Life Insurance for Financial Protection

How much Life Insurance do I need?

If you’ve decided that you need life insurance, how do you know how much is enough to protect your family financially in the case of premature death? The amount of life insurance you need can be a difficult question to answer, but this article will help you understand what to expect before speaking with your insurance advisor. The appropriate amount of coverage varies for each circumstance, and the various rules of thumb, such as multiplying your income by 10, are not an effective way of determining how much you really need.

It is crucial to have the correct amount of coverage, as the money your beneficiaries receive from your death benefit will help them pay any tax liabilities and other expenses that may arise upon your death as well as help them sustain their lifestyle after you have passed away. We will walk you through a “needs-based assessment”, which will ultimately help you gain a better understanding of how to protect your family with life insurance.

Needs-Based Assessment

A needs-based assessment considers cash and income needs that your beneficiary or beneficiaries will need to sustain their current lifestyle. Cash needs include funeral fees (last expenses), probate fees, tax liabilities, legal fees, outstanding loans, a mortgage redemption, an emergency fund and an education fund for any minor children. Income needs take into account the family’s current annual income and the percentage of this income that your family will need to maintain their current lifestyle. For example, you can decide that upon your death, with the cash needs met, your spouse will need 50% of your income while any children remain dependent, and 30% thereafter.

Within the above-mentioned cash needs, some may be categorized as permanent or temporary. Temporary cash needs are the costs that most people pay out during a set period such as a mortgage and their children’s education. On the other hand, permanent cash needs are costs including last expenses, probate fees, tax liabilities, legal fees, and an emergency fund that are required at any stage of life. It is worth considering purchasing some amount of permanent insurance that will last your whole life to cover these permanent needs.

Application of the Needs-Based Assessment

Now, there are various things to take into account when you’re determining the amount of insurance you may need to cover your family’s immediate and ongoing needs upon your death.  In addition to determining these needs, it’s important to consider things such as:

  • How much savings do you have put away?
  • What insurance do you already have personally?
  • Do you have insurance through a work plan?
  • What benefits are available from the government?

 

Now What?

Now that you understand the basics of needs-based assessments, you know that having the right amount of coverage is key in protecting your family financially. Without the right coverage, your family could have trouble paying for necessary costs such as legal fees and last expenses. If you would like to learn more about how much life insurance your family needs, speak with your insurance advisor today.

Submitted By: JR Moy

Financial Advisor – Love & Persson Group

 

 

 

 

 

 

 

 

 


101 Main Street North
Dauphin, MB  R7N 1C1 
Phone: 204.622.7600   
Fax: 204.622.7601

Hours of Operation: 
Monday to Friday 8:30am - 5:00pm   

443 Main Street
Grandview, MB  R0L 0Y0 
Phone: 204-546-2667    
Fax: 204-546.2624
 
Hours of Operation: 
Monday to Friday 9:00am - 4:30pm 
(Closed 12:30 -1:30)

Financial Services Division
103 Main Street North
Dauphin, MB R7N 1C1  
Phone: 204.622.7640  
Fax: 204.622.7615

Hours of Operation: 
Monday to Friday 8:30am - 5:00pm   

NOTE: Love & Persson Group is closed on Stat Holidays.  There may be a limited amount of other days we are closed.  These days will be posted on our door as a notice.  Alternatively, if you are uncertain, please call our office to confirm.

“MUTUAL FUNDS ARE DISTRIBUTED THROUGH DESJARDINS FINANCIAL SECURITY INVESTMENTS INC. LIFE AND HEALTH INSURANCE PRODUCTS ARE PROVIDED THROUGH LOVE & PERSSON GROUP. LIFE AND HEALTH INSURANCE PRODUCTS AND SERVICES ARE NOT AVAILABLE THROUGH DESJARDINS FINANCIAL SECURITY INVESTMENTS INC. (DFS INVESTMENTS) NOR ARE THE INSURANCE PLANS OR SERVICES AVAILABLE AND/OR OFFERED, SUPERVISED OR REVIEWED BY DFS INVESTMENTS. DFS INVESTMENTS IS THE MUTUAL FUND DEALER THROUGH WHICH MUTUAL FUND PRODUCTS AND SERVICES ARE PROVIDED.”
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