OB Report
February 2019
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Determining Your
Life Insurance Needs

By Rita Ager CFP, CLU, CHS, CPCA, FEA
Insurance Specialist, Odlum Brown Financial Services Limited

OBFSL image 310In last month’s Odlum Brown Report, we examined who should consider owning life insurance. The next question clients often ask is, “How much life insurance do I really need?” The answer depends on each client or family’s unique circumstances.

To get an accurate picture, it is advisable to work with your insurance professional to develop a comprehensive insurance needs analysis based on your individual situation and personal financial goals.

There are two main factors to consider when purchasing life insurance:

  1. The immediate cash needs following a death to pay final expenses and taxes.
  2. The need to replace the financial support and income that had been provided by the deceased, for their surviving family members and dependents.

The immediate cash needs following a death typically include:

  • Funeral, cremation or burial costs
  • Probate and executor fees
  • Legal and accounting fees
  • Income taxes due
  • Outstanding loans, credit card debt or lines of credit
  • Taxes due on registered accounts (RRSPs, RRIFs or locked-in accounts)
  • Capital gains taxes on appreciated securities in non-registered accounts
  • Capital gains taxes on commercial or recreational property and shares in private corporations
  • A mortgage redemption fund for the family’s personal residence or cash resources to cover rental expenses

Future cash and income needs for the surviving family members and dependents typically include:

  • Support in the form of cash or income to keep up with ongoing day-to-day living expenses
  • Education funding (RESP contributions, post-secondary education or specialized training may be required for the dependents or the surviving spouse to improve their future income opportunities)
  • Child care expenses if the surviving spouse returns to work
  • Support for dependents with special needs that may require lifetime care or financial assistance
  • Family members with unusual circumstances who may require financial aid, such as parents or siblings with health concerns or long-term care needs
  • Establishing an emergency or contingency fund for family security
  • Assistance in funding the surviving spouse’s retirement
  • Special legacies or donations to charitable interests

A comprehensive insurance needs analysis will also consider additional factors such as:

The level and duration of family income and support required based on the current age(s) of the dependents and present lifestyle expenses

  • The survivor’s annual employment income
  • Existing investments and income producing assets
  • Income available from private pension plans or annuities
  • Other income sources, such as the CPP survivor’s pension and children’s benefits
  • Existing insurance coverage
  • Future investment returns
  • Adjustments for inflation

Working with an insurance professional to develop a comprehensive insurance needs analysis based on your individual circumstances and personal financial goals is the first step in determining how much life insurance you really require.

The next important step in providing the protection you and your family require is to review the options that are available with an insurance professional and take the necessary actions to apply for and purchase the recommended insurance coverage as soon as possible.


Odlum Brown Financial Services Limited has insurance specialists on staff that can work with you and your family to:

  • Create a customized life insurance needs analysis;
  • Review and explain the product solutions and options that are available;
  • Customize solutions to best fit your individual and family’s unique needs; and
  • Facilitate the required processes to apply for and obtain the insurance coverages needed to protect you and your family.

If you would like more information regarding the insurance products offered by Odlum Brown Financial Services Limited, please contact us through your Odlum Brown Investment Advisor or Portfolio Manager.


Odlum Brown Financial Services Limited is a wholly owned subsidiary of Odlum Brown Limited, offering life insurance products, retirement, estate and financial planning exclusively to Odlum Brown clients.