Gordon Powers

The post-war baby boom was a time of great prosperity as the massive generation started more businesses and accumulated more wealth than any previous generation. Their spending patterns also tended to be more lavish with, in many cases, insufficient attention to the future.

But, as that generation has aged, it has been presented with a whole new set of challenges. Not the least of which is boomers' failure to plan for their own passing, a period that, from a financial point of view, can be devastating.

End-of-life issues involve a lot more than deciding which family member gets the silverware, says Helena Smeenk Pritchard, a consultant with over 36 years of experience in the insurance industry. Estate planning using life insurance presents older Canadians with one last opportunity to shape the future, even after they've gone.

It's actually a common misconception that seniors have outlived their need for life insurance coverage, she maintains. In fact, there are at least half a dozen reasons for people who are retiring or are already seniors to continue to look closely at life insurance.

According to her way of thinking, these include:

Accommodating special needs: Children and grandchildren with special needs can be provided life-long financial support with the proceeds of a life insurance policy and a discretionary trust - known as a Henson Trust in Ontario. Essentially, the trust set up is worded so that the disabled child is deemed not to have personally received the inheritance.

If the child is considered not to personally own the assets, then he or she can continue to receive full government benefits. Meanwhile, the designated trustee can pay out the trust assets for the benefit of the child at their discretion.

Equalizing an estate: Parents or grandparents who wish to ensure the fair and equitable distribution of their savings to all their children and grandchildren often turn to life insurance as the means.

If a parent has been using resources to provide financial help to a deserving child, then upon his or her death, the proceeds from an insurance policy can be distributed recognizing the financial support already given as a "pre-payment" of the inheritance.

This simple solution avoids any unnecessary squabbles or siblings feeling that "Mom must have loved you more because you got more," Pritchard explains.

Leaving a legacy: Sometimes referred to as "a gift from the grave" to family, church or charity, an end-of-life gift can also serve to sharply reduce the deceased's final income tax return.

Integrating a charitable life insurance policy into that gift plan is a win for both donor and charity. You can donate the life insurance proceeds down the road or make an outright gift of an existing life insurance policy.

This gift doesn't have to be elaborate, nor does it necessarily have to move beyond family members. The tax-free life insurance payout could be used to pay for grandchildren's post secondary education, for instance, Pritchard offers.

Replace essential income: Income replacement is often the main focus when young families are considering life insurance purchases. But the need for many seniors is the same.

The loss of a major revenue source can be devastating, especially if the surviving spouse's advancing years are also accompanied with increasing medical challenges.

Pritchard estimates that Canada has more than six million grandparents who are raising some 65,000 grandchildren. Replacing essential income for these grandparents is clearly critical for the future of their subsequent generations.

On occasion, seniors will purchase a life annuity with no guarantees in order to receive the highest monthly payout. However, this offers little support for other family members.

Supporting that annuity purchase with life insurance can be an effective strategy, Pritchard suggests. This will still produce a steady income stream and, at the same time, guarantee the value of the estate.

Pay final expenses: That remaining pile of bills must be paid. End-of-life expenses could include income taxes, as well as funeral and other final costs. Carrying even a modest policy will ensure that other assets don't need to be liquidated to pay the bills.

With average funeral costs in Canada ranging close to $8,000, putting money aside for this eventuality will help ease the burden on friends and family who are left behind, Pritchard believes.