Life Insurance Strategies & Personal Financial Security

Life insurance, like all types of insurance, is fundamentally based upon the concept of indemnification: the death benefit is intended to compensate (indemnify) the beneficiary for a loss suffered as a consequence of the death of the life insured.  The loss may be both immediate, and finite such as funeral costs, ongoing such as a family’s financial needs or indirect such as the effects of grief and the impact they can have on the dependents of the life insured.

The major cash and income needs at death include:

Mortgage Funds – cash required to eliminate the mortgage due to the death of a family’s primary breadwinner.

Emergency Funds – cash required to cover emergencies that could devastate your family’s budget.

Dependency Funds – cash required to fund the income needs of dependents for a given period of time (spouse and children, living parents).

Educations Funds – cash required to ensure your children are able to access the financial support they need for post-secondary education.

Last or Final Expenses – cash required to fund final medical bills, funeral and burial costs, probate costs, debts or other outstanding loans including your mortgage, legacies you plan to leave behind as well as estate equalization between children.

Survivor’s Readjustment Funding – cash required to replace the income of the deceased for the benefit of survivors for a given period of time or provide for retirement income for survivors.

Tax Funding – cash required to fund the deceased’s tax obligation on death that stems from tax due on capital gains on death from both registered and unregistered investments, property, business assets and other assets where taxes become due by law, on death. 

Further Personal Insurance Planning Considerations

Equally important to the personal financial planning process is the use of disability, critical illness insurance and long-term care policies to adequately protect your family against financial hardship.  Disability, critical illness and long-term care policies should be used with life insurance to adequately protect against the income loss associated with the disability or critical illness of the family breadwinner.  The monthly or lump-sum payouts can be used to replace needed income, discharge debt, specifically, the mortgage on the family home and buy professional medical treatment in North America. 

Click below to learn more about:

The Risk of Disability
Critical Illness Insurance
Long-Term Care Planning

Ask FC Financial Group about proper wealth and estate planning techniques to minimize taxes payable on death, maximize the value of your estate and protect your family from financial hardship.