September marks National Life Insurance Awareness Month, an opportune time to revisit your life insurance needs.
According to the Canadian Life & Health Insurance Association’s most recent facts, as of 2021, 22 million Canadians own $5.3 trillion in life insurance coverage. The average life insurance protection per Canadian household is $458.000, up from $442,000 in 2020 and approximately five times household income.
Most life insurance—80 percent—is purchased by individuals through an agent or advisor. Individual life insurance coverage now equals 65 percent of the value of total policies in force, up from 57 percent in 2011.
Here are some of the reasons Canadians purchase individual life insurance policies and reasons you may also want to consider purchasing life insurance if you have not already. Some of these reasons may surprise you.
In the event of your death, life insurance provides an income for your loved ones or business shareholders. Protecting loved ones and protecting business interests are two of the biggest reasons why people purchase life insurance today.
You may not think about it while you’re living, but the reality is one day you will have to plan for your funeral. The death benefit from a life insurance policy can pay for your funeral costs instead of leaving the financial burden to grieving loved ones. Funeral costs are another reason why people buy life insurance.
The death benefit from a life insurance policy can be used to pay off any debt you may have left outstanding in your estate such as an existing mortgage. Whole life insurance policies are a consideration for managing debt because they feature a cash value asset you can withdraw a policy loan from to repay debt while you are living.
Whole life insurance with a cash value asset is a great savings vehicle you can leverage to fund your grandchild’s or child’s post-secondary education. You can use it in replacement of an RESP or as a supplement to an RESP if you want to take advantage of the Canada Education Savings Grant program.
You can use the cash value feature of whole life insurance policy as a way to build up a tax-free retirement income rather than investing in an RRSP, which is government-controlled, has restrictions and is taxable income in your retirement years.
You can use the cash value feature of whole life insurance policy as a way to build up a tax-free retirement income rather than investing in an Registered Retirement Savings Plan, which is government-controlled, has restrictions and is taxable income in your retirement years.
When you pass away the heirs of your estate can face inheritance taxes and probate fees on your estate and any assets received from it. The death benefit from life insurance can help cover such added costs and is not subject to probate fees or taxes.
If you make regular contributions to a charity, you can use a life insurance policy to build a charitable gift without impacting your family’s inheritance. Corporations can also use life insurance to make substantial charitable donations that can provide them with a tax-deduction based on the strategy used.
Disclaimer: The material provided in this newsletter is for informational and/or educational purposes only. The information, opinions and/or views expressed in this newsletter are those of the authors and not necessarily those of the distributor. All financial endeavors should be vetted through a financial professional: life insurance broker, financial planner, accountant, lawyer, and/or other professional, as the reader sees fit. MacDev Financial Group Corp., SET Financial Solutions Inc., including but not limited to its agents, staff, associates and/or partners will not assume any liability for any Information printed in this article; indirectly, or assumed. The MacDev tagline, “Financial Control For Life” and “Bank On Whole Life” are trademarks of the MacDev Financial Group Corp. Click Legal for further information.