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Choosing life insurance coverage that's right for you

    Life Insurance 101 - Tips from RBC Insurance

    Whether you're planning to buy a new
policy or just trying to understand the coverage you have, making sense of
life insurance and knowing what coverage to get can be challenging. Here are a
few tips to help find out what's right for you.
    "It's important to remember that life insurance coverage is more than
just security for your family in the event of your death - it's an important
component of any financial plan," said Neil Skelding, executive vice-
president, Life & Health Businesses, RBC Insurance. "It can be used for a
variety of purposes such as paying outstanding debts or everyday living
expenses, as an estate planning option or as a tax-deferred vehicle for non-
registered savings."

    1.  Think about how much coverage you need and why you need it. Determine
        what financial obligations you have and consider how you would handle
        expenses if you or someone in your family passed away or became sick
        or disabled. Typical expenses include mortgages, loans, taxes and a
        child's education. This will help determine the general amount of
        insurance needed. Also consider other coverage you may already have
        such as insurance through your employer-sponsored plan.

    2.  Life insurance coverage can serve a number of useful functions in a
        financial plan. For example, coverage benefits can be used to cover
        estate taxes, which are often quite substantial. Certain life
        insurance policies - such as universal life insurance - also allow
        policyholders to accumulate tax-deferred funds by investing the
        maximum allowable amount into the cash value portion of their
        insurance policy. Universal life insurance policies usually increase
        in value over time, and like many other assets, can also be used as
        collateral for a loan from a third-party financial institution - such
        as a bank, credit union or trust company.

    3.  There are different types of life insurance, usually divided into two
        categories:

        -  Term life insurance provides insurance for a specific period of
           time and is often a logical choice for young people or families
           just starting out.
        -  Permanent Life Insurance, such as whole life, universal life or
           variable life, is designed to provide insurance protection for the
           entire life of the insured person. It can also provide a cash
           equity account that allows funds to grow tax-deferred and be used
           as a retirement supplement.

    4.  Evaluate your life insurance coverage after major life changes, such
        as a marriage, the birth or adoption of a child, the purchase of a
        house or retirement. It's a good idea to review your policy annually
        to make sure you have adequate coverage.

    5.  Never buy a policy you don't understand. Ask for clarification from
        the insurance company or your insurance agent or broker. The policy
        is a legal document so make sure you understand exactly what you're
        signing.

    6.  Research the insurance company you're buying from to ensure it's
        stable and reputable. Refer to a ratings company, such as A.M. Best
        at http://www.ambest.com for this information.

    7.  Expect questions about your medical and family history, as well as
        about personal habits such as smoking or alcohol consumption. Always
        answer truthfully to minimize the risk of a claim being delayed or
        denied. Review your application carefully before submitting it to
        make sure there are no errors or omissions.

    8.  Consider what other types of additional coverage you may need. Life
        insurance policies often have riders, which refer to any supplement
        to the policy, such as additional coverage, expanded conditions or a
        waived coverage or condition. Life insurance riders can include
        disability coverage or accidental death coverage, and some even have
        critical illness or long term care riders. Additional coverage of
        this kind, either as a policy rider or as separate coverage, may be a
        good idea, depending on your age, income, family situation or other
        considerations.

    9.  Insurance should be viewed as part of your overall financial plan.
        Review other components of your financial plan to ensure the
        insurance you purchase makes sense and complements your overall
        strategy.

    10. Don't put your decision off for too long. While it's important to
        take your time to do your research and consider your needs, this type
        of coverage exists to protect your family and your assets should the
        unexpected happen. So, do some research and don't be afraid to shop
        around and ask questions of insurance agents or brokers to find out
        which coverage would work best for you.

    "Life insurance is right up there with wills in terms of topics most
people would prefer to avoid," added Neil Skelding. "But both are absolutely
necessary if you intend to ensure the financial security of your family and
plan for the future."

    About RBC Insurance
    RBC Insurance, through its operating entities, including RBC Life
Insurance Company, provides a wide range of creditor, life, health, travel,
home, auto and reinsurance products to more than five million North American
clients. As one of the top 10 life insurance producers and the leading
provider of individual living benefits in Canada, RBC Life Insurance Company
offers a comprehensive portfolio of individual and group life and health
insurance solutions. These products are distributed through more than 17,000
independent brokers affiliated with producer groups, financial planning firms
and stock brokerage firms, as well as through direct sales and a network of
career sales representatives

MISSISSAUGA, ON, June 22 /CNW/