This post is for the Canadian Tour of Personal Finance blogs - May 7, 2007.

Life Insurance and Personal Finance in Canada
Life insurance is definitely a topic that is not cocktail chatter, that's for sure. Life insurance is talked about on the personal finance blogs, but it's not the usual topic.




Many of the personal finance bloggers write about stocks and investing, being frugal and saving money, getting out of debt, or how to get better deals on products and services. These are all topics that relate to how to better spend your money and how to invest better.

IT'S ALL ABOUT HAVING GOOD DEFENSE PLANNING
The topic of life insurance is more of a defense topic. A hockey team would get obliterated without a good defense line up. An army would lose every war with out a good defense strategy.

Hockey teams plan for the "what ifs". "What if the other team does this!?" And "what if Player X does that!? How doe the team respond to these situations?! I would imagine that professional sports teams spend a good part of their practice time talking about and preparing for the unexpected "what ifs".

This defensive part of their training helps them when they're playing. However, the defensive strategy part is not necessarily something you see when the players are skating on the ice.

People love to watch the exciting skating, outmanoeuvering of the other players, scoring goals. They are not as excited about the mundane defensive planning part of the game.

Can you imagine buying tickets to a Toronto Maple Leafs coaching session where the players are hammered with the what if situations? You would be able to spend the hour listening to the mundane but important parts of the game. I don't know about you, but that doesn't excite me very much!

LIFE INSURANCE IS THE DEFENSE OF PERSONAL FINANCE
Life insurance is the defensive part of personal finance & estate planning.

Life insurance helps you plan for the "what ifs" in your personal economy. One of the things that gives you peace of mind is knowing that you've covered all of the angles with regards to your household finances. Knowing that you and your family is covered in the case that by very small chance you, or one of your family members die expectedly.

THE FOLLOWING ARE SOME LIFE INSURANCE WHAT IF'S

• What if you're on vacation in a foreign country and pass away?
  This question I found most shocking in as much as I've never really given it much thought.
  
  If you pass away in a foreign country such as Mexico, or Africa, or anywhere else in the world, there are huge costs to process your body and then have it repatriated back to Canada. You've got to identify the deceased's body and then go through all of the paper work and cost to bring them back home. This could devastate a person's finances.
  
  
• What if an loved one is visiting you from another city or country?
  Most family members are close. However, what happens if you have a loved one that travels from Toronto to Calgary, or even another country to visit for Christmas. All of a sudden they die unexpectedly.
  
  Would you know how to answer the following questions:
  
  • Where are their will and testament papers?.
    
  • Where are their life insurance documents?
    
  • Do they even have life insurance?
    
  • Would you know how to pay for all of the expenses related to their death?
    
  • Where do the finances come from if you have to call a funeral home in your city?
    
  • How would you pay to have your loved one's body transported back to their city for their burial?
  
  
• What if your spouse dies?
  If your spouse is an income earner, and you rely on their pay check to cover debt payments and bills, do you have enough life insurance coverage to make up for their loss of income. If not, what sort of impact would that short fall in income have on your capabilities to pay your debts. Would you have collectors starting to call you right away?!!
  
  
• What if your child dies?
  Children don't usually contribute to the household income, but their funeral would cost money that you may not have. Recently we had a friend whose daughter was killed tragically and unexpectedly in a car crash. It was heart breaking to say the least.
  
  Not only did the parents have to deal with the devastation of losing their child, they were also strapped with a funeral expense of several thousand dollars. I can't imagine their pain.
  
  I only hope they had some sort of coverage so that they didn't have to remember their daughters death every month in the form of bank loan payments.
  
  
• What if you don't have life insurance at all?
  People have estates, even if the assets are only a very small amount dollar wise. When a person dies, their estate must be managed by the will executor. If no executor is named, the estate is settled by the government.
  
  The worst case scenario is that the main bread winner in the family dies unexpectedly and leaves all of the bill and debt payment responsibilities to the surviving spouse. This financial demand could quickly eat up any cash reserves that the family has carefully saved over the years.
  
  Without financial protection, the surviving spouse would get all of the weight of the family's mortgage payments, bill payments, car loan payments etc. This could ruin that families finances overnight. If the surviving spouse can't make the mortgage payments, the family could lose their home.
  
  These are the facts of what happens when people die unexpectedly.
  
  I don't imagine that this post is the most exciting, or upbeat one of the Canadian Tour of Personal Finance blogs. It's not been one that people really want to talk about as it involves pain and death.
  
  Fortunately it's a very rare case that people die unexpectedly. ( That's the way the insurance companies like it! )
  
  I hope I did encourage readers to take a moment to reflect on their situation based on the points above. If I can help people to protect their assets and their income from the devastating effect of untimely and unexpected death, then the goal of this post will have been accomplished.
  
  Always remember, life insurance is the defensive coordination of personal finances!
  
  I am very pleased to have participated in the 2nd Ever! Canadian Tour of Personal Finance blogs. on May 7th, 2007.
  
  This Tour is hosted by themoneydiva.blogspot.com
  
  You can find a list of the other participants on Canadian Money Advisor's blog
  

Articles from May 2007
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