There is no question that an effective estate plan protects your loved ones in the event of loss. The role of life insurance in the estate planning process is a valuable tool. It may be the most unselfish act that you can ever do for your family. For after all, you will not benefit – your family will. Life insurance is also one of the few assets that transfers to the beneficiary on a tax free basis. For these reasons, life insurance is a highly effective tool in the estate planning process.
Many people believe that life insurance is for when you are younger, in particular when raising young children. This is completely true and perhaps the most obvious reason to secure life insurance. Yet, older people can benefit from insurance as well, for estate taxation reasons.
Below are some of the top reasons why life insurance is purchased:
- To pay off mortgage and other debts
- To cover taxation costs on registered investments
- To cover taxation costs on a family cottage
- To cover final expenses such as funeral, legal, and administrator costs
- To provide for additional cash so that administrator does not need to liquidate assets
- To provide estate planning equalization for children and other heirs
- To provide income for a surviving spouse or dependent
- To contribute towards charitable giving
- To leave a larger estate for family as gifts
- Succession planning for business and to protect business partner’s families
- To help business owners protect against the loss of a key person
The right amount of life insurance depends on the individual and is highly unique. You will need enough to meet all of your debt, tax, gift giving, and other required and desired obligations. A professional financial planner can assist to determine what is the right amount of insurance.
In addition, the type of insurance varies. There are many types of life insurance policies. They can be purchased as individual life insurance policies or wrapped around investment vehicles to protect against estate taxation. Pension annuities are also a form of life insurance, and they are offered by life insurance companies. A professional financial planner can help navigate the myriad of life insurance options.
It is also important to shop around with a qualified broker, as there are many details within the life insurance policy contract that can be confusing as well as extremely important – and they vary between insurance companies.
Please contact Joanne David CFP FCSI using our contact form for a no obligation estate planning and life insurance review.
For simple needs, the below search engine can provide an idea of the cost of simple term only insurance. Please contact us for further details, confirmation, and application process.
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The information contained in blog or article posts are derived from various sources, including the Canada Revenue Agency (CRA). Any data provided is for illustration purposes only. Any information relating to the discussion of taxation issues is considered to be only general in nature. Clients should seek a qualified tax professional to discuss their specific tax requirements. The opinions, estimates and projections contained in the publication are those of the Financial Advisor and not that of Keybase Financial Group. Keybase Financial Group Inc. makes no representation or warranty, express or implied, in respect therein and accepts no liability whatsoever for any loss arising from any use of or reliance on the reports or its contents. The provisions of this publication are not to be constructed as an offer to sell, or a solicitation for, or an offer to buy any securities. Keybase Financial Group Inc. is a member of the Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation (the ‘IPC’).’
Joanne David BA CFP FCSI
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Joanne David CFP FCSI
