If you have a mortgage it makes good sense to insure it. Owning a debt free home is an objective of any sound financial plan. In addition, making sure your mortgage is paid off in the event of your death will benefit your family greatly.
Often we see older investors shift gears near retirement and beyond. Many become risk adverse and move their assets into fixed income type investments. Unfortunately this often results in the assets being exposed to higher rates of income tax and lower rates of return – never a good combination.
Ownership of individual life insurance at its lowest level in 30 years
The Life Insurance and Market Research Association (LIMRA) 2013 study shines a light on a developing problem for Canadian households:
Has it been awhile since you last looked at your insurance portfolio? Are you a little sketchy in your recollection of all the coverage you have and why you have it? Are you uncertain as to whether or not your portfolio reflects your current situation? If this is the case, this might be the ideal time to have an audit of your insurance policies. Circumstances can change over time and making sure your protection keeps pace is a worthwhile exercise.
If you require permanent life insurance coverage for family, estate planning, business, or tax planning purposes or you just wish to accumulate money in your life insurance program it may be time to look at a permanent, level cost solution.
Many of us purchase large amounts of low cost term insurance to cover our needs while we are raising our families or growing our businesses. However, as the saying goes, “there is no free lunch”. Eventually this low cost term insurance starts to become expensive and other options should be considered. If you are unable to qualify for a new permanent insurance policy don’t worry, your safety net is the conversion option in your existing policy.
When I am helping clients plan for retirement or their estate needs I often come across “old” life insurance policies that were issued in the 1950’s, 60’s or 70’s. They were either bought by the client, the parents or grandparents for them. (yes, people do buy life insurance for the kiddies!).
If you own your home, chances are you were offered mortgage life insurance from your bank. This type of insurance is sold by the banks as a flexible, low-cost way to protect one of your largest financial obligations.
If you are a grandparent wishing to provide an asset for your grandchildren without compromising your own financial security you may want to consider an estate planning application known as “Cascading Life Insurance” that will generate:
In August the Department of Finance published their changes to the taxation of life insurance as previewed in March 2013 Federal Budget. When final legislation is passed later this year, these changes will result in an updating to the “exempt test” which determines how much tax-deferred value can accumulate in a life insurance policy before it is subject to accrual taxation. The new rules take effect and will apply to policies issued January 1, 2016 and later.