Of the few certainties of life, death is something that comes for us all. As responsibilities stack and families grow, many people begin considering options if the inevitable should occur sooner rather than later. Life insurance is a safety net, something meant to financially support your family and pay for funeral costs when you depart this world. Some people may want to steer clear of regular forms of life insurance like term and whole life or may be excluded from such options for health reasons.
As outlined in this recent The Times Money Mentor article, there are a number of other options to help protect the financial stability of your family, including help with paying a mortgage, general living costs or funeral expenses. All of the available options have pros and cons. Income protection insurance is one option, it pays a tax-free income that is a percentage of a person’s regular income should they be off work because of injury or illness, however it does not pay out upon death. There are other stipulations with it, but it is typically a good option for people who would like financial safety if they are unable to work, according to the article. Critical illness cover pays out a tax-free lump sum when a person is diagnosed with a potentially life-threatening illness, but it also does not pay out upon death. Also, not as many illnesses are covered as with income protection insurance. “Policies can last as long as you want, although many people choose to have cover until their mortgage has been paid off or children have left home,” per the article It provides a single payout, and then the policy ends. Mortgage protection insurance functions as a form of life insurance, but payout is only for use with paying off a mortgage. Other household costs will not be covered. According to The Times Money Mentor, perks of this policy include that it clears mortgage debt if you die during the term, the money is usually paid in a lump sum, and payments are not impacted by an inheritance tax if the policy is placed in trust. Employer–offered life insurance is also known as a “death-in-service” benefit that is a perk of working with some companies. Should you die while employed with the company, your beneficiaries will receive a lump sum that should be protected from inheritance tax if it is placed in a trust. “The payout is typically two to four times your annual salary, although some employers offer more than this,” according to the article. “Be aware that the death-in-service payout may be lower than your family would require, so it can still be worth taking out a life insurance policy in addition.” A prepaid funeral plan is also an option, and ideal for those over 50 years old who do not want their families burdened with funeral expenses. Payments are protected from inflation, although there are currently some regulation questions as mentioned in the article. Important information about mutual funds is found in the Fund Facts document. Please read this carefully before investing. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Unit values and investment returns will fluctuate. Insurance products, including segregated fund policies, are offered through Beyond Business Financial Solutions Inc., and Investment Representative Nathan Garries offers mutual funds and referral arrangements through Quadrus Investment Services Ltd. Comments are closed.
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AuthorNathan Garries is a Certified Financial Planner who has been involved in financial advising, financial planning and wealth management for over two decades, carrying on a family tradition of three generations. Archives
October 2022
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