​In addition to funeral costs, your death can trigger costs to your estate that you may not have anticipated:

1. Probate fees – The fees to settle your estate can be high depending on the province you live in. In Ontario, the fees equal almost 1.5% of your estate’s value.
2. Tax on capital gains – You’re deemed to dispose of all capital property at death. Your estate must cover the tax on any of these capital gains.
3. Tax on tax-sheltered savings plans – Registered plans such as Registered Retirement Savings Plans (RRSPs) can be transferred tax-free to your spouse’s plan, but if you don’t have a spouse, these savings become fully taxable at death.

Life insurance is a way to cover some or all of these costs. It can provide your estate with the ready cash needed to ensure that non-liquid assets, such as a cottage or business, do not have to be sold to cover your estate’s liabilities.