No! I don’t need life insurance! I don’t believe in it! It is a waste of money!
So often I hear people say “I don’t need life insurance. I am single and I don’t have kids what would I need it for, it is a waste of my money?” In fact before I went into the financial industry I think I said those words myself. Then I became a Saskatoon financial advisor and quickly realized that I was uninformed and uneducated about the need for insurance. It is expensive to die!!
Even if there is no one that I want to leave an inheritance for, there are still several costs that someone will be responsible for after I am gone. A funeral can cost anywhere from $5000 - $20,000 depending on the extravagance. Once the funeral is over there is the additional cost of the headstone or marker that people often forget to plan for, another few thousand added to the tab.
Then my estate goes to probate, and even if I was responsible and had a will in place there are still all of the estate costs that need to be covered.
• Court costs – these are pre-determined costs set out in the Fees Regulations. They are $7 for every $1000 of assets. So for example if my total estate has a value of $50,000 it will owe $350 in court costs.
• Land Transfer Costs – These are fees incurred to obtain the Public Guradian and Trustee’s consent to sell any land that was left to a child and payments to the Information Services Corporation Branch when the title is transferred to the estate and then to the beneficiary. So if I were to leave my house to my niece my estate would incur this cost as well.
• Legal fees – Somebody has to pay the lawyer that is representing my executor (the person I choose to carry out my wishes expressed in my will). These fees are set out in the Rules of the Court and state that when a lawyer does the majority of the work to administer the estate they shall be paid a percentage of the value of the estate. This is how those percentages look:
• $300 on the first $10,000 or any portion
• 2% on the next $90,000 or any portion
• 1.5% on the next $400,000 or any portion
• 1% on the next $500,000 or any portion
• Excess of over $1 million is half of 1% So for example if my total estate is worth $120,000 the legal fees charged to my estate will be: $300 on the first $10,000 2% of the next $90,000 = $1800 1.5% of the remaining $20,000 = $300 Total fees payable = $2400 If the executor does the bulk of the work the lawyer’s fees can be decreased by 80%.
• Executor or Administrator fees – By law the executor or administrator has a right to be paid for their services. The fees vary and some wills define a specific fee. Fees can also be agreed upon by beneficiaries if it is not defined in the will or the court can define the fee if no method for defining is stated. In Saskatchewan the law states that an executors and court appointed administrators are entitled to a fair and reasonable allowance for “their care, pains, trouble, and …time expended in and about the trust estate.” The amount is not defined and is decided case by case. There are criteria used to determine what is considered fair and reasonable. Bottom line is to make it easier I should define how I want my Executor to be compensated in my will.
So I can't strss enough how important it is to have that will...which will prevent and confusion or bad feelings within the surviving family
So those are just the costs for my funeral and dealing with my estate.
That does not include paying off my credit cards or my line of credit or any other loans I may have. Who is going to pay for all of this?
Sure I have some money in my assets but it could take 6 months to a year or more before that money is released from my estate. Sometimes there are not enough assets in the estate to pay off the debts of the estate which further complicates things.
If I have life insurance – even a small policy I can choose a beneficiary and leave instructions in my will that the proceeds from the policy are to be used for my funeral, paying off my debt and paying for any costs associated with my estate. There are not many of us who like paying for insurance but if something were to happen your loved ones will be relieved that you did. I personally do not want to put my aging parents into financial hardship because I was not responsible enough to cover my risk.