Your Term Life Insurance Guy (866)341-3220

I was reading some blogs about life insurance and life assurance and how the terms differ in different countries. Comments like “getting best rates” and “don’t leave home without it”. Probably makes sense depending on where you live.

In Canada, I believe that having the proper amount of life insurance to cover your family and business debts and commitments is a good idea (like carrying car insurance and house insurance –Just in case something happens.

Statistics will show that less than 20% of the people who buy Term Life Insurance will die and allow their beneficiary to collect the benefit to cover the commitment and debt. (The insured person will outlive the policy) Also the same for disability income plans, less than 10% of the insured people will be disabled long enough to collect the benefit they hope will provide income in the event of a long term disability. To make a disability benefit plan affordable most people are recommended to include a ninety or 120 day waiting period before they qualify for benefits. Most insured people are not off work that long on any one disability and therefore do not collect. They do, however, keep the policy in force and continue paying premiums for, who knows, just in case, maybe.

So in my opinion 70 to 80% of the people who buy life insurance products have the wrong amounts and the wrong mix of benefits to protect family and business.

Life insurance is important to the family of the major bread winner. Having a replacement income plan, in the event of a need because of a disabling condition is important to everyone. Having a way to turn the cost of medical and dental benefits into an expense against personal or corporate income is paramount. (If you do not have a company group insurance plan)

This can be done in proper proportions that make sense and can be set in place for an affordable monthly premium for most.

Speak to your broker or the writer of this blog for a combined benefit plan that will work for you.

Now we can say don’t leave home without it (a well designed plan)

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And Then There Were Eight!

A few years ago I wrote an article in our quarterly newsletter suggesting that a particular type of life insurance plan (Term 100) was disappearing from the marketing shelves of the Insurance Companies.

Why would this be of interest to anyone? Well the first reason the policy was well priced and GUARANTEED. The death benefit was guaranteed for the life of the contract and the premium was guaranteed for the life of the contract.

The reason for the disappearance is simple the Insurance Companies do not make money with this type of contract. The amount of reserve necessary to be put in place to support the policy in the event of a future claim is about three times higher than for a Universal Life plan (which is not guaranteed). Another concern (of the Insurance Companies) is that the policy is almost certainly lapse proof. This means that more policy holders (of a Term 100) will keep the policy in force until they die, than will cancel the policy for various reasons (as they might with a Universal Life Plan).

Five or six years ago there were about twenty-five companies selling Term 100 life pay and Term 100 quick pay, now there are about eight. It is important to note; the Companies still marketing the Term 100 plans still guarantee all the values and premiums of the plan by contract.

Those companies who used to sell Tem 100 are now claiming that Universal Life is the way to go. I disagree! Isn’t it a better decision to buy a policy that has both a guaranteed premium and guaranteed death benefit for the future safety of your family or beneficiary than to have a plan in place that is subject to change because the Insurance Company decides it is not a profitable plan or that the market investment, that is supporting your policy, is failing.

If a permanent (whole of life plan) is needed in your financial portfolio for the long term protection of your family, your estate, or your business speak to your Broker about the value of and the viability of a Term 100 policy (life pay or quick pay). If their  recommendation is a Universal Life policy (with guaranteed investment component) get a second opinion from a Broker who will talk about fully guaranteed life insurance plans, which allow for no adjustment in premium or the death benefit.

As I mentioned in the newsletter a few years a go, this insurance plan (Term 100) will disappear from the insurance market place. It has been and soon will be a plan of the past and the insurance purchaser will be the looser. By the way any Term 100 plan that was sold in the past will continue as long as premiums are paid for the duration of the contract and the benefit will continue for the life of the contract. If you own a Term 100 plan treat it like gold it is irreplaceable.

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LONG TERM CARE INSURANCE: MYTHS AND PITFALLS

The longevity revolution is well underway and long term care (LTC) is a huge personal fear for many as the growing number of Canadians over the age of 65 doubles in the next 25 years. In 20 years, 2 million Canadians will be over age 80!

The following information has the intention of alerting consumers to some of the many factors associated with purchasing an LTC plan and why it is essential to have an LTC Specialist assist you in your selection.

Increased longevity brings a greater need for specialized health care services. LTC is normally identified with chronic illness conditions associated with the elderly. LTC policies typically pay benefits for Cognitive Impairment’ illnesses or if a person is unable to perform any 2 of 6 activities of daily living (ADL’s). These would include Bathing Eating, Dressing, Toileting, and Bladder & Bowel Continence.

Chronic illnesses are a huge threat to our health care system. Interest in LTC plans is growing but it’s extremely important to fully understand such plans before making a purchase. So, here are some myths and pitfalls to be aware of when considering LTC:

Individuals who require LTC:
Myth: One reason often cited for buying LTC insurance while you’re young is because over 40% of individuals requiring LTC are under age 65.
Fact: Less than 1% of LTC patients who receive nursing home or facility care are under age 65.

Facility care vs. Home Care:
Myth: You run an almost 50% risk of requiring 24-hour care in either a Nursing Home or LTC facility after age 65.
Fact: Approximately 80% of LTC services are provided at home and only 20% in Nursing Homes or LTC facilities. The average age of admission to a Nursing Home is age 83.

LTC Premium Adjustability:
Myth: The best time to purchase LTC insurance is when you’re young and premiums are low.
Fact: LTC policies are adjustable and premiums can increase dramatically over 20-30 years. In the U.S. some premiums have increased 700% over the last 35 years.

Smoking Status, Health and Gender:
Myth: A non-smoker might expect to pay less for an LTC policy.
Fact: In Canada smokers and non-smokers pay the same price. As well, some plans charge men and women the same.
A Risky Investment:
Myth: By purchasing an LTC in one’s 60’s you are making a sound investment.
Fact: In order to purchase an LTC plan one must be in good health and therefore could be paying adjustable premiums for many years to come before any likelihood of receiving benefits. Individual plan purchasers can expect and should be financially prepared for significant future premium increases.

Qualifying Period:
Myth: Once an LTC plan has been purchased, there is no wait time for benefit payments to commence.
Fact: LTC plans have a qualifying, waiting or elimination, period that must be satisfied before the benefit is paid. The shorter the qualifying period the higher will your cost be.

Pitfall 1
A Catch 22 Dilemma:
It’s estimated you run a 50% risk of requiring LTC after age 65. But insurance companies screen LTC applicants and only accept healthy ones who will end up paying adjustable premiums for many years. One survey in the USA concluded that, based on a typical purchase age of 60 or older: ‘If you are medically eligible and able to qualify for an LTC plan you probably don’t need it and if you do need it, you probably won’t qualify for it’.

Pitfall 2
Beware the Fine Print:
Before claim benefits are paid out, an insured must satisfy the policy’s definitions, sometimes referred to as the fine print’. A policy’s definitions dictate which type of care the insured is eligible for and where and by whom it can be administered. That may not be as simple as it sounds. For example, Cognitive Impairment is relatively easy to understand as one immediately thinks of Alzheimer’s or some other form of Dementia. However, such a condition wouldn’t be covered if it resulted from a self-inflicted injury, or from alcohol or drug abuse.

Pitfall 3
Benefit Caps and Limits:
Most plans offer both Facility and Home Care; but some only cover Facility or Home Care. Note too that the majority of LTC plans offer a lifetime benefit period, as well as shorter benefit periods. Many LTC Specialists recommend a limited benefit plan rather than a lifetime plan as the average length of an LTC claim is only 2.8 years. A dilemma could occur should you outlive the policy.

In summary, if you are age 65 or under, the decision to purchase an LTC plan is more complicated than if you are older. One alternative to consider is a Critical Illness (CI) insurance policy providing coverage to age 100. In fact, one particular plan starts out as a CI plan and then converts into an enhanced LTC and CI policy after age 70. CI premiums won’t increase and there are no restrictions as to where and by whom care is provided. When the benefit is activated (by condition) the payout is in the form of a life annuity and can be used wherever the patient is and to pay anyone giving patient care.

Discuss your concerns with a Long Term Care Broker.

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Claims — Now What do I do?

I read an interesting article on Google written by someone in India about life insurance claims and it occurred to me that most people will only be involved in one or two claims in a life time, if at all.

Those people involved, probably had the assistance of a Life Insurance Broker to purchase a life insurance product (Term life, whole life, disability income benefit, critical Illness benefit) so that part would not have been a problem.

Now the policy (whatever type) is in place and it happens (death, disability, critical illness happening).

Now what do you do?

Well first things first:

Contact your Agent/Broker if you have one, as soon as reasonable, after the happening.

            Contact the Insurance Company if you do not have a Broker.

Advise the Broker or Life Insurance Company of the event giving them the date and cause of the event. In the case of a life insurance policy the premiums will cease. In the case of a critical illness benefit the thirty day survival of the condition will start and the premiums will cease. In the case of a disability income benefit the waiting period (before benefit commences) will start.

When advice is given to the Broker or Insurance Company the claim form is prepared (by the insurance company) and forwarded to the beneficiary or (in the case of a critical illness or disability income plan) to the insured person or owner of the policy.

The claim form is normally in two parts; one to be completed by the owner or the beneficiary and one part to be completed by the insured person’s doctor.

From this point on the beneficiary or owner will deal directly with the Insurance Company, however, keep in touch with your Broker and take advantage of his/her experience to assure that the claim moves along without a delay.

Some of the reasons for delay will be; forms improperly completed by the beneficiary or the insured person’s doctor. Do not send the forms to the doctor. Take them, if possible, wait for them to be completed or return as soon as possible to pick up the form. Now, mail your copy and the doctor’s copy together to the Insurance Company and keep copies of what you sent and the date you sent them.

Follow up with the Insurance Company within one week of mailing to be certain the forms were received and a file open on this claim.

Under normal circumstances a death claim should be completed within two weeks of receiving the properly completed claim forms and death certificate. A violent death under investigation or awaiting an autopsy would definitely delay the issuance of a benefit. If a death claim is made within two years of the policy being issued the Insurance Company can and will recheck all the information on the original application to assure themselves there were no errors or omissions (Two year Incontestability Clause - contractual in all Canadian insurance policies)

In the case of a claim for a critical illness benefit, when the survival period of thirty days (of the insured person) has passed a cheque in the amount of the benefit should be issued and sent to the owner of the Critical Illness policy. At this point the Critical Illness policy terminates.

In the event of a disability income benefit, when the properly completed forms have been accepted and the waiting period passes, the benefit will be paid at the end of the next month following the waiting period and the monthly cheques will continue as long as the insured person continues to be disabled or until the end of the benefit period whichever happens first.

The owner of an insurance policy pays premiums to keep that policy in force so that in the event of whatever claim happens there will be a payout of benefit. It is your right to receive the benefit in a timely fashion. Correctly completed claim forms in a reasonable time frame should insure this happens.

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Will your Beneficiary make a Hassel-Free Claim?

I just read a report about Canadian Tire selling life insurance. Well, it would be more to the point that they are making life insurance policies available online or offering a form to be filled in by you at their counter. The maximum amount available is $250,000 and the rate is fixed for only 5 years. To qualify you must answer “no” to seven health questions. If you answer just one question “yes” a Nurse will visit you to do more health underwriting.

The Insurance Company underwriting the plan is Canada Life. The “Plan” is not an individual, “for you only” plan it is a group insurance plan and the premium and the benefit can (and probably will be) modified by Canada Life at their discretion or the discretion of Canadian Tire if the plan is not profitable.

The other very disconcerting thing is that the Insurance Company is sure to re-exam the individual certificate of insurance at time of claim. This is referred to as underwriting at time of claim.

One only has to go back to the expose by CBC Marketplace last year when they (CBC) investigated Mortgage Insurance sold by Banks. In many cases Canada Life underwrote that type of group creditor insurance for some of the Banks. It was noted and proven that many of the claims for the mortgage life and critical illness insurance were denied at time of claim. The reason for denial of claim, non-disclosure of health information or lying about your health conditions, at the time of application. In most cases when applying for the bank insurance, the questions were not asked or asked and not explained well enough by the individual taking the application, who had little or no training in life insurance related situations.

Now think about this; “how do you argue or fight the denied claim?” Your either dead (life insurance claim) or suffering from a critical illness (heart attack, Cancer etc.) where you’re more concerned with getting well than fighting the BIG Insurance Company (who has deeper pockets than you have). The reasons for denial would not exist, if you had a signed application with specific health and lifestyle questions answered and explained, about your current health and health history that produced a real life insurance policy. In addition most individual life insurance applications require a report from your doctor. When a policy is issued under this circumstance (short of fraud on your part) you can be confident that your beneficiary will have no problem at time of claim.

The same could be said about buying online from any other institution that sells hardware or furniture or car towing maintenance insurance. They do not specialize in life insurance, critical illness insurance, disability insurance, and do not require annual certification by their employees in the insurance related products that they offer for sale. An Independent Broker must complete continuing education courses, annually, to maintain his/her license to sell life insurance products.

If you are interested in, if you have or think you have a need for life insurance, critical illness insurance; whether your need is short term (five to twenty years) or long term (for all of life), please contact a qualified Independent Insurance Broker.

These Brokers have your best interest at heart and have little or no allegiance to any one individual Life Insurance Company and will advise you on the best product and price of product for your needs based on your ability to pay premium. You will also be pleased to discover the cost is less expensive through a Broker than through Candian Tire.

Be certain that your insurance will pay a benefit, at claim time, Hassel-Free in the event there is a reason to claim. 

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Buying Life Insurance Online

When people surf the net for information about life insurance, I wonder how many believe they can make their purchase without talking to an agent or broker.

A young lady visited our main website http://www.assure-all.com and after completing two quotes for a term life insurance plan she left a message indicating she thought she could buy a life insurance policy online. When she realized this could not be done she left another message not to call her at the phone number she left on the original quote.

As she had also left an email address I felt obliged to send her a “thank you” for her comments and explain why buying life insurance online in Canada still isn’t possible.

Yes there are some Companies who offer “guaranteed issue plans” (usually up to $50,000.00 without medical) and advertising suggests that an Agent does not get involved; however, this is not one of the regular life insurance plans.

There are a number of challenges that have to be overcome when purchasing life insurance. Identification is one; how do you prove you are who you are? If the purchaser is buying life insurance, on the life of another person, how does that buyer prove they have permission to place the insurance on the life of the third party? Another challenge is the “signature”. The Canadian Insurance Industry does not yet accept an electronic signature to bind the insurance contract. They demand a hard copy application with an original signature and photo I.D. to prove that the applicant is legitimate.

The Insurance Company is agreeing to accept a small amount of “premium dollars” to guarantee a large amount of “insurance dollars” in the event of death of the insured party. The applicant must prove good health, identify  that they are who they say  they are, have the ability to pay the premium, have an acceptable lifestyle, have an occupation that does not put the insured in danger and the insured person does not travel to dangerous countries.

All of the above is determined by answering questions on a regular application for life insurance and providing acceptable health underwriting. Most individuals making application, after determining which plan is best for their immediate and future needs will require the knowledge of a specialist to assure all information is input in a way that will not prejudice the policy in the future, at time of claim.

We welcome all life insurance inquiries for information on the various plans and the costs of life insurance plans. The cost on all websites should be the same, if you’ve input the same data. The premium you see on the website, however, is just a number and, may, or may not be your final premium for your life insurance policy.

Take the time to discuss your needs with a broker. Decide whether or not this is the person you would like to do business with and whether or not this broker has the years of experience and knowledge to advise you about your life insurance needs.

Remember there is no cost for information and the Broker’s experience and assistance may be priceless.

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Critical Illness –Will a Plan Benefit You?

More today than only a couple of years ago are we hearing about a product called Critical Illness. What is it? Well it is a plan that is designed to pay the insured person a lump-sum of cash, tax-free, in the event that the insured person develops or is diagnosed with one of the twenty-four covered conditions. Most good plans have twenty or more covered conditions and the conditions are well defined in the contract. This is a plan you do not buy based on price alone. Be aware of the covered conditions and their definitions.

The definitions of the covered conditions are as important as the number of covered conditions offered.

A partial list of conditions would be heart attack, cancer, stroke, by-pass surgery, loss of limb, blindness, major organ transplant etc.

For most of the covered conditions there is a survival period of thirty days and then the payout is made to the insured or the owner of the policy. Cancer is one of the differences and is not covered for the first ninety days following issue of the contract and one of the reasons the companies do not back date to save age in this type of plan.

After the issue of the contract and once past the ninety days for cancer any diagnosis or development of a covered condition activates a claim that must be made by the insured person or owner of the policy. Following a thirty day wait and the insured is still alive the benefit is paid out and the Critical Illness policy is terminated. Yes, there is only one opportunity in most plans to claim.

Many people look at this plan as a Disability Income Plan. It is not! This plan was designed through discussions with by the brother of Dr. Christian Barnard, the famous heart surgeon, when he asked the insurance industry what they were doing to protect people from heart attack, stroke and cancer when they survived the ordeal and their savings began to dwindle because they had to adjust their working habits and could not earn the same kind of income.

Another benefit is tax-free cash to allow an individual to find a quicker solution to his/her medical problem by going elsewhere but at a higher cost. They didn’t have to dip in to their life savings or their RRSP.

They could also use the cash to support a thriving business in their absence. There are so many needs for money during a time of critical health and the Critical Illness plan will provide the cash tax-free.

The other interesting thing with Critical Illness insurance is the automatic death benefit. Not what you’re thinking. The premiums paid during the in force life of the policy are returned to a named beneficiary or the estate should death occur while the policy is in force with no claim on one of the benefits or not surviving the required thirty days from diagnosis or development of a covered condition.

With many of the companies you are allowed to add a rider that will return the premiums paid during the life of the policy if the policy matures without claim. With some of the companies there is an age specified and with others it is the number of years the policy is in force.

One other interesting option available in one company is the ability to convert the policy to a Long Term Care plan at age seventy. If the return of premium at maturity is opted for as well, the conversion to Long Term Care plan can be prepaid by the return of premium.

The interesting thing with this Long term Care plan is that it is far superior to anything in the market place today. The rate is guaranteed at conversion not to increase which is unlike most of the other Long Term plans that allow the rate to increase by up to 50% above the purchase rate if the insurance company deems it necessary for profitability. Guess what will happen with those other companies? You’re right! They increase the premium.

If you are healthy now and have the required disposable income you can protect yourself against a critical illness and/or provide funding for future Long Term Care.

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They Don’t Believe in Life Insurance

Have you ever heard someone say they don’t believe in life insurance?

Seems ludicrous don’t you think? I mean, how many people would not purchase car insurance or household insurance. Not many.

But life insurance non-believers’ aren’t really saying that life insurance doesn’t exist for them. Why? Well, because they may be independently wealthy and feel they don’t need the extra cash or perhaps they believe they have some other financial resource that will produce the income needed for their family when they pass on. (Or maybe they don’t believe they’re ever going to pass on!) Who knows?

Many people would just prefer to not discuss or even think about what would happen to their family’s financial well-being if they were to pass away pre-maturely. The odd thing is that they would be the first to say that they would do anything to ensure the ongoing welfare of their family. When you come right down to it, it’s simply the old syndrome of it won’t happen to me.’ That’s not rational thinking of course, but it’s more common than not. Although it may never be something that’s at the forefront of the mind, adequate life insurance coverage should always play a part of any sensible financial plan for the future of the family.

The point is that life insurance, like car, household or travel insurance gives you peace of mind. And there’s no price you can put on peace of mind. Life insurance can give you peace of mind knowing that if you die prematurely, your loved ones won’t be saddled by debt, taxes, or just regular money worries.

Deciding how much life insurance coverage is needed depends entirely upon your own circumstances. But the planning of “how much coverage” is basically the same for everyone. Here’s what to do:

1. Make an inventory of all your major assets and liabilities;
2. Work up a list of recurring bills that need to be paid every month or every quarter including personal debts. (Don’t forget mortgage or rent payments, car payments, post secondary tuition, credit card balances, etc.)
3. Determine how much of an estate you want to leave to your dependants and heirs.
4. Estimate how much you can afford to pay for life insurance premiums. Naturally, these payments cease once you (the policyholder) dies.
Once this is compiled then determine how much money will be coming from work benefits and government benefits should you die prematurely.
Putting the list of estimated expenses beside the list of anticipated income should show you pretty dramatically whether there is adequate money for the family you leave behind.

IF THE PROJECTED INCOME FALLS SHORT OF PROJECTED EXPENSES, THAT’S WHERE LIFE INSURANCE CAN HELP BY MAKING UP THE DIFFERENCE.

Purchasing a life insurance policy is the most unselfish thing a person can do. The life insurance benefit you sign up for is for the benefit of others, not yourself. If you ask most people who don’t own, or say they don’t believe in life insurance; the real reason they don’t own life insurance is because they don’t want to pay the premiums.

Life insurance is nothing more than providing money for your family in the event of a happening. I haven’t met a person who doesn’t believe in money or wouldn’t want their family to have lots of money if they weren’t there to provide it for them.

Most people who own a home or drive a car know that the insurance for those things are mandatory. More people will die than homes being destroyed or cars being written off.

In actual fact there is a greater need for life insurance than insuring homes and/or cars.

If you don’t own life insurance and you have a family depending on your ability to produce income you should definitely consider owning life insurance 

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Cottage Succession Planner Strategy

IF YOUR FAMILY IS BIG ON COTTAGE LIFE, WHY NOT KEEP YOUR COTTAGE IN THE FAMILY?
Now that we’re well into summer most families have been or are enjoying the life style that only a cottage can bring. The lazy days at the beach, the swimming, the boating, the fishing, the barbecues are the memory makers of life. My, what a life!!
Over the last ten years or so more and more Canadians have bought recreational properties, driving up both demand and prices. Many people are now finding that the plot of lakefront they purchased years ago is now worth far more than they originally paid for it.
For those wanting to sell, this is great news.
However, for those who want to keep their cottage in the family this presents a problem:

Did you know that on the death of the owner (last survivor of a married couple); the Canada Revenue Agency will tax the cottage on the increase in value? Increased value from date of purchase to date of last survivor’s death. The tax on the increased value is due in the year of survivor’s death.
This means that if the surviving family does not have the money to pay the taxes owing, they could be forced to sell the property to cover that obligation.
Fortunately, there is a solution. There’s something called the Cottage Succession Planner strategy where Mom & Dad can leave their legacy intact for the next generation to come.

Here’s how it works;

• The owners purchase a life insurance policy using the ‘Joint-Last-to-Die’ approach so the proceeds are payable on the death of the second spouse. Their children (or whoever inherits the cottage) are named as beneficiaries.
• The amount of the death benefit is set equal to the estimated taxes owing.
• The insurance premiums paid over the life of the policy end up being a fraction of the eventual tax bill.
• Upon the death of the second spouse, the death benefit is triggered and used to pay the taxes owing.

By using this strategy, a person not only pays less than the eventual tax bill, but pays in easily manageable installments rather than all at once. This is much easier on the budget and a good way to convince the eventual beneficiaries (inheritors) to pay all or a portion of the ongoing premiums should the older insureds have need of assistance to pay premiums (after all, they are the ones who will benefit from the strategy!)

Speak with your Accountant or Financial Adviser and determine the projected Revenue Canada tax bill at some realistic time in the future and as long as both partners are healthy consider a joint last to die policy for the benefit of the children/heirs. You will find the total cost of premiums during a normal life expectancy will equal les than forty percent of the face value of the policy or the amount estimated to pay the taxes. This amount can be modified as the need changes, however, long term planning should allow for a normal percentage increase in property value. Regardless, if there were a shortfall in funds it would be minimal.

If you or your family owns property that is desirable stay in the family for a number of generations consider the above for the protection of all and continue the strategy into the next generations.

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