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WHY I AM GLAD I OWN PERSONAL PERMANENT LIFE INSURANCE
Loss of Income
Permanent insurance does the same job as term insurance of delivering necessary replacement income and money to pay off debts such as mortgages, plus many other jobs term cannot do.
Loss of Pension Income
Those who are prudent make sure they have life insurance for the eventual first spousal death, that will then deprive the survivor of 100% of their spouse’s monthly OAS, and 40% of their CPP, a decrease in budget of around $1000 a month in today’s dollars, and just at a point of major emotional trauma. This is why we frequently receive “I need reassurance about the money” phone calls within 24 hours of a death.
The loss of income will be even higher if the departed spouse had another pension, which will also drop. The point of having at least a moderate amount of permanent insurance is to replace this lost income for the rest of the survivor’s life.
The Right Sum
The best face amount varies in each situation, but if a person lasts to their life expectancy, say 88 for a male, then at least $150,000 (in today’s dollars) required to make up the loss of pensions to the survivor who may have 3 to 6 more years to fund, and at least 2-3 expensive years (long-term care). If the departed dies before life expectancy, more is required, so this is a factor in the decision making for those who have developed health issues.
Freedom to Spend
Clients often tell us they like the idea of having at least a moderate amount of permanent insurance in order to inherit their children, so the clients are free to spend all their capital during life if they wish to or need to.
If the money is indeed used up for expensive end-of-life care, the children will be compensated for helping out their parents.
Parents want to think they will have enough for long-term-care if required, but with an average cost of $7000 a month or more in today’s dollars, and each generation frequently retiring sooner but living quite a lot longer, this is uncertain.
Late in Life Money
If overfunded with any surplus income or as part of the retirement income strategy, there is a nest egg for late in life care that can be borrowed out tax efficiently as borrowing incurs no tax on growth. If the client is terminal up to 25% of the death benefit can even be accessed during life’s last stages.
Start Sooner “For a Lower Cost”
Those who buy their permanent insurance needs in their 40s have a much lower cost (less than 1/2) than those who start in their 60s. Clients should do an insurance review at the earliest age possible.
If they cannot afford permanent, so be it, but they can afford term and this can be converted later without medical evidence.
All these reasons are why each owner should greatly value and appreciate these policies. With our service clients will get a custom solution, with phases if needed, plus a free will template and free Representation Agreement template.