BY: ANDREW STEWART
I can never share an identity with over 1.98 million Canadians. I can never be a widow. Sure, it’s possible for me to be a widower but with the average life expectancy of women in Canada at 83.3 years compared to the male of 78.8 years its most unlikely. A woman who becomes a widow can be put into a terribly devastating situation. You see I’m still very lucky and blessed that both my parents are still here. They have been married for over 40 years, but I can imagine that for my mother, widowhood will surely be a heartbreaking event. It’s a fact that women live longer than men. Indeed, half of surviving spouses over age 65 will outlive their husbands by 15 years. That means there are many years ahead to be responsible for household financial decisions.
It can be even harder if you are a young widow. What if your husband passes away at age 43. You might have a $500,000 mortgage, two kids under the age 12, and not much money in your retirement accounts. You might have close to nothing saved for college, but luckily, he planned well for you by having a healthy 1 million dollar life insurance plan. Now you might be thinking, with that type of financial cushion what possibly could be an issue. The issue is choice. What do you with all that money? Life insurance is meant to provide you with flexibility. It allows you time to catch your breath, fund incidental expenses related to your husband’s death and take the pressure off of an already stressful time.
One of the biggest mistakes you can make is to move forward without a permanent strategy. Sadly, in times of unthinkable grief, financial mistakes are often made. That’s the nature of receiving a life insurance payout. Immediately after the worst moment of your life, your accounts are flooded with money. It’s a strange problem, but a problem nonetheless. There are two primary paths you can take. You can either eliminate your expenses, or you could create an income stream that would replace your husband’s income. I think most people’s gut instinct is to just pay off their debts. An alternative would be to create an income stream off of the death benefit by way of an insured annuity.
An insured annuity is essentially a prescribed life annuity and a term 100 life insurance policy, purchased together. The annuity will provide a guaranteed regular income stream so you won’t spend all your capital too soon, while a term 100 life insurance policy provides a cash payout upon your death to your children. The combination of the benefits provided by these two products is ideal for those seeking guaranteed income and the preservation of their capital. You can receive income payments monthly, every three months, every six months or once a year. You can also choose to start receiving your income payments right away or to have them start at a later date, which is known as a deferred annuity.
The amount of the regular income payment you get depends on a number of things, such as:
- If you are male or female
- Your age and your health when you purchase the annuity
- The amount of money you invest in the annuity
- The type of annuity you purchase
- Whether your annuity has a guaranteed option, which will continue to make payment to a beneficiary or your estate after you die
- The length of time you want to receive payments from your annuity
- The rates of interest when you buy your annuity
One thing for sure to avoid making major financial decisions too soon. Here’s a short checklist of some of the main things you need to do after losing your spouse.
- Get certified copies of the death certificate
- Arrange the funeral
- Gather important documents
- Check for a Will
- Contact your insurance company
- Contact the executor of the estate or your attorney
- Contact your spouse’s employer
- Contact your financial institutions
- Cancel a driver’s license and request refund
