Talking about life insurance may be difficult, but needs to be done advisers

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Talking about life insurance may be difficult,
but needs to be done advisers
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• OTTAWA Talking about life insurance can be
  uncomfortable because it means contemplating what
  happens if you die, so Rob Knight has a trick
  when discussing the topic.

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• Knight, an investment adviser and director,
  private client group, with HollisWealth in
  Cambridge, asks clients to imagine what would
  happen if they died yesterday.
• "Since they are alive today, they don't worry
  about it as much," he says.

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• But despite the discomfort in talking about it,
  Knight says, insurance can play an important role
  in your financial plan.
• If your death isn't going to affect anyone
  financially, then you probably don't need life
  insurance. But if it will, then you need to start
  thinking about how you can use insurance to
  protect your loved ones.

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• In determining how much life insurance, Knight
  says, you need to consider what you owe and what
  you may want to replace in terms of income for
  those who remain.
• If you're a high-income earner and the sole
  breadwinner in your family, then you may need to
  consider more than if that's not the case.

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• "The question that I ask clients is, 'How much of
  this income do you want if something happens to
  person A?'" Knight said.
• "It is sometimes a gut answer and other times it
  is pure math."

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• Jeff Hull, a senior financial adviser at Manulife
  Securities, said it is important to understand
  the purpose of the insurance.
• "For a young family with a big mortgage, that
  could be safety and security as their prime
  objective or goal, and if they were to lose their
  breadwinner they would be destitute," Hull said.

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• "For someone later in life, it could be an
  estate-planning purpose to buying life insurance
  to leave a legacy for a cherished beneficiary or
  to donate to charity or to cover income tax at
  death."
• Life insurance can take different forms.

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• With term life insurance, you're covered for a
  set period of time, often 10 or 20 years.
  Depending on your age, term policies can often be
  renewed until you reach a certain age. Permanent
  life insurance continues until your death.

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• Hull said most people tend toward term insurance
  because it can appear to be cheaper, but
  permanent insurance policies offer some
  advantages.
• Most permanent or whole-life insurance policies
  have a savings component that grows as the years
  pass.

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• "It might be a little more expensive up front,
  but over time as you build the savings component
  into it, over time there is a potential of having
  that insurance policy pay for itself with the
  savings that are built up," Hull said.
• It is also important to review your life
  insurance regularly because your needs will
  change as your own personal circumstances evolve.

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• Marriage, the birth of children, the purchase of
  major assets such as a home are key points when
  you will want to be sure to review how your life
  insurance fits within your financial plan.

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• "You don't necessarily have to change your
  policy, but it is good to revisit it, just to
  make sure the plan and the purpose and the need
  as to why it was purchased still exist and
  whether it has to be upgraded or downgraded,"
  Hull said.

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