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Personal values guide life insurance decisions

Buying life insurance is all about values. Of course you want the best economic value from your coverage. But your own personal values should be the guideposts that help direct your insurance choices.

Your values are unique, representing what is important to you and your family. They won't be exactly the same as another family's, nor will they remain static. They will change over time, with your needs and priorities.

The following scenarios offer some examples of how your personal values can help you set clear insurance priorities at different stages of your life.

Caring for a young family

Children bring happiness, but also responsibility. Should anything happen to you, it's vital that you have adequate coverage for income replacement and debt payment.

If it's important to your family to have a stay-at-home parent, you need to ensure there will be enough funds to replace your employment income for as long as necessary. If, on the other hand, your spouse has a career that he or she values, and wishes to continue working, consider the costs of a full-time nanny or day care.

Private school may be another consideration. Also, if you have a child who is gifted musically, athletically, or artistically, you may want to provide for years of private lessons or specialized training.

Mid-life moves

As you move through life your income and assets grow, as do your family obligations. Look at whether your insurance is adequate or whether you may need additional coverage.

If a university education for your children is a priority, ensure that the funds will be there, especially for a professional school. Tuition for programs such as business, law, or medicine can easily exceed $10,000 a year.

If you have a summer cottage or winter vacation property, you may want to keep it in the family for future generations. Your insurance should cover any capital gains taxes or outstanding debts on the property.

Moving into retirement

With most of your major financial obligations behind you, your financial choices can now better reflect both your values and your personal wishes.

Perhaps you have a favourite charity, hospital, or environmental cause, or you would like to set up a scholarship in your name. Using life insurance for charitable planned giving can help you make a more substantial donation than you could otherwise afford, without affecting your other estate planning goals. Moreover, your plan can be structured to maximize tax benefits.

It may be important to you to leave a legacy for your children. Do you want to leave the same amount to each one? If, for instance, you have two children but only one would benefit from inheriting your house or cottage, you may want to name the other as the beneficiary of your insurance policy.

Professional advice will help you and your spouse choose the insurance that reflects your values as well as meeting your needs, goals, and budget.

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