Insurance can anchor a financial security plan by helping to reduce risk
Life is full of risks, and most we simply have to accept.
But some we can do something about. Life insurance is an essential tool in protecting a family's economic well-being if a partner or parent dies.
Life insurance is designed to pay loved ones a tax-free lump sum death benefitOpens in a new window if you die. The benefit should be large enough to allow them to have the lifestyle and choices that your financial security plan set out to achieve.
The money from the death benefit can be used as needed. Some examples may be to help pay off debts, help ensure loved ones can afford to remain in the family home or pay for the children’s education. The benefit can also be used to help ensure the well-being of a sibling with special needs, or aging parents who lack adequate retirement savings.
Personal insurance policies represent an important part of prudent financial security planning.Opens a new website in a new window
Life insurance could also play an indispensable role in protecting a business. If you and a business partner start a company, you should each have a life insurance policy. The reasons make pure business sense.
The death of one business partner may have a significant impact on the company’s operations and life insurance can help the surviving partner manage through the resulting challenges. Life insurance can provide funds to allow the surviving partner to buy out the deceased partner’s share in the company without having to sell assets. Moreover, the deceased partner’s family receives the full amount they deserve from selling their share of the company.
There are many online resources and calculators to help you learn about the different life insurance options and coverage needs. The large variety of options allows you to customize a policy to fit your needs, and that may include the flexibility to increase coverage as needed.
Once you have done some primary research, consult your financial security advisor. Life insurance may play a starring role in your financial security planning.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.