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It's Your Money  

Do you need life insurance?

You don’t really need to have life insurance, do you?

Odds are you aren’t going to die in the next 20 years, so why waste the money, right?

Like it or not, if you are one or more of these five types of people, you probably do need life insurance:

A parent with financially dependent kids?

Raising a child is no small task and it requires time, patience and money. Don’t leave your surviving partner or named guardians struggling to make ends meet while they raise your child, especially when a basic term life insurance policy will provide the necessary funds and is very inexpensive to buy.

A life insurance policy should be in place for any parent who needs to provide replacement income to raise their children if they are no longer here to earn income.   

You have a mortgage or other loan?

Many lenders insist on insurance to protect their loan if something happens to you. Even if they don’t, many Canadians opt to have this debt covered so that it’s not left behind to pay off by their loved ones without their income stream there to do so.

But you don’t need to buy the lousy, overpriced insurance that the lender offers as an add-on to the mortgage. Setting up the life insurance coverage on your own will save you money and give you better protection.

Own a business with a partner?

Life insurance is the most affordable way to buy out your partner’s interest in the company from their family if they pass away prematurely.

A buy/sell agreement is vital to any business partnership so that everyone knows exactly what happens if a partner passes away. But the document is basically worthless if you don’t have liquid funds to finance the agreement and insurance is the easiest and cheapest way to provide this.

Planning to donate money upon your death?

Many people’s estate plans include a donation to their favourite charity or cause. But few of these same people realize that life insurance is often the cheapest way to make such a bequest.

If your final plans include donating money, you owe it to the cause you’ve chosen to support to look at an insurance strategy to maximize the amount they will receive.   

You want to pass down the family cottage?

Many Canadians have a cottage, ski chalet or other type of vacation home that they would like to pass down to their kids when they die.

Unfortunately, the tax man wants their cut of the growth in value that the property has seen, and they want their money right away. Instead of being forced to sell off the property to pay the tax bill, your family can cover these taxes with the proceeds of an insurance policy and keep the family cottage with the family.

Most Canadians need some type of life insurance and many of them don’t have the coverage they need. The most common reasons are not knowing where to start and who to trust or assuming that the coverage is too expensive.

This is largely due to the insurance sales industry who push expensive “whole life” and “universal life” policies on people who don’t need them in the hopes of earning a bigger commission.

In this digital age, you don’t need to guess on the cost of coverage, you can run a quote by yourself in 30 seconds at www.insuringcanadaonline.com to see how affordable the coverage really is.

You may still feel like you don’t need life insurance but remember that this is not a decision about you and your needs.

It’s a decision that will affect those closest to you – take a few minutes to see how easy it is to provide and protect for those that you love.

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About the Author

Designated as a chartered investment manager and certified financial planner, Brett holds life insurance and investment licenses in B.C., Alberta and Ontario.

In addition to being the owner of Kelowna-based SPEIR Wealth Management Inc., Brett also serves as the vice-chair of the Financial Planning Standards Council of Canada’s board of directors. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations for the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FPSC board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected].

For more information or to see a database of previous columns, visit www.speirwealth.com.



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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