Get the most out of your life insurance
As you know, life insurance today is more than just protection. Its many facets can meet various needs and serve underwriters in many ways. One of them: savings. So how do you get the most out of your life insurance? Here are some tips on this.
The sole purpose of term life insurance is to financially protect the life of an insured for the benefit of others. The duration of this contract is determined in advance by the insured. For example, he can choose to be protected for 25 years while his mortgage is paid off. The temporary does not include any possibility of saving, so it must be removed from the equation for this purpose.
On the other hand, it is easier to exploit the various facets of life insurance with the perm. Here is how.
Did you know that only 40% of Quebec workers have access to an employer pension plan? This means that if you are among the 60% who do not have it, you have to plan your retirement financially in a different way and on your own.
Assess your retirement savings needs
Any process should start with a baseline assessment. Do you have a travel plan in mind? You will probably notice what you want to see and do. The same goes for retirement. You must start by making a diagnosis of your current finances, including your short, medium and long term debts as well as your income.
There are calculators online that let you know how much you'll need to save for your old age. They take into account the savings you already have, your current income and desired income in retirement, for example.
The result of this calculation will therefore give you a good idea of the amount to contribute to your RRSP and your universal life insurance. These days automatic payments are doing us a great service. Indeed, we don't even have to think about transferring money, a little programming and presto, it just happens! Almost all banks offer it on their web portal, use it.
It may also be helpful to speak to an InfoPrimes advisor. There may be other things he knows that eludes you! It will also help you to maximize your investments for the future based on your current reality.
Situation
So let's say, by way of illustration, that you are self-employed. Of course, you don't have a pension fund. When you retire, your income will come from governments (Quebec pensions and Canada pensions). But smart as you are, you invest sums every week in an RRSP. Are these three incomes combined enough to build an adequate retirement savings strategy? Chances are, you still need a little extra. What form will it take? This additional amount could very well come from your permanent life insurance.
However, you have universal life insurance (a type of permanent life insurance). This transaction will allow you to save, on the one hand, by paying more than what is required of you. The difference will go into a capitalization fund. On the other hand, when the insurance is paid in full, you will be able to withdraw the benefit, but be careful, this withdrawal is subject to the tax laws in force. This means that you will pay tax on the withdrawal.
In conclusion, it is essential to take care of your finances. In fact, by regularly questioning your accounts and making financial projections each year, you will be able to readjust the shot so as to live comfortably, as much as you want and as you deserve.
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