Mike Kidney written for St. John's Board of Trade Business News, Feb/March 2016
Last May I had the opportunity to speak to over 1200 Insurance advisors in this country in Toronto at the Canada Sales Congress. In that speech I spoke about the need for insurance and its place in a family and business financial and estate plan.
Before we talk about the needs let's look at the statistics. Could your family survive today on $189,600 in insurance? Think about that, would that cover your debts? Pay for the funeral? Children’s educations? Capital Gains tax? Mortgage? Replacement of key employee? Or replacement of your income to your family? The list is extensive, but the Canadian Health and Insurance Association confirms, that the average person in Canada has only $189,600 (Family $373,400). As an advisor in Newfoundland, I would argue that number would be smaller here.
Life has a way of challenging us. We finish
school, get married, start a family and then our lives get interrupted. This interruption can take many forms; a deadly accident, death from illness or even surviving an illness. Each of these events bring with it their own challenges which could be mitigated with insurance.
Ask yourself, if you died today would your family survive? What about your business? Do you know how much insurance you would need? Life insurance advisors, should ask you a series of questions to make sure that you know how much coverage you and your business needs. It is not just your expenses that need to be considered, you also need to protect your lifestyle. If you died tomorrow would you want your spouse, children to continue to enjoy the lifestyle you have provided them?
Life insurance planning and will planning should be done hand-in-hand. Everybody has an estate and the key document of any estate plan is a will. If you don’t have a will, call a lawyer and get one! The will is the key document which will outline the distribution of your estate. Once your will is complete, share your plans with your insurance advisor. That way they can ensure that your beneficiary designations on your policy’s match your will. By doing this, you will save your executor a lot of time and stress.
Think about this scenario, your doctor comes into your hospital room and says I have good news and I have bad news. The bad news is you have cancer. The good news is we can treat it and in 12 months, you should be back to normal. How would your family or business handle that news financially? Would you have income replacement? What about the other costs?
When a critical illness hits a family, their world is turned upside down. A spouse takes time off to be with their partner during their treatments. Families rely on support or childcare to help out. If you need to travel for treatments, are those flights covered? What about hotels, meals? I would like to think that if you are fighting an illness to get back to a normal life, you wouldn’t want to have this added financial stress. By having a critical illness insurance plan, you can eliminate this stress.
As business owners, we regularly do a SWOT analysis of our business. Unfortunately, we rarely do one for our families. When you look at your threats, do you look at your own health? We can do somethings to minimize illness and premature death but we can’t stop genetics. I hope that after reading this article, you take a step back look at how you would handle your life being interrupted. This will help remove financial stress when you need it most.