Insurance: Life’s changes require an insurance tune up

Are wedding bells about to peal for you? That's not surprising – this is the wedding-est time of year, after all. Getting married is one of life's biggest changes and even though “wedding” is often just another word for “frantic”, you should take the time to contemplate one significant change your new life together will bring – the change to your insurance needs.

No, that's not very romantic, and it is absolutely necessary to safeguard your future. In fact, an insurance tune up is vital for anyone whose life has recently changed in any significant way – and there are a lot of us in that broad category. So, here's a brief look at the types of insurance protection you should consider as your life changes.

Family and debt protection. When you're beginning to build a life together, insurance should provide an economical safety net that protects your family. Life insurance accomplishes these goals by providing a lump sum to your beneficiaries in the event of your death. And, as a general rule, you should increase life insurance protection as your family grows and your lifestyle and income change.

Term insurance is usually the most affordable for young families who need a lot of coverage, but premiums increase with each policy renewal and can get very expensive as you age. Permanent insurance – either whole life or universal life – renews automatically for your lifetime, as long as you continue to pay the premiums. Depending on the type of plan you choose, the price of coverage will never go up and you can blend life insurance coverage with an investment program that delivers tax-deferred growth (subject to certain limitations) and usually tax-free benefits to your beneficiaries.

If you have a significant mortgage, you should consider mortgage insurance that will pay off the full remaining mortgage balance directly to the lender, or the more flexible option of individual renewable term insurance that allows your beneficiaries to pay off some or all of the mortgage and/or other pressing expenses (with proceeds that are usually tax-free).

Lifestyle protection. Your most valuable asset is your ability to earn a living. Disability insurance provides a regular stream of income should you become disabled and unable to work. You may have some disability insurance as part of your benefits package through your employer, but it may be capped or include exclusions or restrictions limiting payment. That's why you should look carefully at supplementing your group plan with a personal plan. And if you're self-employed, disability insurance is an absolute necessity.

As you age, supplemental health insurance plans, such as long-term care insurance and critical illness insurance, become vital. Long-term care insurance guards against the financial burden of a lengthy, debilitating medical condition. Critical illness insurance provides you with a lump sum payment when you are diagnosed with a specified life-altering illness – such as heart attack, stroke or cancer – and you can usually use the payout any way you wish.

When change arrives in your life, it's time to take stock of a lot of important things – including your evolving insurance needs. A financial planning professional can help ensure your insurance program stays in tune through every one of life's changes.

(Submitted by Damon Smith, Investors Group Financial Services Inc. For more information call 888.335.1362).

This column, written and published by Investors Group Financial Services Inc.(in Quebec – a financial services firm), is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant. Insurance products and services offered through I.G. Insurance Services Inc. (in Quebec, a financial services firm). Insurance licence sponsored by The Great-West Life Assurance Company (outside of Quebec).

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