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A little perspective on life insurance and its benefits

There are a number of insurance policies that you probably should own. Vehicle and home insurance are essential if you own a vehicle or home, travel insurance is usually offered at the time you are booking a trip and even if you rent you should have contents insurance.

All of these have various deductibles, coverages and terms you can choose upon the advice of your agent.  Although as important, the subject of personal insurance — life, disability and critical illness, is sometimes avoided or delayed which can mean a financial hardship to your surviving spouse and children.

Today we will discuss life insurance and put it into perspective. Quite simply, the purpose of life insurance is to provide the means for your beneficiaries to pay outstanding debt and final expenses and be able to maintain their existing standard of living and future needs.  Debt may include loans, lines of credit, credit card debt and typically the mortgage as your spouse is usually expected to keep living in the home.


Many employees have a life insurance component to their work benefits package, typically a multiple of their salary.


Too often, some mistakenly make the assumption that the amount of coverage through work is sufficient, even as their family or debt load grows.


It makes sense that a large life event, such as a baby or a house purchase warrants an insurance review to ensure that your loved ones will be looked after in the event of the unexpected.


Vehicle and home insurance are usually renewed for one year, in effect making you review your coverage annually.


Life insurance should also be reviewed on a regular basis, purchasing 10 or 20 year term insurance does not mean that you do not have to think about it for that length of time. One of the benefits of an insurance review could be to reduce your premium while ensuring you have sufficient coverage.


Parents and grandparents sometimes buy a life insurance policy on a dependent child.

We will discuss this topic in a future article, it is an often debated solution that has advocates for both the pro and the con side.


Insurance can also be used for retirement planning by providing a method of funding a tax-exempt accumulation of non-registered cash, or estate planning, by funding a tax liability, or triggering a tax receipt through charitable life insurance.


Have the insurance conversation with your spouse or with your parents. You will both be happy knowing that one more aspect of their financial house is in order while having the peace of mind that comes with knowing that your loved ones are looked after.

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