Insurance is for risk management and planning

There should be a specific purpose or reason for buying insurance.  It is relatively easy to calculate the insurance need from a risk management standpoint, but we encourage individuals to understand the full benefits of insurance.  There are so many situations where strategic planning is enhanced with insurance products.

People who have complicated family situations or extended families need to take extra care when updating their will and arranging financial affairs.  What ever your case, get professional advice.  You may be surprised to learn of an insurance strategy which will solve a specific problem or provide flexible solutions to address changing circumstances.

When most people think of insurance the first thing that comes to mind is life insurance.  Others such as annuities and segregated funds, are also considered insurance products.  In many cases, an individual may combine different insurance products to create a strategic strategy that meets their overall short and long term objectives.  Insurance needs change through various life stages and it is important to review the relevance of existing policies.


Risk Management

Having a strategy to deal with uncontrollable events such as death, disability, critical illness and general personal health is an integral part of financial planning.  Others may be concerned about not having enough income at retirement or outliving their savings.  Insurance allows individuals and their families to have more comfort should an uncontrollable event occur.

Tax Benefits

Certain insurance products may be attractive solely as a tax benefit.  We will outline a few of the potential tax savings of each insurance strategy highlighted in this series.  Prior to purchasing any insurance product we recommend that individuals meet with their financial advisor to make sure the policy is consistent with their overall risk management and financial plans.

Creditor Protection

Professionals and small business owners may want to ensure that their personal financial assets are not subject to professional liability.  The potential for creditor protection on insurance products is an attractive feature for individuals faced with this concern.   Professional advice should assist in determining whether these would apply to your situation.  The creditor protection feature may be compromised if the insurance product is purchased to avoid current or anticipated insolvency.


In order to fully appreciate insurance, it is crucial to note the importance of naming beneficiaries.   Provided the individual’s estate is not named the beneficiary then the proceeds relating to any insurance products bypass the estate.  This is important because an individual’s will determines how they wish their estate to be divided.  If the will were contested (Wills Variation Act) then only those assets that flow through the estate would be considered.  In most cases you are able to change the beneficiary selection in addition to naming a beneficiary without their knowledge; you are not required to obtain the beneficiary’s consent.

Avoiding Probate

As noted above, insurance products have a beneficiary.  The beneficiary may be the individual’s estate, charity, individual(s), etc.  Probate fees may be avoided by naming beneficiaries as opposed to an estate.  Only those assets that flow through the estate are subject to probate.  Death benefits are generally paid without significant delay.

Public Record

Confidentiality is very important to most individuals.  It may be disconcerting to some individuals that for a minimal fee, their private will – something they have kept confidential for years – is accessible to the public to view after their death if their will is probated.  Proceeds distributed from insurance products not only bypass probate but also avoids public record.

We encourage individuals to consider insurance strategies in their overall financial plans.  Even those individuals that feel they have no need for insurance may be surprised to learn ways to reduce risk, transfer wealth more effectively and increase privacy.

Before implementing any strategy noted in our columns we recommend that individuals consult with their professional advisors.