Most of us need it. We don’t like talking about it. But it may well be your most crucial financial instrument. Life insurance is a complicated, ever changing and often intangible asset. And if the life insured is yours, you will never personally see the results of your invested premiums.

The insurance industry has undergone massive changes during the last five years and one of the largest is the way insurance is now being marketed.

Most insurance carriers have closed down their in-house captive sales force and now market their products through brokers who have access to a multitude of products from various carriers. This is the model that we at the Fraser Financial Group have used since our beginning.

Canada’s large banks are now entering the fray, and the Internet is becoming an additional source of insurance pro-duct and information. However, buying insurance by responding to an Internet questionnaire can be a perilous proposition.

At the Fraser Financial Group, our job is to help you navigate the insurance maze. We establish a structure to assess your needs and that structure (no surprise) is your personal financial plan. To make an informed and appropriate decision regarding your life insurance, it is important to integrate it with the rest of your financial life.

How much to buy?

The main purposes for life insurance are to protect your dependents or preserve your estate.

In order to protect your dependents, you must provide for that stream of income that would be lost in the event of your death. Insurance provides the capital to generate that income stream. How much capital you need depends on what return you generate from that capital. Our financial plans generate a range of insurance requirements based on conservative, moderate and aggressive investment returns. What end of the range you choose will depend on your investment philosophy as well as the related cost of premiums.

What type of insurance?

The need to protect dependents tends to diminish over time as you accumulate assets and pay down debt, and as your children grow older, become independent and leave the house (hopefully). This suggests a temporary policy would be adequate. On the other hand, the need to protect your estate from the tax man grows as your net worth grows. And this is far more likely to be a permanent need unless you have an extremely optimistic view of future tax rates.

The other major consideration is the affordability of premiums. Term premiums are much cheaper initially but become prohibitively expensive as time wears on. Permanent premiums are more expensive initially but do not increase in the future. Therefore, it is important to tie in cash flow requirements to your financial plan as well.

Which Carrier?

Not all insurance carriers are created equal. There are many things to consider in addition to the cost of premiums, such as the financial strength of the insurer and the ability to convert their temporary insurance to a good permanent product without providing additional medical evidence.

An insurance policy could be in effect for 50 years or more, so it is important to choose a company with a strong balance sheet and a prudent management style. Size and solvency matters in the insurance business.

What Price?

There is excellent software that allows us to compare the premiums charged by various insurers and rank them in order of cost. And unlike the sales material from some insurance companies, the comparison includes virtually all insurance companies, not just select competitors. Price should not be the only consideration when buying insurance, but it is our job to ensure that you are getting good value for your premium dollar.

Insurance can be a great arrow in your financial quiver, provided it fits your needs.

We see our role as your Consumer Reports. We search the market to find the best product to meet your individual needs based on your personal financial plan.