When considering financial services here in Ontario, one of the first things you should be taking care of is your life insurance requirement. People once bought life insurance strictly to take care of their funeral expenses. Although this is one of the uses of life insurance, it is by far not the only one.

There are actually seven situations that life insurance can directly affect. They are: INCOME REPLACEMENT, FINAL EXPENSES, LIABILITY EXPOSURES, EDUCATION FUNDS, CHARITABLE GIFTING, FAMILY BEQUEATHS and EMERGENCY FUND.

We all know how emotionally devastating it can be to lose a loved one. We also know that our family's lifestyle is dependent on the income produced by the breadwinners of that family. So it only goes to reason our family would suffer both the emotional trauma and suffer a dramatic lifestyle change should the death be of the major breadwinner of the family. I have personally seen situations where the main provider is prematurely killed and the family has not only lost him or her, but they have also been forced to sell their home, cancel post secondary school education plans, change their social activities and even wind up on social assistance, all due to the fact that there is no longer enough income to support their lifestyle as it had been prior to the death. Is this the legacy you want to leave for your family?

Final expenses not only cover the type of funeral or burial that you want but also covers any tax exposure that might occur in your terminal income tax filing. This is different for each person depending on their wishes and their estate and what the corresponding tax exposure might be. Even though you may have bequeathed certain capital assets to your family or friends in you will, often the tax exposure will remain with the estate.

Liability exposures include any debt item that would become due and payable immediately upon your death. These include mortgages, bank loans, credit card debt, personal loans and lines of credit. Most people I deal with do not want to leave these items to their family to have to deal with. Often the lending institution will demand that the debt be life insured and may even offer bank owned insurance. There are numerous advantages to personally owning your life insurance protection, but that is a subject all on it's own.

Many people use a Registered Education Savings Plan to provide funds for their children's post secondary education. This depends on systematic deposits being made and if properly maintained will provide the necessary funding. The problem arises if there is a premature death of the person making those systematic deposits. If there is no longer the income to complete the RESP, you can set aside part of your life insurance proceeds to take care of and ensure that your children have the finances to go to university or college.

Charitable Gifting can be part of anyone's estate plan. people may want to leave a legacy for their church or favorite non-profit organization, such as The Hospital for Sick Children or the Humane Society, just to name a couple. This type of planning can produce either significant tax deductions in your terminal income tax filing or tax relief on a year-by-year basis while you are still living. A plan can be tailored to fit each individual situation.

Family bequeaths involve the dealing with specific situations where assets of cash is earmarked for a specific individual for various reasons. Often at face value these situations may seem unfair, but the deceased had a specific reason for wanting the beneficiary to have that asset or that amount of cash. These situations often involve succession planning for businesses or farms and can be used to equalize the estate for multiple children. Because life insurance falls outside of the will and probate, it remains private and not open to be viewed by the public.

The final item is that of an Emergency Fund. At times people may feel that in addition to all of the concerns, they want their family to have an amount of cash available for maintenance items that can come up unexpectedly. Things such as a new roof for the home, new furnace, new vehicle or new appliances. This is an arbitrary figure that each person would need to decide upon.

Choosing your life insurance advisor should be done with care. Ask questions such as how long have they been in the industry, how many policies they write, what continuing education do they have, what designations have they earned and what insurance companies do they have contracts with. Make sure you get a comfortable feeling and that they are prepared to discuss all of the above using your numbers.