heir to the business avoid having to sell the business upon your death.
Legacy Giving
There may be important charities and community groups that have impacted your life or the life of your loved one(s) in some way. If you choose to leave something to them as a legacy gift it can be extremely helpful to the future programs and growth of these organisations. You can incorporate life insurance planning into your overall charitable giving plans.
What is the amount of life insurance that I need?
Once you understand the areas of your life that will be impacted by your death and therefore the need for life insurance, you can determine how much you need to cover these areas. Many Canadians choose life insurance under $500,000. It’s important to speak with your Stalker Financial Group representative to understand your life insurance needs. For example, you may require more coverage if you have children or if you own a business.
What type of insurance do I need?
There are specific types of life insurance to decide upon such as Universal, Whole or Term life policies. You may choose one over another depending on your current financial situation and your future needs. Stalker Financial Group’s licensed insurance experts are ready to inform you on all the options available. And because Stalker Financial Group is not affiliated with any specific insurance brand, we can seek the best price in premiums for our clients. We take the time to do the research and select the policy that best suits your plans and the needs of your family tree.
