Why Life Insurance?
Life insurance is a necessity that everyone with a mortgage, a family, or children must have. Unexpected expenses and loss of income is the #1 factor that can throw your family’s plan off. While a small unexpected expense can be managed by having an emergency fund, the long term financial effects of losing a family member can have some major detrimental effects on your family’s lifestyle.
Everyone is exposed to the risk of dying. This could be due to natural aging process or due to a sudden illness or accident. While most people have a long term plan for the former, it is the latter that shakes off those plans and leaves the families and finances in big turmoil.
While a loved one’s death always leaves the survivors to deal with emotional pain and suffering, it becomes horrendous if they have to deal with the financial difficulties as well. At this time of need, the life insurance funds can help families manage the financial uncertainties in a better way. Almost everyone knows or has heard about a family who had to suffer financially due to death of a family member. It is your responsibility to make sure that that family is not yours.
A lot of people have bought life insurance without realizing the coverage provided under the policy or without a proper plan as to how their insurance policy would help their family survive. This lack of planning leads to people ending up being uninsured or under-insured.
Being uninsured or under-insured can leave your family with some hard choices to make:
- The reduction in income may lead to your spouse and children to move out of your dream home.
- Moving to a new neighborhood means your children may have to drop out of their school. Their education may suffer. Or worse, your child may have to drop full-time college education to earn for the family.
- Your creditors demand repayment of loans from your family when your family is already struggling to make ends meet.
Estate Creation and Income Tax: When an individual dies, they are deemed to have disposed all their assets, investments and property at a fair market value. All the registered funds like RRSPs are converted and taxed at the marginal tax rate. In case there are insufficient funds to pay the income tax, assets will have to be sold to pay the tax bill. Because of a fast sale, the property might be sold at a lower price than what it is actually worth. All of this can be avoided by having a proper plan in place. The tax-free life insurance proceeds can be used to pay the taxes due upon death.
Life Insurance is widely used as an important tool for Estate Creation. You can convert your life insurance plan into a tax-free asset and leave a legacy for your family. The possibilities are endless with a proper plan.
To summarize, Life insurance is a topic that not many people want to talk about, but it can help to protect families from financial consequences from the death of a loved one. Do not delay and commit to a secure financial future for your family by contacting us through the contact information provided on this website or by contacting an experienced agent near you.