I was building a deck a few years back and
I didn’t know what type of wood to use.
When I asked my family and friends, everyone seemed to have their own
answer. One friend suggested spruce,
another recommended pressure treated lumber, another proposed untreated lumber,
and yet another believed cedar to be the best choice; if I could afford it. I
wasn’t sure which wood to settle on until I asked a family member; who in turn asked
me a question first. He asked: “how long do you want the deck to last?” I guess
the answer really depended on what my own
objective was.
When buying life insurance, one must ask
themselves similar questions; such as:
- Why do I want the coverage?
- How long will I need the insurance?
- Is my need short term or permanent?
- Will my need diminish with time?
And the most important question: How much
coverage do I need to accomplish my objective?
By asking these questions, the answers will
come to the surface; and speaking with an advisor will help uncover some issues
you may not have thought of on your own.
For example:
- Can I split my beneficiaries?
- Should I name my estate as beneficiary?
- What is the advantage of naming a secondary beneficiary?
- What about increasing or decreasing coverage in the future?
- Can I keep my coverage even after my mortgage is paid off?
The amount of life insurance you need is
determined by your personal objective. Buying insurance to cover a
specific item, such as a mortgage is easy. If the mortgage is $150,000 and you
want the full amount of your mortgage paid off at your death, then you will
need $150,000 worth of coverage. However, if you have a more complex situation;
you may need coverage that will generate a full replacement of your income,
which will last until the children are finished school and then, a reduced
amount of coverage until your widow/er has survived a further number of years. If
the death benefit is to be indexed for inflation, or if taxes are to be
considered, your requirements will again be different.
Prepared
for:
|
Client Name
|
||||
Current Income
|
$100,000
|
||||
% target
|
50%
|
||||
Actual Target
|
|||||
Existing Insurance
|
$0
|
||||
New Insurance
|
$750,000
|
||||
Inflation
|
3%
|
||||
Opening
|
6%
|
38%
|
Year End
|
||
Years
|
Balance
|
Income
|
interest
|
Income
Tax
|
Balance
|
1
|
$750,000
|
$50,000
|
$42,000
|
$15,960
|
$726,040
|
2
|
$726,040
|
$51,500
|
$40,472
|
$15,380
|
$699,633
|
3
|
$699,633
|
$53,045
|
$38,795
|
$14,742
|
$670,641
|
4
|
$670,641
|
$54,636
|
$36,960
|
$14,045
|
$638,920
|
5
|
$638,920
|
$56,275
|
$34,959
|
$13,284
|
$604,319
|
6
|
$604,319
|
$57,964
|
$32,781
|
$12,457
|
$566,680
|
7
|
$566,680
|
$59,703
|
$30,419
|
$11,559
|
$525,837
|
8
|
$525,837
|
$61,494
|
$27,861
|
$10,587
|
$481,616
|
9
|
$481,616
|
$63,339
|
$25,097
|
$9,537
|
$433,838
|
10
|
$433,838
|
$65,239
|
$22,116
|
$8,404
|
$382,311
|
11
|
$382,311
|
$67,196
|
$18,907
|
$7,185
|
$326,838
|
12
|
$326,838
|
$69,212
|
$15,458
|
$5,874
|
$267,210
|
13
|
$267,210
|
$71,288
|
$11,755
|
$4,467
|
$203,210
|
14
|
$203,210
|
$73,427
|
$7,787
|
$2,959
|
$134,611
|
15
|
$134,611
|
$75,629
|
$3,539
|
$1,345
|
$61,176
|
16
|
$61,176
|
$77,898
|
($1,003)
|
($381)
|
($17,345)
|
If you are in Nova Scotia, and wish to
receive some insurance advice, please contact:
Corry Collins CLU CHFC CFS.
902-444-7000
corry@maritimewealth.com
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