Life Insurance

Is to protect you & your most precious in the world, if permanent, it could also be a valued financial asset & resource in future or retirement years.

Life insurance comes in two types – temporary and permanent. Most people have some type of temporary insurance either as a term insurance policy, mortgage insurance, or group insurance policy (likely through work or an association plan like an automobile club). Many also have permanent insurance either in the form of whole life insurance, universal life insurance, or Term to 100 Insurance.

Many people are under the impression that they must buy one type of insurance, or the other. One choice or the other, the truth is, you could have a few types of coverage in force at the same time, on the same person. Perhaps you need a large term policy while the children are young, maybe you bought a Universal Life (UL) policy to cover some midrange retirement and pension issues, finally, you bought a Whole Life (WL) permanent policy for the time frames through the retirement years, and estate planning periods.

Perhaps you have no recollection why you purchased one type over the other in years past other than it sounded like the right thing to do at that time, many household would be better served if they implemented a comprehensive program of combining term and permanent insurance with the advice of a good Life Insurance Broker.

Delsan Group is here to help you in the process of buying and analyzing what product is best for you, Delsan Group as a life insurance Brokerage firm in the Montreal Region has the connection to top Canadian insurance providers, to get you the lowest possible premiums for the best possible product. We can help you find the custom package that contains the appropriate amount of insurance at competitive premiums. Many will find they receive more insurance coverage for lower premiums.

Combined Strategies:

Some people may see a need for and appreciate the benefits of permanent insurance, but just can't afford the higher premium costs at the present time. For these individuals, combining a program of term and some permanent insurance may be a workable compromise strategy to implement.

Probably the worst thing to do is identify a need of $1,000,000 and insure only $150,000 of this need with a permanent policy using up all premium dollars available thinking no dollars are wasted on term coverage. In this scenario, at the time of death, the family is left with inadequate resources for the future that can never be recovered, $850,000 worth of living expenses, college funding, health care, housing and transportation are often all lost along with a spouse. A better solution may be to purchase only $50,000 of permanent to get started and the other $950,000 in term, which is converted a little bit once at a time.

Life insurance will play a vital role in your overall financial strategies during your lifetime. Sadly, life insurance is often the part of the financial planning that is most often disdained and ignored even though for the vast majority of insured's, life insurance proceeds will provide the largest asset at death to family members, spouses and business partners.

It is essential to assess your insurance needs and purchase the most appropriate coverage for your family's specific situation now, not tomorrow or next month. Why not take a few minutes and review your coverage with a licensed broker today so you receive the greatest benefit from this often overlooked asset.


Determining the Right Amount of Insurance for You

Here's a reliable rule-of-thumb when it comes to buying the right amount of life insurance: there is none! While it's easy for some so-called "experts" to say everybody needs life insurance protection equal to ten or 20 times their income, the truth is everyone's situation is unique and the amount you need can only be determined by looking at your individual circumstances.

Having the wrong amount of life insurance can be devastating for your survivors and "one-size-fits-all" recommendations can leave you under protected. In fact, according to a 2004 report by the life insurance industry's research association LIMRA International, the average person is underinsured by more than $300,000. The study also found that 45% of widows (35% of widowers) say their spouse was inadequately insured. And one to two years after the death, half the widows and one third of the widowers are just getting by financially.

As you try to decide how much life insurance you need to reach your personal and financial goals, there are many questions you need to ask yourself. Here are just a few:

• Is it important to ensure that your survivors - whether they are parents, siblings, spouses, or children - can take care of their financial obligations after you're gone?
• Do you want to make sure those who depend on your income and support have the means to maintain their current standard of living?
• Is it important for you to make certain your children will have the money to pay for a quality education even if you are not around?
• How will your spouse and children cope with your death? Will they need to take time off to grieve after your death? Will they need assistance around your home? Will they need counseling to recover?
• Will estate taxes be an issue? Add up the value of your home, cars, investments, pension, life insurance proceeds and other assets. If the total exceeds the lifetime exclusion amount, your estate may be subject to estate taxes. Life insurance can help replace assets that may be lost to taxation.
• Is the option of being able to get a loan in the retirement age, without having to pay it back until dead, an issue? Would you like to own a valued asset for security in the future if needed?

Once you have determined your goals, there are many other factors that will have an impact on the amount of life insurance you need. Here are ten of them:

1. Age and number of family members
2. Blended families
3. Risk tolerance/investment objectives
4. Existing planning, savings, life insurance, investments, retirement programs or other assets
5. Current and expected income
6. Estate tax liability (current and expected)
7. Current health
8. Children with special needs
9. Expected inheritance
10. Budget

While this is not a complete list, it gives you an idea of the considerations that should be included in proper life insurance planning. The impact of these factors should also be measured in relation to each other.

Because there are so many considerations and everyone's situation is unique, answering the question of "how much do I need" is not always easy. Many people become overwhelmed and put-off buying any life insurance because they don't know how much or what kind they should have. Meeting with a trained financial professional who understands your individual needs and goals can help you determine the right amount that makes sense for you.

The bottom line is this: having or not having the right amount of life insurance when you die can have a dramatic impact on those who depend on you. It is a personal decision, too important to rely on a "one-size-fits-all" recommendation. Don't make the mistake of having the right amount of life insurance...for someone else's circumstances.

Reevaluate Your Life Insurance at Retirement

As retirement age approaches, it's usually a good time to reassess your life insurance policies, since your needs may change then. With your children on their own, and no earned income to replace, you may no longer need a large life insurance policy. Especially if your insurance premiums are high, you may be tempted to cancel the policy, take the cash surrender value, and enjoy retirement. But before you do so, make sure there aren't other uses for your life insurance policy. While it is generally believed that life insurance needs decrease after retirement, there are a variety of reasons why you might want to retain your life insurance policy.

Some possibilities include:

• To help deal with long-term-care costs
  Many individuals don't purchase long-term-care insurance, believing their spouse will care for them. However, when one spouse dies, who will take care of the other spouse? The proceeds of a life insurance policy can be used to provide long-term care for the surviving spouse.

• To enjoy the benefits of owning a valued asset
  If the policy has a cash value, you may take out a loan from it, or get a loan from a bank against it using the policy as collateral, and with some banks you may even not need to repay the loan or interest on the loan depending on the face value of the dead benefit and the bank’s calculations, and the bank will only take back their money (Capital and interest) at the dead of the insured, from the policy dead benefit payout, and the remaining money of the dead benefit will go to the heirs.

• To leave a legacy to heirs
  Many people like the thought of leaving a large sum to their children or grandchildren. With an insurance policy in place, you can feel free to spend your retirement assets during your lifetime, knowing the insurance policy proceeds will be paid to your heirs after your death. If you have a large estate, the policy proceeds can be used to help pay estate taxes.

• To pay for college for grandchildren
  With the rapidly increasing costs of college making it more and more difficult for parents to cover this cost, you might want to use an insurance policy as a college fund for your grandchildren. If you're still alive when they start college, you might be able to borrow some of the cash surrender value to pay these costs, or borrow from a bank with the policy being the collateral.

• To support adult children
  There are a variety of reasons why you might want to provide financial help for an adult child. Perhaps your child is a doctor, but has significant debt from college. Or your child might work at a profession that doesn't pay much.

• To provide a large charitable contribution
  A life insurance policy can serve a couple of purposes when making a large charitable contribution. You can name the charity as the beneficiary of the policy. Or you can leave other assets to the charity that would have been included in your estate and possibly be subject to estate taxes. The proceeds of the life insurance policy, if properly structured, can then be paid to your heir’s estate and income tax free.

• To optimize pension benefits
  When retiring, irrevocable decisions about benefit payments from pension plans must typically be made. An individual life income option will pay higher benefits than a joint and survivor benefit, but then your spouse will not have pension benefits if you predecease him/her. In such circumstance you could use the proceeds of the life insurance policy as a source of income for your spouse after your death.
  

insurance for your business

There are two parts to consider. First is your family obligations. The amount for the family should be added to the amount determined for the business which is dependent of the following factors:

If family members are involved in the business? How easy will it be for them to find another similar paying job if the business fails?

If other family members can take over the business, coverage is required to bridge the time required to recover and get the business going again. In addition, the bank would like to see the loans paid off, as they will be very concerned with the risks.

If the business has to be sold, the chances of getting anything near its value will be remote. It is also likely that there are personal guarantees on the business debts and other financial obligations like leases that will have to be met. Creditors can attack life insurance intended for the family if the wife has signed guarantees for the business, which is very common. For example, if you have a lease for space or a bank loan that is guaranteed by the surviving spouse, the landlord and bank can come after the life insurance proceeds to satisfy the amount owed.

If the business is a partnership or corporation, it is important that there is buy/sell agreement in place including the life insurance to enable the surviving partners or shareholders to buy out the surviving spouse’s interest in the company. Seek advice on who should own the insurance, as there are significant tax implications on where the ownership of this insurance lies – corporate owned or personally owned.


Delsan Group is there for you, to serve your needs in financial services, financial security and advice.

For more information, contact the Delsan Group.