Events That Change Life Insurance Requirements: Part 2
Since many personal situations can change over your lifetime, let’s continue exploring additional events that may affect your life insurance needs. Make a list of all applicable variables from this two-part series before scheduling your appointment with an Alliance Financial advisor. Together, you’ll be able to update your life insurance in Toronto to meet your current lifestyle.
Getting control of your debts starts with living within your means instead of borrowing to purchase what you can’t afford. If various creditors are charging high interest rates, consider consolidating some or all of your debts into an account with a lower rate. But if you weren’t around, how would your family pay off that sizable obligation? Make sure that your life-insurance payout will cover your outstanding debts. Likewise, paying off large debts gives you the option of lowering your coverage.
Becoming Single Again
If your spouse dies or you go through a divorce, reviewing your complete financial picture is essential. Determine how being single changes your life insurance requirements. You got coverage to secure your immediate family’s future. If you’re childless when you lose your partner or your kids are financially independent adults, your insurance requirements will decline. But when your mate’s death means that you’re the sole provider for young dependents alone, increasing your coverage is wise. If a guardian takes over their care, sufficient life insurance will enable continuing the lifestyle you provided.
Revising your policy’s beneficiaries is another pressing matter. If your mate was your primary recipient, update that designation immediately. Otherwise, a probate court judge could rule how to apportion your policy’s payout between your surviving family members. You can name your adult offspring as your policy’s beneficiaries. But consider appointing trustees as recipients for each minor younger than 18 so they can distribute money to your kids per your wishes. Your will might specify that children receive lump-sum distributions upon reaching certain ages.
When divorce involves youngsters, your situation may be more complicated. Your ex might be the person who’ll provide and care for your minor kids upon your death. Trusts can ensure that the other surviving parent uses your benefits to pay for your dependents’ needs. If you lack experience handling such complex financial decisions solo, consult an accountant and an attorney in addition to your insurance broker.
Helping Aging Parents
Like many adults today, your life may involve supporting your aging parents in multiple ways including financially. From running errands and dispensing prescriptions to handling housework and paying bills, your efforts are invaluable. But how would your parents manage if your death preceded theirs? Would they be able to afford suitable residences and continued assistance? Or would other family members or friends need to help them? If your parents would struggle financially without your ongoing support, life insurance benefits could help you fund their care even after you’re gone.
Preparing for Retirement
To the average person, retirement planning involves making regular contributions to your Registered Retirement Savings Plan (RRSP). But everything might not follow your anticipated schedule. An unexpected disability or premature death could jeopardize your financial goals and thus your dependents’ futures. After counting on your forthcoming retirement benefits to help subsidize their elderly needs, your spouse and other family members might face unforeseen financial hardships.
Without life insurance, your retirement plan is vulnerable. Suppose that you pass away before receiving retirement benefits. Your heirs would lose your salary plus future earnings and retirement contributions. Most individuals who die too young haven’t had enough time for their investment programs to amass sizable funds. But insuring your life can contribute to your retirement objectives in several ways. Your post-work-life support plan doesn’t have to die with you. Appropriate coverage can help your family pay for everyday expenses now and subsidize your spouse’s future retirement.
If your situation changes so that no one needs your death benefit, permanent life offers the flexibility of surrendering your policy. You can use its accumulated cash value to increase your retirement income. If you’re without debts and close heirs, having enough insurance to cover your final expenses like funeral costs, taxes, and possible probate fees may be sufficient. But if your assets dwindle during a lengthy retirement, life insurance allows you to leave money for your surviving kids and grandchildren.