Financial planning. It's a hot topic commonly found in the newspapers, on the radio and the TV. Topics covered and discussed usually centre on ways to manage cash flow, invest for retirement, tax strategies and asset allocation. But have you considered how life insurance is an important part of your comprehensive financial plan? Make sure you do not overlook the value of life insurance and how it adds to your family's financial security.
Why you should include life insurance into your financial plan
There are a number of reasons why buying life insurance is a sound financial decision:
- You'll be protecting your loved ones and those who depend on you for financial support
- Possible tax advantages for yourself and your beneficiary
- Protection for your family against debts, including your mortgage and other loans
- Protection for your business. For example, if your business buys a policy on the life of a valued employee or co-owner and the insured dies, the payout can be used for a variety of business purposes
Whatever the reason, life insurance complements your overall financial plan and gives you the security and confidence required for your peace of mind.
Planning your life insurance needs
Before purchasing life insurance, it is important to do your research, shop around, compare policies and products, and speak with a qualified licensed life insurance agent or broker. Doing this legwork will help you in answering the following essential questions:
- What objectives do you want to accomplish by purchasing life insurance? Do you want to cover immediate expenses after your death or do you want to cover the loss of your salary for years to come?
- How much insurance is enough based on your objectives? (Try the Kanetix Life Insurance Needs Calculator for guidance).
- What life insurance products are out there and which are best suited for your current family situation?
- How much can you afford to pay for a life insurance policy?
Ready to apply for life insurance?
Life insurance rates are based on many different personal factors. That's why you'll have to complete a detailed application form which will likely include questions about your:
- use of tobacco and related products
- past and current health record
- family health history
- recreational activities
Also, you'll probably need to have a medical examination or paramedical procedure when you apply. But it all depends on the amount of life insurance you want, your age and which insurance company you deal with. For a small amount of coverage, many insurance companies simply ask you to fill out a short medical questionnaire.
Finally, even after you've selected and purchased a life insurance policy don't forget to regularly review your life insurance needs. The amount of coverage you require may change as you move through life. Getting married, buying a home, starting a business, having children and retiring are all life events that warrant a re-evaluation of your life insurance policy.