When you purchase home insurance or car insurance, you hope you’ll never need it. At the same time, you’re so grateful to have it if the need arises.
In the case of life insurance, the real benefit is for those you leave behind, explains Stu Tunheim, a consultant with IG Wealth Management in Courtenay.
Like the rest of your finances, “life insurance is all about planning, however rather than saving for your own future or retirement, for example, it ensures those who are left are taken care of,” Tunheim explains.
“Perhaps you want to be able to help your surviving spouse pay off the mortgage, or ensure your children have money for university. Or perhaps you simply want to make sure your loved ones have the money they’ll need to pay for your funeral expenses,” Tunheim says.
For others, life insurance is a useful vehicle to leave a legacy for a cause that’s important to them.
The added benefit is that life insurance pays directly to the beneficiary tax-free, whether a loved one or charity. It’s also not subject to probate like other assets.
When is the right time to purchase life insurance?
Think life’s major milestones – marriage, home purchase, the birth of a child, for example – and while you’re in good health.
Tunheim equates it to insuring your home. “You can’t insure a burning building; you have to insure it when it’s in good repair. Life insurance is similar. Getting insurance when you’re young and healthy is a lot more affordable.”
Several varieties of life insurance policies are available:
- Term insurance is a fixed-term contract, with set rates for the term of the contract. When it comes time to renew, the rates can go up. This isn’t an investment, you’re simply paying for the insurance.
- Permanent insurance covers you for your entire life at a set rate.
Regardless of the type of insurance you choose, it’s often possible to adapt or tweak coverage as your needs or situation changes, Tunheim notes. “It’s something that will change over the years. We’ll tweak and adjust the coverage to your changing needs.”
Peace of mind is invaluable
A common question Tunheim hears is whether insurance will actually be paid following a death, or if the insurer will find a “loophole.” That’s where underwriting comes in, Tunheim explains.
Underwriting involves the insurer evaluating to determine if you’re healthy, then creating a contract with you, so issues typically don’t arise.
Others believe insurance through a work policy will handle any expenses, but often the amounts provided are insufficient for the family’s needs. Many companies have also changed their coverage through the years, so employees may no longer have coverage they had previously.
Courtenay’s IG Wealth Management team is working remotely, but you can reach Stu on his cell at
Investors Group Financial Services Inc.
Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations. This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Stu Tunheim is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.