What evidence proves that life insurance is worthwhile?

Life insurance has unlimited tactical financial uses.

Life Insurance includes cash benefit payouts arising from personal life insurance, disability insurance, group life and group disability insurance; and income from annuity payments, which together have risen to approximately 40 billion dollars per year in the first decade of the new millennium.

For a person running a business, a disability insurance policy can replace up to 75% or more of the value of a disabled person’s normal working paycheque.

“Life insurance is the first foundation of wealth preservation.”

Personally owned individual life and/or disability insurance can:

1. Pay off a home mortgage if the family breadwinner dies.
2. Pay debts and taxes accrued in larger estates leaving heirs with financial stability.
3. Help small businesses using agreements pass the baton to new leaders.
4. Fund key-man insurance to replace a leader in a small business.
5. Help family businesses and farms stay in the family through succession planning while passing wealth (and paying off liabilities) to the next generation.
6. Pay off capital gains taxes on second properties such as a cottage.
7. Cover taxes due when remaining Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) holdings.
8. Pay off large capital gains on investments at home and abroad.
9. Equalize estates divided amongst siblings whose parents own significant business assets, where some work outside the firm.

The use of life insurance is increasingly creative the more wealth preservation becomes necessary and can assist in this important strategic area of fiscal protection. It can pass substantial sums of cash to future generations using techniques such as estate bonds.

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