The 2011 Canadian census revealed nearly half a million blended or “step” families (made up of married or common-law couples with children from previous unions) in Canada. If you’re among them, you may be dealing with several challenges. You may be adjusting to new living arrangements. Your children or your partner’s children may have changed schools. You are probably working on amalgamating your finances, or establishing new roles over who manages what.
With all these changes, one area that might go overlooked is your protection needs. However, it’s important to stay on top of it. With your new status and your new dependants, chances are your insurance needs have changed. By keeping your insurance up-to-date, you can help ensure that you, your new partner, your children and your step-children all have adequate protection. Here are four areas to consider.
Your existing coverage
If your former spouse is listed as the primary beneficiary of your existing life policies, you may want change the designation to your new partner or your children. Your new partner will want to review and update his or her policies as well. Remember to update not only policies you hold personally but also any life coverage you may have through an employer’s group benefits program.
Make a list of all policies and the amounts and keep it in a safe place for easy access in case a claim needs to be made.
Protection for minor children
Depending on your situation, you may be supporting more (or fewer) children. The amount of your coverage may need to be adjusted to ensure you can provide them with the support they need until they reach adulthood.
You’ll also want sufficient coverage to replace your income, so that your family can maintain the lifestyle that it provides. Depending on your children’s and step-children’s ages, you may need to factor in costs ranging from daycare, to summer camp, to post-secondary education.
Would you benefit from permanent insurance?
Many young families and single parents opt for term life insurance, which provides coverage for 10 or 20 years and costs less than permanent coverage. However, now that you are establishing a new life with a new partner, you may want to consider your longer-term plans.
A universal life insurance policy can provide protection for you and your partner that lasts your entire life. In addition, it includes an investment component, where you can save and invest on a tax-deferred basis. The cash value of the policy can be a valuable source of extra income in retirement or to help see you through a job loss.
Professional advice can help
Insurance planning for blended families can be more complex than it is for traditional families. We have the experience and the expertise to help you review your existing coverage and recommend solutions that will provide the level of protection you need for the loved ones in your life.