Wednesday, January 10, 2007

Whole Life or Term...

That is the question;-)

We met with a friend of ours tonight for a financial needs analysis. It was very interesting to look at our money and where it all goes and what we need to do to meet our goals and dreams.

We are contemplating some extra life insurance. We have some right now, but according to the fna we could definately use some more. I talked it over briefly with my mom and now I am having conflicting thoughts on the matter.

I would like to know some others opinions about this topic.

My mom says that all anyone really needs is 10,000 of whole life, basically to cover a funeral. She doesn't like that with term life insurance, she is spending money that she will probably never see. We have term right now, in a fairly good amount. We are deciding whether to top it up a little bit more or not. I think about the fact that I have 4 kids, and were something to happen to both hubby and myself, it would be a huge burden on the person who would be taking care of them (we still haven't done a do you decide who gets 4 kids...). With the life insurance, they would be taken care of, without a doubt. My mom says that without the insurance, the kids still would get survivor benefit, from the government and the family would ge tthe child tax credit, and that should be sufficient...

What do you all think? I still have to look at our books. I am not sure if we could squeeze more money out for insurance or not. Or maybe we should put that extra insurance money into an RESp...oh, I hate making these kinds of decisions...


  1. I belive more than 10,000 is needed for instance the suvivor benifit is not all that much my friends children get that it is only like 150 a month I believe ill get back to you on that it is not enough with the child tax crdit wich decreases as they get older. I believe the male should have a bit more than the wife as if he goes she has the kids and maybe maybe no job at all. As for a will you need to get that done immediatly before the insurance even you can pick them up at staples a basic one. ask around do not split the children who would be willing to look after the children. My chodren are all old enough now. they do not need any one. But we had a wonderful family for ours to go to eh shannon. Ask familt first if there is no one go to the church family it is biblical for church family to help the widows and orphans. All in all will first then insurance yes.

  2. Hi Ruth, (this is long...)
    No offense to your mom but I believe she's really wrong about survivor benefits and child tax credits... remember the benefits are paid out according to how much you and P have paid into your CPP and for how long. If something happened to you now, I would think it would be quite low. With tax credits, remember it is based on age and income... what do your kids do when they turn 18 and want to go for higher education? You wouldn't want your kids to just survive and barely get by...
    It shocks me that people with homes and children don't have wills.... you people KNOW who you are. Personally, I think it's irresponsible not to have a will.

    As for insurance, we have both whole and term. We recently increased our insurance to cover paying out both our properties and providing a generous amount for the well-being and care of our children. We dropped bank mortgage insurance which only pays out the balance on a mortgage, while life insurance pays out the total we've taken out.

    We used to have family as guardians but we have recently switched over to some friends... the reason for this was.. our children are older and at this stage in their life we wouldn't want them to change schools, churches or environment. The family we wanted, we asked, they agreed and everything is in place.
    You need someone you can trust not just with the safety and training of your children but with your finances. I need to know that my kids will get the money they need as they need it. The family we chose would never "touch" a dime that didn't belong to them and they would love our children as their own.

    We've changed our will twice, our insurance numerous times and our guardians three times depending on where we're at in life. It's ok to change, just get something in place!!!


  3. I agree with everyone above. 10,000 actually doesn't even cover a funeral these days, unless you go bare minimum.

    Then you have the costs of things while you are planning on selling the house, if something happened to your hubby what income would you have? Would you have to go out and get a full time job - having then to put the kids in school and pay for daycare.

    Insurance amounts can change as your kids get older and as your assets increase. We have nearly 3x's the cost of the house in term insurance but no longer have whole life, we've been rethinking this one. We have 4 children for someone to raise if anything happens right now, we want them to be able to go to post-secondary education, to vacation and to not have to worry about money. For right now this is our inheritance for them. As our asset portfolio increases - this may or may not decrease.

    I've been in financial/insurance sector for 15 years, I've seen all kinds of death benefits and what happens after the loss of a parent, at a young or an old age. Life afterwards either continues on or it is a struggle. I'd prefer my spouse and my children not have to struggle.

    Mortgage insurance is a scam in my books and I would never offer it or buy it for myself. Even my place of work no longer sells it when they give mortgages.

    You might as well get as much as you can while you are young. It just gets more and more expensive as the years pass. I even have clients whose children took on the premiums when the parents age - to ensure the inheritance remains the same.

    I have lots to say on this subject, from a professional point of view and personal. Just ask.

  4. I have a story to share...

    In grade 12 my best friend's dad died suddenly of a brain tumor. They did not have insurance. There were 3 teenaged daughters left behind with their mom, the oldest was my best friend. The mom only worked part-time. She suddenly found herself looking for a full time job, with very little work experience and no post secondary education meant minimum wage jobs.

    She recieved enough money for the funeral from the Governemnt death benefit which was $2500 and a small death benefit insurance at work but she had to sell their family home. This took months to complete as many things needed to be done in the home, things that the dad had intended to do for years. She was also trying to hold herself together for the sake of the girls. No time for mourning because there was little money for her to be able to sit and rest. In the meantime utility bills needed to be paid, groceries and stuff for the girls.

    They ended up having to rent a 2 bedroom basement apartment where their mom slept on the couch. Quality of life dropped big time. The girls didn't go on to post secondary. They didn't travel or go on vacations anymore. The girls recieved a monthly cheque from their Dad's CPP but it was just over $100 a month, this does not go very far.

    Two of them are married with their own families now and their mom lives in the basement with one of the girls.

    How their life could have been better!!