How much life insurance is enough? Ideally the amount of coverage you put in place will be enough to pay for your funeral, fund your children’s education, pay off all debt, and leave an income to your loved ones that will allow them to continue to live in the way to which they have become accustomed.
This seems pretty simple but why is it that, I estimate, 90% of the people I interview either don’t have enough coverage, have the wrong insurance product for their needs, or own insurance personally when (for business owners) there could be tax benefits to owning it corporately?
One of the primary reasons is that there aren’t nearly as many life insurance sales people now as when I first started my career in financial services in the early 1980s. Most of the large insurance companies subsequently shut down their training programs and started to work with existing sales network they already had in place. The result of this was, and is, that a lot of people who need life insurance haven’t been approached or are working with someone who does not specialize in life insurance. You might believe that your financial house is in order if you are dealing with a highly reputable financial advisor but ask him or her the next time you meet if they have the wisdom, knowledge and expertise to consult on life insurance matters. If he or she does not, ask that you be referred to someone who does.
We have all seen the Facebook posts where someone is raising money through a steak BBQ for someone’s child’s future education fund since the parent who was the bread winner passed away. If the same effort that goes into the steak BBQ had been put into meeting with a good insurance salesperson, then the family would have been looked after, and there would be no need for fundraising.
Life insurance can be purchased relatively very inexpensively that can fully take care of your needs. If you haven’t done so lately, ask your financial advisor to review your situation to ensure that you have enough insurance to protect your family. I have never dealt with a widow who said “Take some of this insurance money back; I don’t need this much.”
How do you know if a financial advisor specializes in life insurance? The quickest and easiest way is to look for the CLU (Chartered Life Underwriter) designation in his or her credentials; it is recognized by other professionals like chartered accountants and lawyers. But talk also with friends and family about the advisors they work with, and read as many online reviews as you can find, so you can get one or more solid recommendations. Most of us want to ensure that the people we love most will be financially secure even when we’re no longer here to help so it’s important you take the steps necessary to find the best advisor for the job.
Clifford A. Wiegers, CFP, TEP, Ch.F.C., CLU, B.Comm.
Insurance Representative, Wiegers Financial and Insurance Planning Services Ltd.
Financial Planner, Manulife Securities Investment Services Inc.
The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Investment Services Inc.