Life Insurance For "Non-Working" Spouses

Generally, when people think of life insurance, they think of insuring the potential income that will be lost when that individual passes away. However, serious consideration must be given to not only to lost income, but the amount of money it will cost to maintain the household when one member dies.

A stay at home parent can be overlooked in terms of financial planning. While technically there is no loss of income, there will be a significant increase in expenses if the caregiver should suddenly die. Therefore, we highly recommend that both parents carry life insurance, not only to protect the family assets, but also to ensure that it is financially possible for the surviving parent to provide quality care for the children.

In planning for the amount of insurance for the stay at home parent, ask yourself (and your spouse) these questions:

• How long would I plan to take a leave of absence from work in order to make the transition smoother for my children?
   
• What kind of care would be best for my children? A nanny, housekeeper, daycare? Remember that these needs will change as your children get older, so this issue needs to be revisited every few years.
   
• Have we made the appropriate arrangements to ensure quality education for our children?

Talk to your spouse about how best to care for your children in the event of the death of the stay at home parent. Your insurance agent is a great resource in helping determine the amount of life insurance you will need in order to meet your projected needs. It is a good idea to remember that as the cost of living goes up, you should re-evaluate your needs every few years to make sure that you will be insured in the amount necessary to allow for the best care possible. Consider using our online insurance calculator to see how much term life insurance is required to cover your needs.

NOTE: Blue Vision from Ontario Blue Cross offers disability insurance to stay-at-home spouses. Contact us for more information.
  
    

Buying life insurance is the first step in preparing for the future. However, it is very important to ensure that your life insurance policy is distributed in the manner in which you intend. This can only be accomplished by a legal will. Proper will planning can not only ensure the preservation and protection of your assets during your life time, but also an effective transfer of assets in a tax-effective manner and the continued preservation of property.

Be aware that the laws differ depending on the province in which you reside. Before you start to plan your will, check with your province’s current legislation regarding wills. Remember that legislation does change, so make sure you are using the most current information available. Consulting with a lawyer is always recommended.

Your will serves several different purposes:

• It designates who will administer your estate.
• Sets out the manner in which you intend your estate to be distributed, and controls the time and manner in which your assets are to be distributed.
• Designate the age when a minor is eligible to inherit.
• Make provisions for a disabled minor.
• Specify which outstanding debts which are owed to you are either forgiven or still outstanding.

Once your will is written, it is important to remember that it is not irrevocable. At any time, you can amend your will as circumstances change. A codicil can be added stating minor adjustments to your will. Remember to check your province's legislation regarding marriage; as marriage can revoke your existing will, unless specific provisions in contemplation of marriage are already stated. Also check your province’s definition of spouse to whether it includes common-law or same-sex spouses.

Division of your estate is a key consideration. It's a wise decision to have a consultation with a lawyer. A lawyer will help you determine the status of your assets and liabilities, and advise you on the distribution of your estate.

The value of your estate (residue of the estate) is the balance left over after expenses associated with burial, taxes, etc. have been paid. This is the amount that will be left to your beneficiary/beneficiaries. Depending on your province of residence, different legislation will determine the rights of your beneficiary/beneficiaries. Your lawyer will have the necessary statutes to advise you of the best way of dividing your estate. 

If you are planning on naming a minor as a beneficiary, it is usually advisable to set up a trust. Unless otherwise stated in your will, the minor will receive their bequest at the age of majority (ages differ according to province). In this case, you will need to appoint someone you trust as the trustee of the minor's trust. You can specify in your will the circumstances (education expenses, etc) in which the Trustee may use trust funds in order to provide for the minor.

If you are a parent, you must consider the guardianship and custodianship in the event that you (and your partner, if applicable) die at the same time. Consult with your lawyer about the laws in your province concerning custody and guardianship. It is important to remember that the trustee of your child's trust does not have to be the same person you designate as the custodian of your child. Choosing a guardian for your child/children is a very important decision, and requires careful consideration and planning. Discuss your thoughts and concerns with your lawyer, who can advise you of the best course of action.

Planning a will does not have to be a confusing experience. Even if you do not want a lawyer to draw up your will, and choose to do it yourself, we strongly advise consulting with a lawyer. A lawyer can help you through the legalities of your will, and also ensure that your wishes are carried out.

Please note that LifeQuotes.ca is NOT engaged in rendering legal or accounting advice.
 

Health And Wellness Programs

Life insurance is more than just a policy to cover you in times of death. Your insurance carrier wants you to be healthy, happy and productive. This is why most carriers are offering health and wellness programs, aimed at educating and supporting their clients in maintaining healthy lifestyles.

Health and wellness programs are designed to educate both employers and employees. Studies show that employers who take an active interest in their employees health and well-being have reduced employee absenteeism by a significant number. Employers who implement programs to promote healthy lifestyles and stress reduction have happier employees with less "burn out" rates and increased productivity.

Standard Life offers a useful health calculator, as well as tips for a healthier lifestyle and diet. The calculator can help you determine whether you are eating a balanced diet, getting enough exercise, and offers help to prevent major health problems. It offers links to other websites that are helpful in education of such health issues as cancer, diabetes and heart disease, as well as mental health concerns.

Talk to your employer about health wellness programs, and ask what programs are available for you and your co-workers. Remember, your health is important not only to you but to your employer and your insurance carrier. Take advantage of these programs to ensure your health for years to come.

The Benefits of Donating a Life Insurance Policy to Charity

Life insurance policies cannot only be left to an individual beneficiary, but can be donated to charity. Along with the satisfaction of knowing that you are leaving money to a worthy cause, donating your policy will also have certain tax benefits.

Donating your life insurance policy can be accomplished in 2 ways. The donor will either gift ownership of an existing policy to a charity, or the charity will take out a policy on the donor’s life. In both scenarios the charity is the owner of the policy.

If an existing policy is donated, the cash surrender value of the policy minus any policy loans outstanding plus any accumulated dividends or interest is treated as the fair market value of that policy.  This is the amount for which a tax receipt can be issued.  Payment of the premiums due on the policy by the donor, which is owned by the charity are considered charitable donations.  The charity can issue an annual tax receipt for these payments, whether they are paid by the donor directly or paid to the charity with instructions that the money is used to pay the premiums.

Where the premiums are paid by the charity, or by a donor on behalf of the charity, these payments are not considered to be a charitable expense and do not count towards meeting its disbursement quota.  Investment income is not counted as part of income for disbursement quota purposes and therefore becomes very valuable to the charity.

If a donor takes out a policy and names his/her estate as beneficiary the donor can then direct the death benefits to go to one or more charities of his/her choice.  While there is no tax relief for the payment of premiums, the individual will be eligible for a charitable donation tax credit on the proceeds distributed to the charity on their terminal return.  If a donor takes out a policy and names the charity as the beneficiary, the donor does not qualify for a charitable donation tax credit for premiums paid.  The individual may, however, claim a charitable donation tax credit on their terminal return for the death benefit paid to the charity.

Finally, use permanent life insurance, and not term life. Term life is temporary insurance, and as such is not well suited for charitable gifting.
 

No, You're Not Too Young

Life insurance is not a topic that people want to think about. Everyone would ideally like to put off this issue for "another year", "when I’m older and need it", or "when I get around to it."

However, purthe ideal time to purchase coverage is when you are young and healthy. Rates will be higher if you purchase your policy after health issues arise.  Policy rates tend to get more expensive with age, so purchasing life coverage at a younger age can be financially beneficial. Remember, you can't buy life insurance with money only, you buy it with your health!

Life insurance is an essential consideration when purchasing a home or borrowing money for business ventures. 

By purchasing your coverage at a younger age, you also have the benefit of choosing benefits that are best suited to you. Different types of insurance offer differing advantages and disadvantages. Take your time evaluating your needs, and projected needs for your future and then select the option that fits your life.

Whole life insurance policies are a viable option for people who are young and in good health. With a whole life policy the premiums are stretched out over a long period of time, minimizing the increasing cost. These premiums can either be spread out over your lifetime, or until a set-upon certain age. The earnings from a whole life insurance policy are tax-deferred, and the death benefit never decreases. These policies  have a cash value and can be used for wealth management and estate planning.

Universal life policies provide the purchaser with the option of being able to reduce or increase the death benefit amount. A great advantage to this type of policy is that the cash value tends to increase in a non-linear fashion, depending on how the purchaser invests his/her money.

Term life insurance is a temporary form of insurance, which covers the purchaser for a limited time span, usually 10 or 20 years, and may be renewable up until a certain age.

Term life insurance can be an attractive option when the insurer wants coverage for a specific debt for a specific time frame (i.e. mortgage). Although there is no cash value, the premiums are lower than for whole life insurance. Some policies allow for the option of converting a term life policy into a whole life policy. Premiums for term life policies will increase at 5, 10, or 20 year intervals with the age of the insured person. 

Just remember that the earlier life insurance is purchased, the more options are available to the consumer. Life insurance does not only provide death benefits, but also help you arrange for your long term financial needs and goals.