The Paris Independent
25
November 11, 2023
F I N A N C I A L M AT T E R S Life insurance is not just for emergencies Common Cents with Jacob Gaudet
Many people think that life insurance is only for emergencies — the most pressing emergency being the death of the policy holder. And it’s true that most people take out life insurance in case the worst happens, and they need the payout to replace income, pay off debts and cover their final expenses. As the decades pass, and you reach your 50s, you may well feel that the reasons for having life insurance are no longer valid. Your mortgage is paid off, your kids are grown up and a bigger priority is boosting your retirement savings. If you bought term life insurance, which expires after a certain number of years, you’ll likely let it lapse, happy that you didn’t need it. However, keeping your family financially secure should the worst happen is just the tip of the iceberg of what life insurance can do.
Taking out life insurance over 50 can be an essential part of your estate plan, as Jacob explains in this column. Most people aren’t aware that life Your executor might have to sell the insurance can also be used for cottage or find cash elsewhere in the complex estate planning strategies. estate to pay the CRA. Having Here are a few ways life insurance permanent life insurance over 50 over 50 could be a very useful could avoid this situation. After you financial strategy that goes far pass away, your estate would get a beyond dealing with emergencies. tax-free lump sum of cash that can be used to pay off your estate’s tax Cover estate taxes bill. It’s one way to fund your final tax bill for the lowest cost. Life insurance over 50 can be a good plan of action if you intend to pass a Passing on a fair inheritance big asset on to your kids, such as a cottage or shares in the family Typically, people want their estate to business. In this situation, your be divided equally between their estate could get hit with a serious tax offspring. However, in many cases, bill after you die. For instance, if dividing up assets equally is not a your cottage has appreciated in value cut and dried process. by $1 million and you’re in the 50% tax bracket, the tax on the capital Continued on page 26 gain could be as much as $250,000.
