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Why Purchase Life Insurance?

The simple answer is: Because your family matters to you


Therer are a host of reasons why you would want to purchase a life insurance policy. Here we will focus on the four main reasons and we will spell it out for you in a language you can understand and appreciate. 

Your family matters to you: If that is the case then you would do anything and everything to make sure they are well taken care of. Simply put you would protect them from a financial hardship. How do you do that? Well, you can self-insure if you already have enough money saved up for that dreadful day and beyond or buy life insurance policy today. We can understand the fact that an individual would like to save money for burial expenses such as $10,000 or so. How about a family with two young children and a mortgage? What would a $10,000 insurance policy do for your family? You know the answer. If you have a mortgage of $200,000 and two children to send to college to, buy life insurance. It is the most prudent and most economical way of insuring your family's well being today and in the future. And with our experience and knowledge we can help you achieve the peace of mind you and your family deserves.    

We understand that nobody likes to talk about death. It is not the kind of subject matter you like to talk about around kitchen table on a Sunday morning. But you have to. It is inevitable. The question is how well prepared are you? We all know family members and friends who have been devastated financially due to a death of father or mother who did not have life insurance protection. Having an insurance policy to protect the people you love the most should not be a choice it must be and is a necessity.

 To protect your mortgage: Many people confuse mortgage insurance with house insurance. The reason for that is when people think of mortgage insurance they assume the insurance is on the house. It is not. The insurance is on your life, the home owner. The purpose of having mortgage life insurance is to have the money you need to pay off the outstanding mortgage if you die prematurely so that your family can become mortgage free and they can remain in their home. Mortgage life insurance proceeds are directly paid to your beneficiary. And the best part is that your beneficiary spends the money however they wish. Click here to be linked to the Mortgage Life Insurance page. We have highlighted the key differences for you.

♦ Child's future health protection: It is understandable that most parents would not wish to talk about life insurance on their children. After all life insurance has to do with money. And what kind of parent wants to benefit from a child's insurance policy? Moreover, why would a child need an insurance policy? There is no financial or income loss if a child dies. Those are all important questions. Here we will address those questions and will lay out a few arguments why you should consider life insurance on a child:

 It is much cheaper at a young age. The younger the child, the cheaper it is
 You set a foundation today where they can build on it later on
 They are generally healthy today and you as a parent cannot guarantee it tomorrow. 
 The healthier they are, the cheaper it is 
 If there is a medical history in the family, best time to secure the future is today
 The insuranace you buy today will be there for them for life
 You can buy their insurabilty in the future today so that no matter what happens to their health status later,              nobody will take that away from them

 Buy-Sell Agreement: This is especially relevant for business partners. A buy-sell agreement is a legally binding document that can help to ensure the smooth continuation of a business when one of the owners leaves or dies. The question you have to ask yourslef is that how would the death of a partner affect the life of your company? How would your company settle with your partner's estate? If you haven't planned it properly, you may be faced with an impossible choice: either invite members of your partne's family into your business, or pay the value of the shares to the estate. 

It is important to have a well structured buy-sell agreement. We are not here to advsie you as to how to set it up or discuss the legal issue. That is something your lawyer will do. Our main focus here is to help you prepare for the funding side of the plan in the event one of you leaves or dies. Essentially, there are three ways to fund a buy-sell agreement:
liquidate assets, get a loan, or buy life insurance.

•  Liquidate assets- where would you get the cash from? Well you can sell assets of the company. But can you get a fair market value if you were forced to liquidate?
•  Get a loan- would a lender feel comfortable in granting you a loan to a company who just lost one of the partners? Even if a loan can be secured, what would the interest costs be?
•  Buy life insurance- A life insurance policy for each partner can be put in a place to cover such events. For example, you own half of the company and your partner owns the othe 50% . Let's just say your company is worth $1 million dollars today. Now you buy $500,000 of insurance policy with your partner being your beneficiary and your partner buys his $500,000 with you being his beneficiary.The idea here is that money will be available if one of the partners dies to buy out the other partner with the life insurance proceeds so that to ensure the continuation of the business. 

The best way to deal with that kind of emergency is to be prepared. Of the three methods discussed above, only life insurance allows you to plan ahead. If you have a buy-sell agreement in place, perhaps it's time for you and your partners to evaluate its terms and provisions.
If you do not have one, it only makes sense to talk to your lawyer, accountant and us here. We would be happy to set up your life insurance policy.

 Estate Planning: You work hard your entire life and you build a considerable amount of wealth or estate. Your estate is comprised of everything you own— your home, your car, other real estate assets, checking and savings accounts, your stocks and bonds, your life insurance policies, furniture, and personal possessions. So what's got your estate to do with life insurance? A lot and we will explain. When you die and you had accummulated a substantial amount of money or real assets, then you will pay an estate-tax or inheritance tax. 

Before an inheritance money can be distributed to the designated beneficiaries, the Canada Revenue Agency(CRA) has to get a cut. Depending partly on how rich the deceased person was, up to half of the estate can go to taxes. That means not much would be left over for your loved ones. So what can you do to minimize the tax you would owe upon death so that your hard earned money gets transferred to your children? You buy life insurance. The purpose of buying a life insurance policy is that the proceeds of of your insurance will go to paying the tax you owe to Canada Revenue Agency (CRA), legals fees, and court costs. Unfortunately even upon death we still have to pay taxes. But we can be prepared today by buying life insurance policy that is affordable and flexible. Call us and we would be happy to design a customized plan.

We love to hear your comments and your feedback. Please email or call us. 

Non-Med Canada 

Tel: 416-546-1167 
Toll-free: 1-800-656-1876 


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