Here’s Why You Need Life Insurance

 

Why do you need life insurance? This is an interesting question which we will attempt to answer below. There’s more than one reason, and many products to fit a number of needs.

Who Needs Life Insurance?

To answer this question, you may be surprised to know that it doesn’t have anything to do with you. It has to do with who will suffer financially if you die prematurely. When you pass away, chances are high you need life insurance to provide cash to your family after you’re gone. This cash is called the death benefit and it replaces your income and helps your family meet financial obligations such as funeral costs, living expenses, and college fund(s). It’s important to note that there are no taxes payable on the death benefit. Below are a few examples where you need the best life insurance in Alberta to protect your family.

                                                                                                         1. Single

If you’re single do you support your aging parents financially or a special needs sibling? Do you have significant debt that might pass on to other family members? If any of these scenarios are applicable, you need life insurance in Taxes.

2. Spouse/Significant Other – No Children

Even if you don’t have children, your spouse or significant other needs your income and you need theirs if they pass away prematurely. If you’re a two-income family, it would be a financial hardship for one of you to pay off the debts such as car loans and credit card balances; while covering rent/mortgage and utilities.

3. Married with Children

If you died prematurely, can your household run on one income? If your spouse or significant other is a homemaker, and something happened to them, can you afford to cover the costs of the services they provide, such as homemaking, cooking and childcare? Can you take time off work to drive the children to school and extra curricular activities?

Can your children live the same lifestyle? Can they stay in the home they’re in now? Wear the same clothes? Engage in their hobbies? If your children play sports, can your significant other afford to keep them in baseball, hockey, or basketball?

4. Single Parent

Are you a single parent in charge of caregiving, breadwinning, cooking, chauffeuring and the hundreds of other things you do daily? With all this responsibility, you need to make absolutely certain you have enough life insurance to keep your children’s financial future safe.  It will be hard emotionally for them to live without you; life insurance would ease some of their hardship.

5. Grown Children

Even though your children are finished with college and your mortgage is paid off, this doesn’t mean you don’t need life insurance. If you passed away today, your spouse will still have to pay for daily expenses. Without life insurance, would your financial plan allow your significant other to live the lifestyle (you’ve worked so hard to obtain) into retirement?

6. Retired

Subject to the size of your estate, your heirs may be hit with a hefty estate tax payment. Your heirs can use the death benefit to pay these taxes, your funeral costs and other financial liabilities without having to quickly liquidate your other assets. Life insurance proceeds usually taxed, so they shouldn’t add to your estate tax if it’s properly structured.

7. Small Business Owner

Along with taking care of your loved ones, term life insurance in Alberta protects your business. What would happen to your small business if you passed away tomorrow? A death benefit can be used to fund a buy-sell agreement (www.investopedia.com/terms/b/buy-and-sell-agreement.asp). This will ensure that your business partners would have the money to buy your company’s interest at a previously agreed-upon price. Thus, your partners get your business and your family gets the money.

8. Key Person Insurance Payable to the Company

In this instance, your partners will have the finances to hire a replacement or work out another arrangement.  This ensures your death will not disrupt the flow of business and lessen the emotional burden of your loss on your partners.

As you can see, there are a number of reasons why you need life insurance. This list isn’t exhaustive, there are other things to consider when it comes to the financial stability of your loved ones.

Rather than try to figure out what life insurance you need on your own, you should speak with an insurance broker. They are life insurance professionals who don’t work for a specific insurance company.  They can help you assess your needs and find the perfect life insurance product to cover all your bases.

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