Underinsurance a problem in Canada, too
By National Underwriter
By Bill Coffin
According to new research from TD Insurance, 94 percent of Alberta parents surveyed have life insurance. However more than half (59 percent) don't think their policy will leave enough money to financially support their children up until their 18th birthday.
Nine-in-10 Alberta parents agree that knowing they have the right amount of life insurance would give them peace of mind that their children would be financially secure in the event that something happened to them or their partner. In fact, Canadian parents who understand what protection their life insurance offers are less likely to be quite worried or extremely worried about their children's financial security in comparison to those who don't understand their coverage (34 percent versus 42 percent).
TD vice president DaveMinor recommends parents consider the following expenses as they crunch the numbers to calculate how much coverage they need:
- Current debts: Purchasing enough life insurance to cover the mortgage and other personal debts can ensure important assets, like the family home, are retained.
- Final expenses and taxes: Consider funeral expenses plus any tax that may be owed following one’s death, such as capital gains tax or inheritance tax. One’s insurance should cover these expenses without having to sell any important assets.
- Child care and education costs: A four-year post-secondary degree away from home can cost as much as a small house, so it is important you consider this cost. Young children and a stay-at-home spouse should also factor in to childcare expenses.
- Ongoing income for your family: Determine how much you wish to provide for your family in your absence to help them maintain their current lifestyle. Even smaller costs, such as sports activities can add up quickly.