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How would your family fare without you

When was the last time you took a few moments to think about how your family’s lifestyle would be affected by losing you? Not only does your family depend on you for love and emotional support, but the fact of the matter is, they also rely on your continued earnings to provide for their daily living needs. This is why it’s critical you maintain sufficient life insurance coverage.

In the event of your death, life insurance proceeds can be used to eliminate debt, provide a home free and clear of mortgage payments, guarantee funds for a child’s education and replace the income you generate today that maintains your family’s lifestyle.

How much is enough? A common rule of thumb suggests you should maintain life insurance coverage equal to 10 times your income. The danger of a rule of thumb is that it does not account for an individual’s age, stage of life, personal and family circumstances or current investment returns.

Beyond life insurance: Don’t overlook the financial toll a disability could take on your family, especially if it affects your ability to earn an income. Here are two types of insurance to think about:

  • Disability insurance: Fills the void in the event you are no longer able to work due to a disability or should you have no choice but to accept a lower-paying job
  • Critical illness insurance: Usually pays a lump sum to you should you be diagnosed as having a life-altering medical condition specified in the particular policy, such as a heart attack or stroke, or if you are diagnosed with a life-threatening disease like cancer.

Ensure your will is updated regularly, making sure you specify whom you’d like to take care of your children in the event you and your spouse should die simultaneously. This should be discussed with your designated guardian(s) before your choice is formalized in your will and provisions should be made to ensure funding is available to allow your guardian to carry out his or her responsibilities. Also, make sure you appoint an executor (liquidator in Québec). This is the person who will act on your behalf to settle your personal affairs, including the financial aspects of your estate.

Reviewed: May 21, 2015

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Great-West Life Assurance Company (outside of Québec). Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.