Five Reasons to Consider Life Insurance

Statera Financial Planners |

If you’re working to improve your financial situation, a few strategies may come to mind: paying down debt, building an emergency fund, investing inside a TFSA or RRSP. These are all important elements of a strong financial plan, but there’s another piece of the puzzle that is often overlooked: having life insurance.

An effective financial plan goes beyond saving and investing. Life insurance can also be a key element in achieving your goals. At Statera Financial Planners we are here to help with all aspects that may impact your financial future.

Often when people decide to incorporate life insurance into their picture, its because they have looked at their overall plan and identified a risk that makes them uncomfortable. Here are five considerations that may present a solution to a risk currently present in your life.


Number 1: To protect your loved ones from financial loss

When a person dies, their family has to deal not only with the emotional impact of their loss, but also the financial burden. Fortunately, life insurance can help protect your loved ones from unnecessary financial hardship and reduce their stress during an already difficult time.

It can be a great financial tool no matter your relationship status, but life insurance is particularly critical if you have dependents such as a spouse and/or kids who rely on your income. The surviving parent may need money to cover debt or afford ongoing expenses for the family—housing costs, monthly bills and groceries, to name a few. The last thing any of us want is to have our family experience the upheaval of a lowered standard of living because the resources don’t exist to allow life to carry on as we had once envisioned together.


Number 2: To help pay off a mortgage or other debts

If you share the home you own with your partner, children or other loved ones, life insurance can help pay off the balance of your mortgage in the event of your death. This may make it possible for your spouse or family to stay in their current home despite the loss of your income—something that’s important to a lot of parents while helping their kids worth through such a difficult transition already.

Life insurance can also help pay off outstanding student and vehicle loans, lines of credits, or other outstanding debts, as well as funeral costs and burial expenses. It’s not always easy for families to come up with the amount of cash needed for your end-of-life services without liquidating assets that may hinder them in the long term; the average funeral cost ranges between $7,000 and $12,000.


Number 3: To transfer wealth to the next generation

Want to leave your kids or grandkids an inheritance? A life insurance policy can be a tax-efficient way of doing that.

Whether you have debts or not, whether your children are grown or not, there is usually a desire to pass something monetarily onto the next generation. Your estate will need to ensure all debts, all taxes and all probate and estate costs are paid prior to the beneficiaries receiving the remainder, if any.

One way to ensure that the next generation receives some amount of wealth transfer, is by the use of life insurance proceeds. By the use of direct beneficiary designation, these proceeds flow outside of the estate and directly to the hands of your beneficiary, regardless of what bills are due to the estate. This will also help ensure that the process is handled quickly (within a week or so), whereas an estate can take months, if not years, before it settles any surplus proceeds.


Number 4: To make a philanthropic impact

Some individuals have a particular charity they are very passionate about, and they want to leave a legacy that has a positive impact on others.

A lesser-known function of life insurance is that it can be used to efficiently transfer funds to a non-profit organization as a donation through a beneficiary designation. Again, passing tax-free and outside of the estate to the charity, allows you to mitigate legal challenges from family and make a donation that will leave a lasting impression on the non-profit organization selected.

Whether you want to help fund cancer research, support animal welfare and human rights or give back to your alma mater, your life insurance policy can help make it happen.

This is only one possible philanthropic option, it’s best to speak to Statera Financial Planners to learn about all the different methods.


Number 5: Protect your family’s interest in your business share

Life insurance is crucial for safeguarding your share in an owned business, as it provides financial security and continuity of the company in the event of a partner's untimely death.

By securing life insurance policies on each partner and establishing a Buy-Sell agreement funded by the proceeds, surviving partners can ensure that sufficient funds are available to buy out the deceased partner's share of the business from the estate. This arrangement not only protects the interests of the surviving partners but also provides fair compensation to the deceased partner's family, ensuring a smooth transition of ownership and preserving the stability and viability of the business.


Finding the right life insurance

Many people find it challenging to know how much coverage they actually need for their family. But a good financial planner will discuss your goals and reverse-engineer the numbers to find the right policy. Just make sure you’re dealing with a reputable professional, like those at Statera Financial Planners, who listens and will help you understand your options.

There are many reasons to buy life insurance, but no matter what motivates your decision, it will feel good to know you’ve protected what’s most important to you.