5 reasons you should consider life insurance

1- Taking out insurance to leave something for your loved ones

Life insurance payouts are non-taxable. Your beneficiaries will receive the full insured amount without it affecting their income tax rate. A term life insurance policy can be used, for example, to leave an amount that covers the transfer tax on an inherited property, thereby eliminating any financial burden associated with the inheritance.

The difference between revocable and irrevocable beneficiaries

In a nutshell, revocable beneficiaries can be changed by the owner of the insurance policy at any time, without prior notice. Irrevocable beneficiaries remain beneficiaries until they agree, in writing, to have their beneficiary status revoked. (There are, of course, some exceptions.)

2- Taking out insurance to secure the financial future of your loved ones

This is THE classic reason for taking out life insurance, since death is often associated with a decrease in family income. Many parents also want to lend a helping hand to their children and grandchildren after they’re gone. Others, for example, will leave the family home or cottage to one child and make the other the beneficiary of an insurance policy, to compensate. Life insurance can also:

• Pay off debts: including mortgages (if the mortgage isn’t covered by a mortgage insurance policy), car loans, and credit card bills.
• Pay for your funeral: the money for a funeral generally comes directly out of the estate, but there may not be enough money there to cover it.

Have you thought about your pet’s long-term wellbeing?

Who will take care of your pet after you pass away? It may not always occur to us, but pets are often a great reason to take out life insurance. Appoint a trustworthy beneficiary. Your insurance policy will give them the funds they need to pay expenses and continue caring for your precious animal. It’s something to consider, whether you have a cat, a dog, a parrot, or a horse.

3- Insurance as a form of planned giving

Life insurance is an excellent way to make sure your gift to a non-profit organization (e.g., United Way, Université Laval) goes directly to the intended recipient, since gifted policies cannot be contested by heirs. They are also tax deductible, either for the current year or for the final tax return. Want to use a life insurance policy to make a donation? Contact your chosen organization to see what’s possible!

4- Using a life insurance policy as a savings vehicle

Some policies combine life insurance and savings. The money saved through the insurance policy is placed in an investment fund, where it grows tax-free until it’s withdrawn. Withdrawals are subject to certain conditions. Many insurance policies even have better rates of return than other investment products such as guaranteed investment certificates and savings bonds.

5- Using life insurance to protect an ownership share or to ensure the future of a business

If you own a business, or part of a business, you have an added responsibility, since your death will affect more people directly. As a business owner, your life insurance can protect the interests of your family, associates, and employees, or provide cash when it’s needed most. A life insurance policy can also allow the remaining shareholders to buy back their former partner’s stake in the business and thereby pursue the venture.

For every good reason to take out a life insurance policy, there’s a host of insurance products. Take the time to compare what different companies are offering so that you can select a product that’s cost effective and makes sense in light of your total assets. It’s also worth noting that the sooner you take out your life insurance policy, the more advantageous it’s likely to be.