Whose interest can be served by insurance?

Life, disability, critical illness, long term care, drugs and dental, and more -- various applications for various people and various purposes.

In many cases, insurance is to protect survivors, dependents. In the most frequent, classic case, the benefit for the person insured (who is most often, but not always, the owner or payer of the policy) is the peace of mind gained from the knowledge that certain responsibilities will be fulfilled even if death or serious illness intervene. How serious this threat is can be assessed from the data given in the primer, or in the pages totally devoted to relevant statistics on serious illnesses and people in long term care facilities.

However, it is even more than peace of mind and the financial interests of dependents that is at stake. (Though one should not belittle the importance of that peace of mind either.) There are several opportunities to serve the financial interest of the person insured him/herself as well. Disability insurance, critical illness insurance, long term care insurance, or viatical arrangements are cases in point.

Another example can be when insurance is used as a means to accumulate investment gains in a tax-deferred way, or when the insurance contract is sought entirely from business considerations. Examples for the latter are when key persons of a business are insured, or when the continuation of a business is ensured with insurance protection in case of the death or critical illness of one of the partners. 

Finally, if someone wants to leave all or part of his/her assets to a charity, insurance offers options that help minimizing the consequences of obligations to the Canada Revenue Agency; again, better control of own assets is provided. With recent changes in regulation, there are certain financial constructions that make the possible dilemma of "How should I distribute my assets between my family and favourite charity?" a quite easy one: both the charity and the family can receive at least as much as if they were the solely heirs. The necessary 'magic' of dramatically increasing the size of the assets for this is made possible by insurance and tax-advantages of charitable giving.







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Key areas:

Life and health insurance (including disability, critical illness, and long-term care protection)

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