Basic family needs
Our retirement plan will be achieved if we maintain good health, we can obtain monetary compensation for our competence in relation to the work accomplished during our active life and we can accumulate sufficient assets to maintain our lifestyle at retirement. However, we need to consider the risk of misfortune until then. Disability caused by illness or accident is an important risk to manage. Also our death, which is a risk to others. The most effective way to manage these risks is to take out insurance policies.
Life insurance protects dependents. The goal is to ensure that their lifestyle is maintained in the event of the death of the insured. Disability insurance makes it possible to maintain the cost of living (our own and that of loved ones) in the event of illness or accident thanks to the monthly benefit it generates. Even if it is the main risk that awaits us, it is the most underestimated and the most neglected. The critical illness insurance policy is a complement to disability insurance. If the latter must cover regular expenses up to age 65, the critical illness insurance benefit is a single, non-taxable lump sum (for example, $250,000 or $500,000) to provide for exceptional needs: care abroad, leave without pay for the spouse, services of a nurse at home, liquidation of certain debts, purchase of equipment and special installations for the residence or the car.
Business needs
For active businesses, insurance will mainly serve as a risk management tool. The company may wish to protect itself against the financial impacts resulting from the death or disability of a key person. Life insurance, disability insurance and critical illness insurance will be used in this context. The insurance will also be useful in the context of buy-sell agreements in order to redeem the shares of co-shareholders, in the event of death or disability. Life insurance can also be used for succession purposes if the owner wants to balance the estate when some children are not interested in the business.
