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Basically, we buy life insurance to leave money to our loved ones when we die.

PDF – Needs Worksheet

Although many people leave behind life insurance when they die of old age, (and it is a good idea to do so), it is more important function is to care for those we support if we die prematurely. We do this by buying enough life insurance to replace the income that we would have generated if we had lived. Or to pay down the liabilities that our loved ones may find difficult to manage, such as our personal debts, mortgages, children’s education and retirement.

This sounds fairly simple. However, through the evolution of the life insurance industry, many products have become complicated and confusing. Other than basic term coverage, most people don’t understand some very important facts about life insurance. We’re here to help you understand all the misunderstood facts and help you choose the kind of life insurance that is best for you.

There are over a hundred life insurance companies in Canada and they each sell a variety of products. With hundreds of insurance products with hundreds of different names, is it no wonder the general public is confused and don’t know who to trust. In the last fifteen years there has been a very positive evolution of insurance products, which I think speaks very well for the industry as a whole. Many companies are engaged in truly trying to supply products that really are what isin the best interests of the consumer and not just profitable for the company.

But, how do you find what is really best for you?

Knowledge is power. We hope to educate you so you will be able to discern what is and isn’t good for you today and for the rest of your life when it comes to this very important subject: life insurance to protect your most precious possession – your family.

The Decision

As complicated as this topic may seem, there is generally only three things to consider when buying life insurance:
How much do you need?

To analyze your need you must consider the reasons for buying life insurance.

The main reasons are:

  • Replace your income for your family
  • Pay debts
  • Pay for final expenses

Some other reasons may be:

  • Future education for children
  • Leave extra money to loved ones
  • Leave money to a charity
  • Estate protection

To establish the amount you need to replace your income, the accepted formula is to take your annual income X 10 (for example), minus 25%. The plan here is to leave behind enough money for your loved ones to invest so that at a 10% return they could receive the same income as though you were still able to provide for them. The less 25% is because expenses should drop by about 25% because you are no longer a consumer. Add to this income replacement, an amount to cover your final expenses and pay your debts, and you have a rough total of your insurance needs.

If you are concerned about the other potential reasons, it is quite simple to add an amount as a leave behind lump sum over and above what you might consider a present need to cover the other things that you wish to provide for.

Estate Needs

Now, in addition to here we are dealing with basic life insurance needs,. There there is an area of coverage which is much more complicated called estate protection. This is where you have accumulated a fair amount of assets or wealth and you wish to use life insurance to maintain the value of your estate on your death, especially in regard to taxes. We are not going to go into detail on this at this time but iIf you require more information on your insurance estate needs, we encourage you to call or write to us today.

Below is a form that will help you work out your life insurance needs in a very simple manner. Remember, it does not have to be complicated to be effective. This method will suffice for most people. For a much greatermore in-depth analysis, we encourage you to meet with us to discuss details of this process.

PDF – Needs Worksheet


The material presented above is for information purposes only and should not be acted upon without first consulting a licensed life insurance agent or broker.

Definitions, Terms and Conditions vary from insurance company to insurance company, and for that reason, we encourage you to read, in detail, your existing policy and/or insurance quotes thoroughly. If you require assistance at any time, please contact your licensed life insurance agent or insurance company for more information.

Stratford Financial Planning and its life insurance brokers, insurance providers and MGA are not responsible for any actions taken, misuse, or misunderstandings regarding the materials presented.

Stratford Financial Planning strongly recommends that you consult a qualified and licensed investment specialist and life insurance agent/broker before implementing investment products or strategies with any insurance product.

In the event that your licensed life agent is unavailable to assist you, we encourage you to call or write to us with your inquiry.