Regardless of your role or responsibilities in life, we all work hard to get where we want to go. As we get older, ensuring our family is well taken care of when we are gone is more important than ever. Using insurance to provide liquidity in an estate to pay off liabilities such as taxes or mortgages is a great tool to ensure that takes place. That’s why more and more estate planning experts regularly recommend insurance as a solid wealth planning tool. Here’s what you need to know when it comes to leveraging insurance to help preserve your wealth.
There are several types of insurance that you can utilize to protect your legacy, including:
- Life insurance;
- Salary or disability insurance;
- Critical illness insurance;
- Long-term care insurance;
- Mortgage insurance;
- Travel insurance.
Several types of life insurance
To protect your family in case of death, life insurance can be used to pay for funeral expenses, as well as the mortgage on your home. When it comes to estate planning, there are several types of life insurance that can help you retain your wealth:
- Credit insurance that reimburses your home loan;
- Group life insurance obtained through an employer or group;
- Permanent coverage - protection in force until the death of the insured;
- Temporary coverage - a life insurance policy to which you enroll for a fixed number of years. This type of insurance is often used to cover the amount of a mortgage;
- Universal life coverage - a policy that may be used to avoid paying taxes in Canada
Protecting your assets in the event you become sick
Disability insurance protects you if you are not able to work due to an illness or accident. The product is often paired with critical illness insurance, which provides the insured payment of a lump sum in the case of diagnosis of a diseases covered by the policy.
Do not hesitate to contact an insurance broker to learn more on how you can use insurance to protect your legacy.
- A good estate plan that protects your wealth for future generations combines several types of insurance, including life insurance and disability insurance.
- There are three types of life insurance: permanent, temporary and universal.
- Disability insurance and critical illness insurance are often teamed together to obtain optimal protection.