Life Insurance For Farmers In Quebec And Ontario
When a major change takes place and everything is invested in fixed assets, even the most efficiently-managed farms can break down. Debt may start to become unmanageable, estates can get consumed by tax liability, and family farms can be washed out in the mud of insurmountable succession. To set up a feasible way to manage these situations ahead of time, you will have to pay some upfront costs which calls for some serious conversations.
Nevertheless, these costs are nothing as opposed to the hassle and costs of figuring something out after a major change occurs. In such cases, life insurance for farmers is the perfect tool to develop strategies to protect you from these issues, before they occur.
At the time of death, life insurance payouts are usually used for covering debt, funeral costs, tax liability, and to support the family. For family farms, life insurance for farmers in Quebec can also be used to even up the inheritance, and if it is done within a company, it can create a tax-friendly liquid investment.
In this article, we, at IMC Financial, will help you understand why you need life insurance for farmers and how it can benefit you.
Why Do Farmers Require Life Insurance?
Farmers need life insurance to safeguard themselves as well as their families with living benefits such as cash values, and demise benefits for succession planning and liquidity for their upcoming generations.
Benefits Of Life Insurance For Farmers In Quebec And Ontario:
Farmers are aware of how much work they have put into their business and their way of life, so it is only natural for them to safeguard their assets and operations for the future. They are also aware of the costs to run and maintain their farm- costs that they want their generations to be able to afford.
In such a case, life insurance can be of huge help. It gives much-needed liquidity to farmers since most of their assets are tied up in the land, equipment, and facilities. Apart from this, the following are the ways life insurance can come to aid:
1. Life Insurance Holds The Family Together
Life insurance can help smooth out the unstable road of transition from one farming generation to another. Its proceeds allow the children of the farmers to buy out the farm from their non-farming siblings.
For instance, the farming heirs can have a land interest, while the ones off the farm get the same value in life insurance proceeds. With the help of life insurance, the family farm can be sustained for the next generation, and family disputes can be prevented.
2. Life Insurance Safeguards The Farm While The Farmer Is Alive
Contrary to the death benefit that pays out after the demise of the farmer, the living benefits of life insurance can be obtained while the farmer is alive. Cash value from permanent life insurance for farmers in Ontario can help by giving financial protection in the form of loans against the aggregated tax-deferred cash value.
These loans can be used for things such as long-term care, unexpected medical bills that may otherwise put the farm in jeopardy, etc.
3. Life Insurance Can Be Placed In Irrevocable Life Insurance Trust (ILIT)
An irrevocable life insurance trust (ILIT) is generally used to safeguard assets. For example, if life insurance benefits are paid to an entity, the life insurance proceeds are incorporated in the taxable estate of the decedent. However, the same death benefits paid to the irrevocable life insurance trust will be not encompassed in the gross estate of the insured.
How To Determine How Much Life Insurance To Purchase?
There are several factors on which the decision of how much life insurance a farmer needs depends. Some of them are as follows:
1. The Pieces Of Equipment You Own
Life insurance allows your upcoming generation to set aside a fund to repair or replace expensive farming equipment after your demise.
2. The Amount Of Your Debt
After your demise, you will be leaving behind outstanding debts. Their payments will come out of the estate before it is divided between your heirs. Life insurance will help your upcoming generation in preventing liquidating assets to pay off your debts.
3. The Cost Of Crops And Livestock
Calculate the costs of purchasing new livestock, and feeding the animals, as well as the transportation and maintenance expenses to move them. You must also determine the costs of planting and maintaining the crops during the first growing season of your heirs. You can add all these expenses to your life insurance amount.
4. The Type And Number Of Farm Buildings
Determine the maintenance and operational costs of your facilities to choose an amount of life insurance that will help your upcoming generation in handling these expenses after they start managing the farm.
5. Costs Associated With Your Death
These expenses are basically the costs related to your death, including memorial services, funeral home fees, and cemetery charges.
To Sum It Up!
At IMC Financial, we offer life insurance for farmers in Ontario and Quebec to help them in keeping their businesses afloat even during the major changes in their lives. Our team can also help you in determining how much life insurance will be sufficient to cover you as well as your family.
So, if you are looking for life insurance for farmers in Quebec and Ontario, then schedule an appointment with us to get one that will be enough for you and your family. We assure you will reap all the life insurance benefits with our help.
For more information, please do not hesitate to contact me.