Getting started in the group insurance business

Illustration by K Ripp

A recent StatsCan study found that businesses with under 100 employees added 185,000 jobs to the economy in 2006. These jobs were split evenly between businesses with 20 to 99 employees and those with under 20 employees. This growing number of small-to-mid-size businesses represents an expanding group insurance market and a tremendous opportunity for Canadian insurance brokers.

That is why I have written an article about five reasons why a new or experienced advisor may want to consider specializing in the group insurance market.

Seven life insurance sins

Do you know why you should watch out for captive agents? Are you aware that the cheapest life insurance plan isn’t always the best? Do you know why you should avoid accidental death insurance and be aware of policy exclusions? We've put together a list of seven life insurance sins you have to know of before signing a contract.

Manulife Financial donates $10,000 to Canadian Red Cross

Illustration by bruceley

Through its Halifax Community Board, Manulife Financial will donate $10,000 to the Canadian Red Cross disaster management program in response to recent major forest fires near Porter’s Lake and Tantallon, Nova Scotia.

“Red Cross volunteers directly assisted hundreds of people and spoke in person or by phone with more than 3,000 evacuees to ensure they were safe and that any special needs were met,” said Gerard Ferguson, chair of Manulife’s Halifax Community Board. “The Red Cross needs our help to maintain its ability to provide immediate support for these types of disasters.”

More than 50 Canadian Red Cross volunteers worked around-the-clock for several days. They provided dozens of evacuees with emergency shelter and ensured that hundreds more had free access to meals; water, childcare and pet care, and helped arrange emergency replacement of prescription medicines. They reunited people who had lost touch with family members due to the suddenness of the evacuations. The Red Cross identified for emergency officials which residents needed help retrieving pets, and they coordinated information meetings with authorities to keep residents fully informed throughout the evacuation.

"This is what our volunteers are highly trained and equipped to do, but it does cost money and the Red Cross gratefully acknowledges this support from Manulife Financial, said John Byrne, General Manager of the Canadian Red Cross in Atlantic Canada. "Donations like this will also allow us to address the longer-term disaster management needs of the Atlantic region."

Life Insurers Applaud Industry Committee Report

House of Commons - by Simon Starr

The Canadian Life and Health Insurance Association (CLHIA) applauds the House of Commons Standing Committee on Industry, Science and Technology on its report on Canada's service sector, The Goods on Services. "The life and health insurance industry strongly supports the recommendations of the Committee. They have recognized the vital role that the services industry plays in the health and prosperity of our economy," said Frank Swedlove, President of the CLHIA in a press release.

The services sector now accounts for almost 70 per cent of Canada's GDP. Further, the financial services sector is responsible for a major portion of Canada's direct investment abroad. "The government should seriously consider how they should respond to these excellent recommendations," added Mr. Swedlove.

The industry was particularly pleased with the recommendations that the Government of Canada:

• Continue to improve Statistic Canada's collection and dissemination of data on the services sector;

• Develop a services sector innovation strategy;

• Ensure that staff in foreign missions have the expertise, knowledge and resources to promote the services sector;

• Seek further favourable and comprehensive bilateral and multilateral trade agreements that would include services sector obligations;

• Work with the provinces and professional organizations to streamline the entry of foreign workers into the labour force, particularly as it relates to the recognition of foreign credentials; and

• Take a leadership role in encouraging the provinces to bring down inter-provincial trade, investment and labour mobility barriers.

AIG is now BMO:Consumer Friendly Changes at AIG

AIG Life Canada has recently made the following five changes to its life and critical illness product line-up as of June 2008:

1. Changes to Yearly Renewable Term (YRT) plans on their Universal Life Dimension series

2. New lowered Preferred Term 10 and Term 20 rates

3. A new Business Guaranteed Insurability Option for business clients

4. New T100 Rider on all Life Dimension plans

5. A new 15 Pay Living Benefit 100 (CI) plan plus bench mark definitions on all CI plans

Lorne’s Analysis
These are all consumer friendly changes. The YRT COI insurance options allows clients to maximize the cash accumulation during the early years of the Universal Life plan.

Lower Term 10 and Term 20 rates make an already attractively priced Term line-up even more competitive.
The business guaranteed insurability option allows business owners to protect their insurability while their business grows.
Term 100 Riders lower the cost of adding Term 100 coverage to their Universal Life policies.

AIG is now one of the company’s in Canada to offer a 15 pay feature on their critical illness policies.

“Cascading” life insurance

Illustration by Ted Bongiovanni

Tim Cestnick, a well-known author and tax commentator has written a very informative article for the Globe and Mail on “cascading life insurance.” He explains that buying life insurance on the life of your children can actually make sense. As he points out, this strategy takes advantage of the fact that you can invest money inside a universal life insurance policy on a tax-sheltered basis. The death benefit, he continues, along with the accumulated investments in the policy, are all paid out tax-free to the beneficiaries when the insured dies.

I encourage you to read this excellent article and learn how to transfer assets to the next generation without giving up control during your lifetime, and eliminate current taxes in your hands on the money deposited into the policy. You can find the whole article here.

Let’s Talk About Schizophrenia

Illustration by Caroline Barberis

The stigma around schizophrenia is one of the reasons Canadians don't want to talk about it. "Let's Talk About It", a provincial campaign organized by Schizophrenia Digest, will hold the fifth and final in a series of province-wide community public forums in Toronto on June 10th at the Centre for Addiction and Mental Health Centre.

According to a Toronto based poll, 92 per cent of respondents agree the cost of medications prescribed to someone with schizophrenia should be covered by provincial health insurance plans. In Toronto, 60 per cent of residents surveyed are willing to pay an extra $1 in taxes every year to ensure better treatment for people with schizophrenia.

Step Up for the Children

Over 4,000 participants are expected to attend the 26th edition of Step Up for the Children with Standard Life, to be held on Saturday, June 14 on Ile Sainte-Hélène at Parc Jean-Drapeau in Montreal. The event will begin at 8:30 a.m. with the 10-km race, followed by the 5-km family walk at 10 a.m.

Event ambassador and Montreal Canadiens defenceman Francis Bouillon and child spokesperson Valérie Bernier will open the walk. It will also be a fun celebration for children, with inflatable games, entertainment and free food for everyone.

"I encourage families to come out and participate. This year, the objective of the Step Up for the Children with Standard Life campaign is to raise over $400,000 in support of the Foundation of Stars. People can register online until Thursday, June 12 or on site on the day of the event," explains Francis Bouillon.

A Strong Term Lineup

Unity Life of Canada joined the Foresters family in April 2008 and as of Jan 23 2012 changed their name to Foresters Life Insurance Company.

Unity Life has been selling insurance in Canada for over 100 years, and although they advertise less than some of their competitors they have one of the strongest term insurance lineups in the Canadian marketplace.

They are one of the only companies to offer 5, 10, 15, 20, 25 and 30-year terms. And unlike most companies, their entire term lineup is competitively priced.

Unity Life’s Term plans come in face amounts of $50,000 to $5,000,000 and are available on a single life or joint first-to-die basis.

The applicant can also add a children’s term rider, accidental death benefit, waiver of premium and indexing option. The indexing option increases the face amount and premium by 5% per year, up to 150% of the original face amount.

Unity Life also offers an E-Z Term 10 application which is available without a medical and with simplified underwriting.

Below are examples of Unity Life Term 10 rates at $250,000 of coverage:

Insured..............Standard Rates.......Preferred Rates
35-yr male N/S:....$19.58/month…........$15.30/month
45-yr male N/S:....$33.53/month…........$26.78/month
55-yr male N/S:....$75.38/month…........$57.83/month

Free benefits for Foresters members

Unity Life of Canada joined the Foresters family in April 2008 and as of Jan 23 2012 changed their name to Foresters Life Insurance Company.

On April 3, Foresters and Unity Life of Canada announced completion of the agreement under which Unity Life becomes a wholly owned subsidiary of Foresters.

This will strengthen the company’s position in the Canadian marketplace. Unity Life has a great Term Life insurance lineup and the Foresters has an innovative Universal Plan. New policyholders will also now be eligible for the following free Foresters member benefits.

• Critical Illness member benefit – policyholders are eligible to receive up to $4,000 financial grant in the event of a critical illness

• Terminal Illness member benefit – if the insured is diagnosed with a terminal illness they can receive an interest free loan up to 75% of the face amount in the event of a terminal illness

• Young Family member benefit - if a child loses one or both parents they may be eligible for a scholarship up to $6000 a year for a maximum of 4 years

Standard Life adds whole life plan

(Effective January 1, 2012, Standard Life will no longer sell individual life insurance and critical illness policies).

In a recent press release, the Standard Life Assurance Company of Canada announced the addition of a Whole Life insurance product to its portfolio. This plan offers premiums and values that remain unchanged for the duration of the contract.

It is targeted to individuals approaching retirement and looking for tax-efficient ways to maximize wealth transfer between generations.It can also fit the needs of younger individuals looking to ensure that their families are financially protected.

Furthermore, it provides an alternative to existing Standard Life term insurance policyholders who want to convert their temporary insurance to a permanent form of life insurance coverage. Standard Life's Whole Life product is available immediately through independent financial advisors across Canada.

Cigar smokers and life insurance

Have just one a month

Cigar aficionados beware! Indulging in the occasional stogie could cost you more than the $150 you paid for that box of Cuba Caimans. Most, but not all, life insurers still let you have the occasional large cigar – usually one a month.

In the latest addition to our Life Insurance Medical Tips, we give you all the details on how nine different insurance companies in Canada treat cigar use and non-smoker rates.

Which health and dental plan is best for you, individual or group?

Photo by Andy Smith

The Canadian employment landscape is changing. Most people no longer work for large corporations or the government. More Canadians either work on contract or are in business for themselves. They must decide what type of health and dental coverage is best. Let's have a look at advantages and disadvantages of both individual coverage and group plans!

Individual coverage is all that is available to one-person operations. Such insurance does have some advantages. The insured has some individual flexibility in the type of coverage sought. Coverage ranges from basic protection to more enhanced plans with higher drug maximums over $5000 a year. On the downside, premiums and renewals are based on an insurer’s experience with the pool of individual clients, so the rates cannot be negotiated. As well, most individual plans must be fully underwritten and include exclusions for pre-existing conditions, such as high blood pressure.

Group Plans pool the rates for all employees of a particular company into a single plan. These plans are available for groups as small as two people. Group plans offer the following advantages:

• No exclusions for pre-existing conditions

• One family rate is charged. Individual coverage penalizes large families, as each family member is charged a premium. Someone with five children pays a premium for each child. Under a group plan there is one family rate, no matter the number of family members.

• Group critical illness is often available without a medical for larger groups.

• Higher limits on drug and dental claims. Individual plans often limit the amount of dental coverage in the first year.

• Group premiums are tax deductible for a corporation. Individual plan premiums, however, are not deductible according to federal tax guidelines.

• More selection. Few insurance companies offer individual coverage, while significantly more offer group plans. More competition generally means more competitive rates.

• Group renewal rates are negotiable, while individual renewals are pooled and non-negotiable. Your ability to negotiate an unjustified rate increase generally means lower overall premiums.

Four Great disability plans

Great-West Life has four disability plans. Their Professional plan is high-end disability insurance geared toward professionals, business owners and key employees. The Boss Plus plan targets business owners who are concerned about cash flow if they become disabled. The Protector plan targets employees, and the Competitor plan offers low-cost disability coverage for people whose occupations or current work situations make it challenging to obtain coverage, such as part-time or seasonal workers.

Great-West’s Professional plan is their flagship program, and competes with RBC Insurance’s Professional Series and Canada Life’s Lifestyle Protection plan in the high-end market. The Professional plan has the following standard policy features:

• Recurrent disability – the insured’s monthly income benefit will resume immediately if the same (or related) disability recurs within a specified period.

• Waiver of premium – if the insured has been disabled for 90 days, Great-West will refund the premiums paid for this period, and waive the premiums while the disability continues.

• Cash flow – the insured can qualify for a two-month extension of benefits when he/she returns to work full-time in the same occupation as prior to the disability.

• Rehabilitation program – Great-West will cover the cost of a pre-approved vocational program, and the insured will still receive his/her monthly benefit while totally disabled. This feature can assist the insured learn a new occupation.

• Transplant surgery – if the insured donates an organ, he/she will be covered during the recovery, if the policy has been in force for six months.

• Survivorship – the insured’s estate will receive a lump-sum benefit if they die while receiving their monthly disability income.

The following optional riders are also available on the Professional plan: return of premium rider; limited first day accident rider; cost of living adjuster rider; future earnings protector option rider; future savings protector rider; lifetime accident and graded sickness benefit rider; accidental death and dismemberment rider; and a health care rider.