Why life insurance is a must for parents

Life insurance can be a great investment that can ensure your child is financially taken care of after your passing.

When thieves broke into a Scarborough self-storage unit, Madhavi Acharya-Tom Yew learned the contents weren't covered by a  homeowners policy.

Published on Wed Jan 18 2012


Naming a guardian for your child or children is a tough decision that a lot of parents avoid. What can be even tougher is deciding how you will provide for your children in the event of your death.

While this isn't something parents want to think about, it's important to prepare for the worst and ensure your most precious asset will be taken care of.

According to Andrew Dedousis, Senior Wealth Advisor at Meridian Credit Union, life insurance can be one of the best ways to ensure your child is financially taken care of. It is paid out tax-free and ensures your child's guardian has the finances necessary to raise your child.

Naming a designated beneficiary in your life insurance policy itself other than your estate can avoid expensive probate fees.


Deciding how much life insurance you need, or what type, is a decision that should be made with the help of your financial advisor, according to Dedousis. There are a lot of factors to consider, including any special requirements or needs of your child, your family's annual living costs, debts and expenses like childcare. To get an idea of what you may need, there are lots of great online life insurance calculators. 
Regardless, parents do a lot more harm than good by not making a will, choosing a guardian or putting together a financial plan.

"We can spend a lifetime building wealth but if we don’t have a proper estate plan a lot of that can really unravel. The most important and crucial components of financial planning include protecting our loved ones in the worst case scenarios." said Dedousis. 
Between my husband and myself, we have over $1.1 million of life insurance.

In addition to other savings for Wilson, including RESPs, and other investments, it is a relief to know that, should something happen to me, both my husband and Wilson will be able to maintain their quality of life.



http://www.thestar.com/business/personal_finance/insurance/2012/01/18/why_life_insurance_is_a_must_for_parents.html

Good article, and wholeheartedly agree with the premise. As a licensed agent I have seen the good, the bad and the ugly. I have seen a widow have to move out of her home because she could no longer afford it when her husband died with no insurance. I have also seen widows who were well take care of, and everything in between. I do have one quibble, and that would be the recommendation to talk to your financial adviser. First most advisers know nothing about life insurance, and in fact I have seen a definite bias against LI in the financial community. What I would recommend is talk to a licensed agent. We have specific training in how to use life insurance in estate planning and to protect a family. If you talk to an agent and he just pops out and says you need XYZ amount, find another agent. It's more complex than that. How old are you? Your spouse? Do you have kids at home? What ages? Is there a mortgage, educational loans. large bills? Are there any special needs? How much SS will your spouse get if you pass? How much will the children get, and until when? Do you need to fund their college? There are a lot of other variables that enter into the calculations, questions to be asked, but you should be able to see that there is no cut and dry answer.

Typically in this sort of situation I will spend a couple of hours with the clients, getting to know them and discussing their needs and goals, and then I will spend several hours running various scenarios before getting back to them with some options that best meet their needs and budget. You should expect no less.