BMO Nesbitt Burns
1 First Canadian Place
40th Floor , P.O. Box 150
One of the most overlooked areas of financial planning is the risk management portion. Insurance is often a difficult topic to broach as it involves discussing uncomfortable situations, such as the death or disability of you or a loved one and the ramifications of that event.
Additionally, with insurance planning, there can be the feeling that you are paying a large premium to mitigate risks that have a small likelihood of occurring. But there is nothing more unfortunate than realizing you overlooked the importance of risk management until it was too late.
Life and Disability Insurance Planning
Our team believes that when creating a financial plan, it is vital to thoroughly analyze your insurance needs and find the most cost-effective solution to ensure that you and your family are well-protected. Insurance planning can be one of the most valuable tools you invest in when done correctly and efficiently.
For many investors, insurance is something that is a benefit at work and taken for granted; however, many work insurance plans only provide a year or two of salary as a death benefit, which is often not enough for families, especially if they have children or liabilities like a mortgage. Insurance is often overlooked by spouses who have decided to stay home, leaving them uncovered until it is too late.
The same goes for disability insurance. Your work plan may not include inflation protection or have loose terminology that disqualifies you from receiving your insurance pay-out if you can work in another field.
We can help you understand the details of your insurance plan and assess what coverage is best for you and your family.
These problems can be exasperated for incorporated professionals such as self-employed professionals, business owners and healthcare workers who often have to self-insure as they do not benefit from an employer. There can be many differences between getting a privately held insurance policy versus a group insurance policy. It is important to review your insurance policy to ensure you understand the differences and can make an informed decision.
For business owners, insurance can be quite beneficial as it can be used in buy-sell agreements to allow business partners to efficiently mitigate the risk of not being able to access capital to buy out the equity stake in the untimely passing of one of the partners.
Insurance can be an effective estate planning tool. Insurance can be used to:
- Bequest gifts to your children outside of probate or reduce estate taxes
- It can be used philanthropically to give to charities or set up a family foundation.
- Allow you to efficiently pass assets such as a cottage or other secondary property to your children with minimal tax implications.