Life Insurance in the new millennium

New products for new reasons

The traditional role for life insurance has long been regarded as the perfect means through which to create an instant estate in case of the premature death of a breadwinner. While some life insurance is still bought for this purpose the majority of new sales are tax-driven and focus on investment opportunities that are particularly well suited to an individual investor. Two income families with fewer children per family, improved employment benefits and a dramatic increase in the net worth of Canadians have reduced the dependency on the income of a deceased in case of premature death.

According to Statistics Canada the average net worth of every man woman and child in Canada is an excess of $100,000. The average net worth per family is over $250,000 for a total net worth of Canadians in excess of $3.4 trillion. No wonder interest has shifted from creating an estate to preserving it, as many Canadians will leave a legacy. In fact, the total amount expected to transfer between generations in the next 10-15 years is over one trillion dollars, which is more than has transferred between generations in Canada in the last two hundred years.

Preservation to many means, "estate friendly investing"; choosing those products that are tax-favoured, offer good investment returns and provide "living" as well as death benefits. In response life insurance companies have made more product changes and enhancements in the last few years than in the last century. For many decades "Whole Life" was the foundation product of the industry. It is rapidly being replaced by universal life type of policies that address new concerns and focus on new planning opportunities. Term insurance, an inexpensive form of life insurance to look after temporary needs, is still available. Investor Desktop not only provides information on the new products it also offers a tool called the Financial Planning Analyzer to determine whether financial planning opportunities that involve products offered by life insurance companies are something you should consider.