Wednesday August 22, 2012 is the very first Life Insurance Movement day. Initiated in the U.S. (I believe I’m one of the very few Canadian bloggers that will be participating) the goal of the movement is to raise awareness amongst consumers about the importance of life insurance.
In order to achieve this goal, many active bloggers in the life insurance community are all going to blog this Wednesday on why we think life insurance is important for our family. As I’ve been intending to start a blog on our website for quite some time now, this movement has given me the impetus to actually get it going – as well as some fodder for my first post.
So on to the post – why is life insurance important for my family? To answer that, I’m going to show you the types of life insurance I own personally along with the motivation behind each purchase. As an insurance broker the value I place on life insurance is higher than most and this does affect the insurance that I purchase. Specifically the insurance products I own are not typical of most of my clients.
First, I am married with 2 children, one in university and one in high school. Both are looking like it’s a long haul through university and I expect both will be at it for up to 8 years. For example, one child is looking at dental school. Tuition costs alone are upwards of $25,000 per year per student.
My wife and I work together, however I am the primary rep for our company. If I die, she can certainly return to working outside our business, but would be doing so at a substantially reduced income. That income would potentially not be enough to put both kids through university. Thus, my first need for life insurance is to cover off my income that’s lost should I die. And that needs to be long enough so that both kids have completed school. For this, I keep a term life insurance policy.
Secondly, I personally want to ensure that there’s no cash shortage when I do die – whenever that is be it young or old (I’m rooting for ‘old’). I also want to ensure that no matter what happens, my wife is looked after upon my death. So for that I have a permanent life insurance policy. In my case, I own a universal life insurance policy which I do not use for investments.
And finally, I want to leave an estate to my kids. I expect I will have an estate built by the time I die, and hopefully a good sized one. However in order to guarantee this, my wife and I own a joint last to die life insurance policy. The policy pays out upon both of us passing and guarantees that my children will have an inheritance, no matter how my business or investments perform.
Coverage as comprehensive as this is well beyond what most of our clients are seeking, and as such, most consumers would not have this depth and breadth of coverage. Nonetheless, for myself being a big believer in the value of life insurance, wanting to guarantee an inheritance, and wanting to ensure my spouse is financially OK in the future, this is the coverage that ensures my goals are met.