Insurance

There is no question that talking about life insurance is difficult at best. Whether it’s the fact that no one enjoys thinking about how life will go on after their own passing or the fact that life insurance terminology can be confusing, it’s a subject that is often not talked about enough.

There are three groups of people that can benefit from using life insurance as part of their financial and legacy plans:

Families that have mortgages and debt in almost all cases NEED to have life insurance.

Families with young children are very much in need of life insurance but are often reluctant to consider it due to financial constraints.

Retired folks that will be passing assets on to surviving generations can often lock in better fixed returns on their assets using life insurance, while at the same time saving taxes and keeping things simple for the surviving generation.

Disability insurance is another risk that many people unfortunately don’t consider. While your odds of premature death can be relatively small, the odds of a long-term disability keeping you away from work while your debt payments are still payable can be a major risk in a families financial plan.

As a first step it’s important to understand the three major types of life insurance:

Term Life Insurance.

Term insurance can be bought for 5-year, 10-year and 20-year periods. This type of insurance is the most affordable, in that they have lower monthly premiums than other types of insurance because of the fact there is a defined end date of the contract. 20-year term insurance can be a great option for insuring the outstanding balance of your mortgage as most mortgages are retired after 25 years, and after 20 years there is generally more than enough equity in a house to make sure a family can survive an unforeseen incident.

T-100 Life Insurance.

Think of as term insurance that covers your entire lifetime. This type of insurance bridges the gap between term insurance and other permanent types such as whole and universal life insurance. The premiums for T-100 insurance are more affordable than whole and universal life, but don’t offer as many investment and legacy planning options as do whole and universal life.

Permanent, Whole and Universal, Life Insurance.

These types of insurance offer the same premiums for your lifetimes. They also provide for many different advanced financial and legacy planning opportunities. The monthly premiums are typically quite a bit more expensive for these types of insurance, and considering the added benefits, can be a very attractive option.

Here are a few other commonly asked questions:

What are insurance ‘riders’?

Riders allow you to take a general life or disability insurance contract and make it very specific to your needs. A couple of examples of common riders are:

Return of Premiums Rider: This rider can be a huge benefit when considering disability insurance. Consumers are often concerned about paying a monthly premium for disability insurance and not ever making a claim – feeling that their premiums may have been wasted. This rider will pay you back the majority of your monthly premiums should you never make a claim.

24-hour Injury Protection Rider: Most disability policies will cover you for accidents that happen at work that leave you unable to work. What about if you get hurt mountain biking on the weekend and are unable to work?

What are ‘elimination periods’?

The elimination period is the time between you getting hurt and making a claim, and the time when you actually start receiving benefits. A longer elimination period, say 90-120 days, will mean a lower monthly premium cost to you as, you need to be disabled for a longer period of time before receiving benefits.

Alternatively, shorter elimination periods of say 30-60 days means that you’ll receive monthly benefits sooner, but will pay increased monthly premiums in order to get that benefit. The idea is to find a premium rate that is affordable for you while at the same time being cognizant of your access to emergency funds in terms of understanding how many months you can survive with no monthly income. I can help you figure these details out.

How will quitting smoking affect my premiums?

There is no question that smokers pay higher insurance rates than non-smokers. Fortunately there is good incentive to quit smoking beyond just health benefits, in that after you have quit for a 12-month period, you are able to apply for reduced premiums based on non-smokers status.

What is ‘Creditor Insurance’?

You’ve likely seen the TV advertisement asking that very question. The technical answer is: Insurance that covers the financial responsibilities for a mortgage, loan, or line of credit, when the insured dies or becomes disabled.

In fact many consumers accept the life and disability insurances offered to them by their creditors at the time of signing. A little homework and understanding can often provide you with lower overall premiums paid, increased coverage and more flexibility when it comes to insuring the debts that we all take on.

There are many benefits to having an individual insurance contract that covers the same need of covering off debts in the case of pre-mature death or disability. For example:

What is an ‘Insurance Broker’?

As your insurance broker I am able to canvass all insurance companies on your behalf to find you the best deal. In other words, I do the shopping for you. If you’ve ever used a mortgage broker, working with an insurance broker is a very similar experience!

Especially in the case of something often misunderstood like insurance, folks often accept their first offer, not wanting to or knowing how to go about shopping around for the best premium and coverage that they need.

Not only can I help you determine exactly how much life or disability insurance you need, I can canvass all the major companies that offer these policies for you to find the cheapest monthly premium with the best policy details. In other words, we do the shopping for you and it doesn’t cost you anything!

* Offered through Canaccord Estate Planning Services Ltd.