Good advice. Well given.
In the building years, you are starting out on your financial plan. You may have young children. Your family income enables you to begin accumulating assets, and you are likely contributing to an RRSP, perhaps a Tax-Free Savings Account (TFSA) and/or an RESP. However, cash flow may be tight and you likely have significant short and long term debt, particularly a mortgage.
Finances are typically tight, and you may have significant long-term debts such as student loans and a mortgage.
This is the time of your life when risks to your family’s financial security are the greatest.
You don’t have the assets to support the family over time if a main income earner falls sick for a prolonged period and can’t work, or passes away prematurely. Protecting your family’s financial security is essential.
Protecting Your Income
One of the most important decisions you can make is to safeguard your family’s financial security. When you choose life insurance, you protect your family’s income now and for the future.
Typical employee group life insurance plans will barely cover funeral costs, leaving your spouse to deal with the cost of mortgage, debt and other needs. If you should pass away prematurely, having sufficient life insurance creates an instant estate. The insurance can pay off your mortgage and your debt. Your family can maintain their standard of living and achieve their goals in life.
Disability insurance pays a monthly benefit to help replace lost income if you cannot work due to a sickness or injury. It’s especially important if you are self-employed, as a disability could be financially devastating.
If you are an employee with group coverage, you could still need personal Disability insurance to cover areas where the group plan may be lacking. This is especially important if your spouse isn’t working or has no coverage of their own. Many group plans only cover a short time period. If your disability is an extended one, only a personal plan of your own will ensure that your family’s needs are covered for the long term.
Critical Illness Insurance
If you are diagnosed with cancer or suffer a heart attack or other serious medical condition, Critical Illness insurance provides a tax-free lump sum benefit to cover associated costs. You can use the benefit for out-of-country treatment, home nursing care, to cover an extended recuperation period or in any way you wish.
Segregated funds are similar to mutual funds, but they offer principal protection, the ability to lock in investment gains, potential creditor protection and estate planning benefits. They can suit conservative investors who will only choose equities if they receive a degree of principal protection to minimize the risk of market volatility.