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Top 10 Life Insurance Tips From 10 Personal Finance Experts

March 31st, 2015
life insurance tips experts
10 Life Insurance Tips From 10 Financial Experts

If you are thinking about applying for a life insurance policy, there are a lot of options out there. If you want to make an informed decision, research what you can and then talk to a financial planner or life insurance broker.

To give you a basic idea of the various schools-of-thought when it comes to life insurance, here are some valuable tips from 10 real personal finance experts. No joke!

1. Don’t Avoid Buying Life Insurance

The first step to getting the right life insurance policy is to stop procrastinating and go to an advisor to talk to them about your options, says Barry Choi. He mentions that a lot of Canadians don’t want to talk about life insurance because of the connection with facing the possibility of accidents or their own death. No one wants to think about death all the time, but it’s smart to talk about your life insurance needs and be prepared for whatever life has in store.

2. Fill Out Paperwork Accurately

Ellen Roseman suggests anyone taking out life insurance to make sure that they fill out all of their paperwork accurately. It's a good idea to fill out the paperwork with your medical records in front of you to make sure your application is correct. You may not have omitted a medical issue out of intent to deceive; you may simply have forgotten that you had a health issue many years ago. You don't want any surprises when you go to file a claim down the road. The insurance company can deny you the money if they find undeclared medical problems.

3. Be Weary Of Permanent Life Insurance Investment Returns

The Frugal Trader at Milliondollarjourney.com believes that Whole and Universal life policies will typically provide a lower-than-average return on the investment portion of the premium. He raises some good points. Before diving into permanent life insurance make sure you are aware of your other options, such as buying term life insurance to cover your immediate needs and investing the rest on your own.

4. Calculate How Much Insurance You Need

Sometimes you are offered group life insurance at work and you may not be sure if you need to purchase more to be fully covered. Sheryl Smolkin and financial planner Rona Birenbaum provide a formula to assess your life insurance needs. The formula is this: “The insurance coverage you need = total outstanding debts + funeral costs + education funding for children + (annual cash flow needed by the survivor to remain debt free x number of years cash flow is required.)

5. Calculate the Return on Your Life Insurance

Bruce Sellery suggests that you should crunch some numbers and determine if buying life insurance is truly worth it when you are older. He says that in some cases you could possibly save more by putting the amount of the premium into a tax free savings account to go to your family should something happen to you.

6. When You Shouldn’t Buy Life Insurance

Robb Engen recommends some situations in which you should never buy life insurance. You should avoid buying life insurance when you’re young-unless you really need it. You shouldn’t consider this an “investment.” When you feel pressured because of your health, continue to look around for the right policy. Moreover, you should have a higher base amount of your policy instead of buying expensive double indemnity insurance. You should also avoid buying life insurance simply because the company is well-known.

7. Ask Questions

You should ask lots of questions about your policy, according to Melissa Leong. It's very important that before you buy a life insurance policy you know about your adviser’s experience in the industry and that you fully understand the terms. You should know the type and amount of insurance and how long the coverage should last. You should also know if your policy is convertible or permanent.

8. Factors that Will Cause Your Life Insurance Application to be Declined

Martin Malinski & A. Fox discuss some of the major reasons why your application for life insurance may be declined. They state that having a chronic or serious medical issues such as: obesity, stroke, heart attack, diabetes, cancer, Parkinson’s, Lupus, HIV/AIDS, MS, ALS, Crohn’s/colitis, even heart, kidney or liver disease can result in your application being denied. Other factors that may impact the approval of your application or cost of you policy is if you have a dangerous job, participate in risky hobbies, if you travel to unstable regions of the world or you have or currently have any addiction to alcohol or drugs.

9. The Biggest Mistake People Make With Life Insurance

Alan Whitton (a.k.a Big Cajun Man) says that the biggest mistake people make when buying life insurance is neglecting term life insurance and buying whole life insurance. Remember that insurance is primarily not an investment; it’s meant to protect your family in the event of an accident or death.

10. Keep An Open Mind When It Comes To Life Insurance Strategies

Jon Chevreau on Get Smarter About Money offers up a nice tip for people with aging parents or in-laws. Taking out a life insurance policy on the life of a parent could be a tax-effective way to create a source of income at their inevitable death. As grim as it may be, this could be a smart financial move for children to consider.

Weekly Personal Finance Roundup March 27th 2015

March 27th, 2015
Weekly Personal Finance Reading TFSA Taxes

This week, we interviewed the founder of Canadian Legacy Builder, Kevin Cahill, about the importance on critical illness insurance in our experts roundup series. We announced that we will be hosting a BBQ for Youth Without Shelter this summer. The event take place on June 11th from 4 p.m. to 7 p.m. For more information about the BBQ check out our announcement post here. Lastly, Chantal Marr wrote an article in Forum Magazine all about kids and insurance.

Below are articles I found interesting this week that deal with investing, budgeting and an experience that a new small business went through during tax season. That's it for our weekly roundup and I hope you all have a great weekend.

Young and Thrifty explains why they are paying down their mortgage more aggressively. In fact, Young suggests to put more money towards paying down your mortgage over investing in a high interest savings account or GICs because your mortgage interest rate is higher than the returns from these accounts. 

An interesting guest post was published on The Blunt Bean Counter this week. The article started as a comment on The Blunt Bean Counter's article on Ontario's Retirement Pension Plan and how it affects you as an employee or self-employed. The article is about the trials and tribulations of a small business just getting started. 

Frugal Trader from Million Dollar Journey gives the run down on how he is able to support his family on one salary. Some things he tributes to being able to do this is having no debts, tracking spending and keeping expenses low. 

Your financial advisor often tells you that individual stock picking is not worth the extra time and effort and that you should stick to buying an index instead. Michael James gives a reason as to why this is sound advice. 

Chantal Marr in Forum Magazine: Kids & Insurance

March 25th, 2015
Advocis Kids Insurance Chantal Marr
Chantal's Article In Forum Magazine

In this month's issue of Forum Magazine, Chantal Marr wrote an informative article about insurance and children. In the article, Chantal explains what different forms of life insurance is available for children. Also, she briefly touches upon the point of contention regarding the debate of life insurance for children. If you want to read the original article, we have it posted below or you can view it here.

Let's get my bias out of the way, I'm a big believer in life insurance for children. And with policies on each of my three children, I practice what I preach. Purchasing the insurance for my kids now allows them to have locked-in and affordable coverage, regardless of any change in their health. 

Many advisors flat out dismiss insurance for kids because the parent, not the child, is the financial breadwinner and it's the parent's income that needs protecting. The financial hit a family will endure after the death of a parent is just far greater. In the case of a child, what financial expense is there to the parent beyond the funeral? 

I'm not disagreeing. Ensuring parents are properly insured is my first priority. If clients can't really afford children's life insurance, it's a better idea for clients to save their money. After all, the cash values generated by the investment component of some whole life insurance policies are minimal.

But for those who can afford it, purchasing life insurance for a child can be a sound strategy. Of course, no one wants to think about the death of a child, but if it were to happen, it could also affect the family in devastating ways. Parents would likely to need to take significant time off work. Having insurance would give parents the time necessary to properly grieve their child's loss and be there for the surviving family members.

Buying children's life insurance also guarantees the future insurability of a child regardless of their health situation later in life. Some insurance companies will guarantee children up to $500,000 in future life insurance coverage. I once had a client who was able to partially insure his mortgage because of an insurance policy his parents opened for him when he was born. Good thing, because he had developed heart-related issues as a young boy making insurance difficult for him to get. While his guaranteed insurability did not fully cover the mortgage, having something was definitely better than nothing.

Cost is another decision factor. When you are young, you are healthy, so life insurance is the cheapest it will ever be in your lifetime. And the cost is guaranteed to never increase. This is also a huge advantage to clients with parents who have health issues. Most life insurance companies will insure someone in good health even if their parents have health issues. Family history has an impact on an insured's ability to get preferred rates but usually will not disqualify them for standard rates.

When clients come to our firm inquiring about kid's insurance, we explain that policies come in three forms. Like adult life insurance policies, children can have a permanent policy or a stand-alone term policy. Unlike adult policies, children can get rider coverage on a parent's own life insurance plan.

While permanent insurance is expensive, it's also the most comprehensive. It can be sub-divided into three more categories. Universal life policies can offer level cost of insurance with an optional saving component. Non-participating whole life insurance policies are fully guaranteed, have a guaranteed cash value, and can be paid up in 10, 15, or 20 years. Finally, participating whole life insurance policies are generally the most pensive, but in addition to guaranteed premiums these plans offer the highest cash values and increasing death benefits.

Term insurance is cheaper than permanent insurance but has fewer features. It is for the term specified (e.g. 20 years) and then expires unless it's converted into a permanent plan. The cost of term policies remains consistent for the initial term selected. Term insurance with built-in critical illness coverage is another option. It allows for a lump sum payment if the policyholder is diagnosed with one of the covered critical illnesses listed. 

A children's life insurance rider is the most common form of children's life insurance because the coverage amount is less than a stand-alone policy and the features are limited by comparison. The rider also does not allow guaranteed premiums for life. It will most likely end when the child is 21 years old, or 25 years old if still attending post-secondary education.

Sometimes, clients are intrigued with the concept of using funds from life insurance to supplement a child's post-secondary education. It works like this: the funds grow on a tax-sheltered basis and can be withdrawn down the road as loan, partial surrender or full surrender. We are not fans of this approach. RESPs are a much better strategy, especially with the 20 per cent Canada Education Savings Grant provided on your contributions up to $2,5000 each year. Don't say no to free money. 

Kids' insurance isn't a yes or no answer. Like any other policy we recommended, it's about going through a needs analysis process and evaluating what makes sense for each individual client. 

LSM Insurance Hosts BBQ For Youth Without Shelter

March 24th, 2015
Lorne Marr And Family Youth Without Shelter
Lorne Marr And Family Preparing Sandwiches For Youth without Shelter

LSM Insurance is hosting a BBQ this summer to help feed Youth without Shelter. The event will be held June 11th 4 p.m. to 7 p.m. at 6 Warrendale Court, the headquarters for Youth without Shelter. The address is located in the Kipling and Albion area.  

Last week, Lorne Marr and his family put together 50 nutritional lunches for hungry youths. Mike Burnett, Event and Education Facilitator, reached out explains the importance of providing a nutritional lunch.

Thank you for your generosity in providing such wonderful lunches to our 50 young residents. Having nutritious and hearty goes a long way to improve self-esteem, food security, and show them that their community cares about them.

More information of the BBQ will be available when we come closer to the date of the event. Until then, you too can help provide nutritional brown bagged lunches for youths. If you want to learn more about YWS, or find out how you can help, you can email YWS

Brown Bag It

Youth without Shelter is Etobicoke's singular emergency residence for homeless youth. YWS was created in 1986 by a group of teachers and guidance counselors that were frustrated about the lack of emergency housing and support for students. Since then, YWS has helped house 4,000 homeless youth. Along with housing, YWS have been able to instill life-skills and confidence in these youths to help them find long-term housing and jobs. Youth without Shelter provides programs and services that ensures every youth will have the support to reach their potential.

The youth that come to YWS are mostly coming from abusive homes. Much of their lives have experienced some form of violence and poverty. They come to YWS with limited life skills and do not have the know-how to look after themselves. The youth that are served come across the Greater Toronto Area with a wide array of economic and cultural backgrounds. The location of YWS is in Jamestown, a United Way Toronto designated priority neighbourhood. Some issues that YWS help youth with are substance abuse, mental illness, pregnancy and problems with the law. YWS provides a safe and stable environment for all these needs and more. 

Last year, Youth without Shelter was able to provide over 17,000 nights of shelter and 85,000 nutritious meals. YWS also helped 89 youth find permanent housing and 46 youth with a job through their employment program.

Kevin Cahill | Founder of Canadian Legacy Builder

March 23rd, 2015
Cahill Profile 2012
Kevin Cahill
Canadian Legacy Builder

Kevin Cahill, B.Sc.(Hons), CFP, CHS, CLU, EPC

Founder, Canadian Legacy Builder

1.What type of Critical Illness insurance do you own?

I own $250,000 face amount of coverage to age 75.

2.What factors did you consider when determining the coverage amount?

In November 2001, my soon to be father-in-law's mother passed away. She was in her 70's when she was diagnosed with a brain tumour. Three months later my father-in-law, who was a business owner, purchased a $500,000 Critical Illness Policy. He was a 52 year old smoker and his premiums were $1200 a month. Two very short years later, a week after my wedding, he was diagnosed with cancer and passed away three months later. In the final three months of his life, I witnessed the power of the policy he had purchased, as the family did not have to worry about money.  His family were able to use the proceeds of the policy he purchased to bring comfort and enjoy the short time that was left. I purchased my policy 24 days after he passed away and I bought an amount that would replace my annual salary.

3. Do you think people underestimate the importance of Critical Illness insurance and if so why?

People buy what they understand. When the product was invented in 1985 by Dr. Marius Barnard, it was simple. When it was introduced in Europe it was simple. When it came to North America in the mid 90's our arrogant culture decided that it needed to be made complicated with more bells and whistles similar to how Home Depot caries a variety of nails. If Cancer doesn't get you, heart disease will, the numbers and stats do not lie. People spend vast amount of money and line up for blocks to wear designer clothing, take part in a run in the freezing cold, but I am still waiting to use the velvet rope at my office to keep the people wanting to buy the most amazing product invented in last 30 years. When the doctor says "You have Cancer" the newest iPhone is not going to help your family.

4. What are some limitations or exclusions should people watch out for?

I talk about the sleep test in many areas and this is one. You need to be able to put your head on the pillow at night knowing that you did the best possible thing for your family. Search out a reputable company and a reputable insurance agent, because when you make a claim you need someone in your corner helping you with the unknown.

5. If you had to choose between Critical Illness and Life Insurance which one would you choose and why?

I would figure out a way to do both within the budget. Something is better than nothing.

Kevin Cahill was born in Ottawa and graduated with a specialized honors biomedical science degree from the University of Guelph in 2001. After three years with a medical supply company based in Germany, Kevin entered the financial services industry in 2004 with Freedom 55 Financial – London Life - and then incorporated his practice and self-branded under Cahill Financial Services in 2005. Canadian Legacy Builder was founded in 2011 with the purpose of helping individuals start the conversation towards how to be a great ancestor. In addition to being a speaker and an author, Kevin is in the top one per cent of Financial Planners around the world because he has always qualified for "The Million Dollar Roundtable" since his first year in the business.

Kevin is passionate about his local and global community having had many leadership roles and now spends the majority of his free-time with his seven-year-old son Calvin.

Weekly Personal Finance Roundup For March 20th 2015

March 20th, 2015
weekend roundup good weather
The Warm Weather Is Almost Here

Our infographic this week is about Guaranteed Issue life insurance. We describe what it is, who sells it and who is suitable for this policy. We also had an article about free life insurance benefits you might have that you are not taking advantage of. In the article, Chantal goes into detail of what kind of benefits you might have. LSM is in the news! Lorne Marr was quoted in the February/March 2015 issue of MoneySense. Lorne was quoted by Julie Cazzin in her article, the only insurance guide you need.  

Lastly, don't forget to enter our giveaway this week to win a ticket to MoneySense's Retire Rich Event in April! The event is being held in Oakville and will feature well known bloggers and MoneySense personalities. 

Below we have articles that celebrate milestones, asks questions and weigh in on debates. Enjoy your weekend everyone. 

Chantal was featured on Million Dollar Journey with tips on how to score well on your life insurance medical test.

Mark Seed of My Own Advisor answers the questions that most investors don't ask.

Big Canajun Man celebrates 10 years blogging about personal finance. Here is to 10 more years! 

Bommer and Echo share their thoughts on the TFSA limit increase, Canadian household debt ratio and income tax.

Common Cents Mom is hosting a twitter chat about taxes with Christa Clips. Robin Taub and Turbo Tax Canada will be taking part in the twitter chat as well. The chat will happen using #CDNmoney on Tuesday, March 24th at 7pm EST. There will also be prizes available to Canadian tax filers. 


Giveaway: MoneySense Retire Rich 2015

March 19th, 2015
Money Sense Retire Rich 2015 logo
Money Sense Retire Rich 2015 Giveaway

MoneySense is returning it's Retire Rich Event this year on Wednesday, April 8th, 2015. The event will be held in Oakville at the Oakville Conference Centre on 2515 Wyecroft Rd. The event will take place between 5:30 p.m. - 9:30 p.m.

Retire Rich is an event hosted by MoneySense to help you live a rewarding life in retirement. Personal finance experts come together to bring one night of practical advice and insights. At Retire Rich, you will learn financial tactics money plans that can help you establish a retirement plan. If you have questions, the experts are there to answer them. Last year, we recapped MoneySense's Retire Rich 2014 event.

Below is the list of featured speakers for MoneySense 2015.

Bruce Sellery the author of the Moolala and contributing editor of MoneySense.

Duncan Hood, editor-in-chief of MoneySense.

Author of Stop Over-Thinking Your Money, Preet Banerjee. Preet has also been seen on CBC's The National Bottom Line panel. 

Lastly, Dan Bortolotti, the founder of Canadian Couch Potato Blog, MoneySense index investing columnist, and financial planner.

Cost of general admission is $49.95 plus HST.  Luckily, we have one ticket that we are giving away. All you have to do is enter in the contest below. End date of the contest is Friday, March 27th, 2015 at 12:00 a.m. 

a Rafflecopter giveaway

Lorne Marr Quoted In MoneySense: The Only Insurance Guide You Need

March 19th, 2015
Money Sense February March 2015
Money Sense February March 2015

Insurance can be a confusing but necessary purchase. To help mediate the confusion, MoneySense put together an insurance guide for all your needs in their February/March 2015 issue by Julie Cazzin. She covers the topics of disability insurance, auto insurance, life insurance and much more.

In the MoneySense guide, Lorne Marr, our Director of New Business Development, offered his insights on how you should treat your life insurance policy and how to save a few thousand dollars. 

The MoneySense Article:

My 24-year-old daughter Laura recently started a new job and, like many new employees, she had to navigate a maze of choices in her group benefits plan. She earns a modest salary and there’s little left after paying for basic living expenses. So her main goal was getting the coverage she needs for the lowest cost.

As Laura and I went through the insurance options in the booklet, even an extra $50 in premiums for more coverage made her sit back and consider: did she really need to spend that much for a cost-of-living adjustment on disability benefits? Did she even need life insurance at her age? Laura soon understood that buying insurance isn’t simple. Whether you’re trying to insure your life, your income, your health, your car or your home, the costs add up quickly.

I gave Laura three pieces of advice. First, only buy insurance to protect yourself from unlikely events. Next, only buy enough insurance to maintain your standard of living: no more. Finally, forget about buying insurance for life events that won’t severely strain your finances. That means in most cases it pays to focus on the basics in several key categories: disability, life, travel, auto and home insurance. It can be easier than you think. “When people come to see me, they want to know one thing: what’s the right insurance for my budget?” says Jennifer Moore, a certified financial planner in Toronto. “I do my best to make sure all of their risks are covered off for minimal cost.”

Here’s how to figure out what insurance you need right now—and which types you can forget about all together. Just remember, before you buy anything, sit down with an independent insurance broker or fee-only financial planner who understands your situation so you make an informed decision.

Disability Insurance

Disability insurance—which pays a benefit if you suffer an accident or disease that prevents you from working—is probably the most important coverage you can get. That’s true whether you’re single or have a family who depends on your income. A typical 30-year-old is four times more likely to become disabled than die before age 65. And one in six Canadians will be disabled for three months or more before age 50. “When I ask clients what their largest asset is, they often say it’s their house,” says Tim Landry, a living benefits consultant in Montreal. “But for many people, their largest asset is their future income-producing ability. If you have 30 years left to retirement and you’re making $100,000 a year—that’s $3 million. Ensuring that is crucial for peace of mind.”

Long-term disability (LTD) insurance provides a monthly income if you’re unable to work due to a serious injury or illness. You can also purchase critical illness insurance, which pays a tax-free lump sum if you’re diagnosed with one of several illnesses covered by your policy (such as cancer, stroke and heart disease). So which is right for you? In almost all cases where a spouse is working and providing ongoing income for the family, LTD insurance is by far the best option. Critical illness polices aren’t necessary for most families on a limited budget.

Not understanding the difference between the two has kept David Singh, a 38-year-old environmental planner in Calgary, from protecting his family from income loss were he to become disabled. “With three kids under eight and a wife who works only part-time, money is tight,” says Singh. “We aren’t sure it’s necessary and believe it may be costly. So for now, we have just a secured line of credit to fall back on if anything happens to me. We may be rolling the dice.”

Rolling the dice, indeed. For families like Singh’s, disability insurance is a must. The good news is, if you work for a large company LTD coverage is probably part of your benefits package, and in some cases it’s mandatory. Typically, such a plan will pay you a percentage of your monthly income if you are unable to work, and these payments continue until you return to your job, reach age 65, or die. But coverage differs greatly from one employer to another, and if you’re self-employed or you work for a smaller company, you may have no coverage at all.

Disability plans will either cover you for “any occupation” or “own occupation.” The latter is much better, because under this definition total disability means the inability to work at your regular job. With “any occupation,” total disability means the ability to perform the duties of any job. So if you become disabled but you could do less demanding work, you may not get the benefit. Often plans offer own-occupation coverage for the first two years of the benefit period and then switch to any-occupation after that.

To figure out whether you have enough coverage, contact your company’s HR department or office manager and have them walk you through your group benefits. If your company plan covers at least 60% of your pay, you likely have enough coverage. If you’re single, have no kids, or if your mortgage is paid off, you likely could get by on a policy that pays 50% of your salary. “List all your basic expenses for the year, including mortgage payments, utilities, food, rent and transportation,” says Lorne Marr, an independent insurance broker and director of business development for LSM Inc. of Markham, Ont. “And keep in mind that many disability plans include a cap on benefits.”

For instance, your plan may cover 60% of your gross income, but only up to $3,000 a month. That means if you’re earning more than $55,000 a year, you won’t actually receive 60% of your salary. If you earn $150,000 annually, the $3,000 a month maximum amounts to only 24% of your pay.

That’s why, if you earn a high income, you may want to consider a private disability plan to supplement your group benefits. To give you an idea of the cost, a private “own occupation” disability policy for a 40-year-old male white-collar non-smoker that pays $3,000 a month until age 65 (90-day waiting period) would cost about $122 a month. The same policy for “any occupation” would cost about $76 a month. (For a 40-year-old female, the premiums would be slightly higher, since women have a lower mortality rate on average but a higher chance of sickness (called “morbidity” in the industry).

When working out how much disability insurance you need, keep in mind that payments from a private plan are tax-free, while the payout from most corporate plans is taxable.

Life Insurance

For Daniel Stinson and his wife Brigitte, money is tight. When Brigitte, 34, resigned from her job last year to be a stay-at-home mom to their 14-month-old daughter Rachelle, she lost the life insurance coverage she had through her employer’s plan. “That got me thinking,” says Daniel, a 36-year-old compensation specialist in Toronto. “We have a mortgage and child costs, so we’re making more critical decisions about what we spend money on. I’d like to avoid paying higher premiums for life insurance as I get older and switch jobs.” For that reason, Stinson is opting out of his group life insurance plan and replacing it with a 20-year term policy with fixed premiums. “Locking in a price now when I’m in my 30s will be more cost-effective in the long run.”

Stinson knows that life insurance is essential if you have a family or dependants who rely on your income. If you die without proper coverage, your spouse and kids may be unable to pay the mortgage or meet daily expenses. The key is getting the right kind, and for most people that’s term life.

With term life insurance you pay a fixed premium that covers you for a specific period—usually 10 or 20 years—after which you would need to renew and face much higher premiums. The other category is permanent insurance—such as universal life and whole life—where the premiums start out higher but stay level throughout your life. Permanent policies are unnecessarily costly for most young families, whose priority should be getting adequate coverage at a reasonable rate.

Start by doing a needs analysis. How old are your children? Would you need to pay for daycare if a spouse died—or, if you’re a single parent, if you died. “Your life insurance should cover your mortgage and personal debts, as well as replace 10 times your income if you have kids under age 10—five times your income if your kids are older than 10,” says Marr. Stinson, who has a $300,000 mortgage, three kids under 10, and a salary of $100,000 would need a 20-year policy with a death benefit of $1.3 million—minus whatever savings he already has.

If you have a mortgage, you have probably been offered a policy that would pay off the balance if you die. Moore doesn’t recommend these policies: not only is mortgage insurance more expensive (by several hundred dollars a year), but your coverage decreases as you pay down the principal. With term life, the death benefit stays the same over time. “So if you bought $500,000 in term life insurance at age 30 and your mortgage has $50,000 remaining when you die at age 40, your family will get the full $500,000 payment—not just the $50,000 to pay off the mortgage, which is what mortgage insurance would pay out,” says Moore.

Travel Insurance

Three years ago, John Kates and his wife Miriam, were on a trip through Europe to celebrate their 40th wedding anniversary when John started having severe heart pain in his Paris hotel room. He was immediately taken to a hospital, where he had a triple heart bypass and spent six weeks recuperating. His wife stayed at a local hotel during that time. The final bill? $200,000.

Luckily, Kates had spent $300 on travel insurance to cover him for the 17-day trip. His insurer, a Canadian bank, also handled all payments to the hospital, so Kates didn’t have to open his wallet and ask to be reimbursed later. “I know people who have had to sell their home because they had medical emergencies outside Canada and no health insurance,” says Kates. “My policy covered being transported by ambulance to the Paris airport on my return flight, as well as a nurse to accompany me home. I don’t know how I would have been able to do the planning and paperwork for the flight back myself. My wife and I travel several times a year and we always get good travel health insurance. It’s worth every penny.”

Before booking a vacation, travel insurance should be at the top of your list, says Tim Landry, a living benefits specialist in Montreal. “I have a client who went to Florida and had some stomach tests done. The ultimate remedy was Pepto-Bismol—and $30,000 in medical bills. It can bankrupt you if you’re not careful.”

There are several ways to keep costs down. Start by checking your employer benefits plan to see if you’re already covered. Some credit cards also include travel medical and trip cancellation insurance. But check your policy closely to make sure you understand what coverage you have. Insurers often limit how much they’ll pay out for claims and restrict coverage to shorter trips—typically seven days or so.

Travel agents usually sell travel insurance and may offer it when you’re booking your trip. “These policies can often be much more expensive than getting insurance from an online provider such as Travel Guard,” says Gavin Prout, vice president of Special Benefits Insurance Services in Port Perry, Ont.

To compare costs, use a service such as Kanetix.ca. You’ll get quotes from several providers on the spot. If you travel more than twice a year, it’s cheaper to simply buy an annual plan. For instance, a 40-year-old would pay $25 for emergency medical coverage during a one-week trip to Acapulco. By contrast, he could get an annual plan that would cover him for unlimited trips of 10 days or less in duration—almost anywhere in the world—for $60. An added benefit? If you just want to go across the border for a weekend, you’ll have a plan already in place. “A health care policy that covers you for any trips you take almost anywhere in the world for three days or less at a time costs $52 a year. Just search online for ‘Canadian travel insurance brokers’ to find a list of providers,” says Landry. Organizations like the CAA or the Canadian Snowbirds Association also have plans tailored to their members, and they’re usually cheaper. Family plans can be considerably less expensive than covering each individual separately. “The premium is based on two individuals, so the kids are free,” says Landry.

And finally, if you’re returning to Canada after more than six months away—teaching English in South Korea, say—you have to reapply for provincial health insurance, and there is usually a three-month wait. “Get insurance for those three months,” says Prout. “About $50,000 of coverage for a 30-year-old male would cost about $300 and includes all x-rays, prescription drugs, wheelchairs and home care services.

Auto Insurance

Car insurance premiums vary by the type of vehicle, your driving record and city you drive in, and also from company to company. But by remembering a few key tips, you can scoop up big savings no matter what your situation.

Three years ago, I added my two grown children to the family’s car insurance policy. And while this bumped our annual premium by $2,000, that’s a lot less than the $2,000 to $3,000 they would each have paid if they owned their own vehicles and were primary drivers. “Anyone can stay on someone else’s insurance policy for as long as they’d like—there are no restrictions,” says Adam Mitchell, president of Mitchell and Whale Insurance Brokers in Whitby, Ont. The key is to maintain a solid driving record while being covered by some form of insurance. Mitchell says a membership in a car-sharing service such as Zipcar—even if you hardly ever use it—can be a good way for an inexperienced driver to establish a track record. A 10-year member could get their own insurance on a new vehicle for $1,200, he says, compared with $6,000 or so for someone who has a license but no driving record for that period. Those are great savings for an annual membership that costs less than $100.

A second option for lowering your costs is to consider telematics—technology your insurance provider puts on your car to measure acceleration, braking and cornering. “You could get up to 30% off your premiums if your driving shows you are in a low-risk category,” says Mitchell. “You can get a 10% discount for just signing up.”

Of course, some auto coverage—like third-party liability insurance—is mandatory. This is your first line of defence if someone sues you. You have some say over the amount of coverage you get, but don’t skimp in this area. What happens if you run into an 18-wheeler or Greyhound bus? Bumping up your coverage from $1 million to $2 million only hikes your premiums by about $50, and it’s well worth it. “If you’re involved in a lawsuit, the difference could be bankruptcy,” says Mitchell.

The accident benefits portion of your policy looks after medical expenses not covered by your province’s health insurance—everything from physiotherapy treatments to crutches. “Collision” covers damage to your vehicle resulting from an impact with another vehicle or object—including crashing into a fire hydrant, like I did one rainy night in a mall parking lot. “Comprehensive” coverage takes care of theft, vandalism, fire and hail. Don’t waive collision or comprehensive unless your car is so old that the increase in premiums you’d face when making a claim exceeds the value of the vehicle. Think $3,000 or less. In total, collision and comprehensive will set you back $100 to $400 annually.

If you frequently rent cars, consider adding rental coverage for about $50 a year: that may be more affordable than paying for insurance every time you rent a car.

To lower your premiums, consider raising your deductible: the amount you need to pay out of pocket when you make a claim. Raising the deductible from $500 to $1,000 can save you 5% on your premium. You may be able to get bigger savings if you boost your deductible to $5,000, but that’s risky.

To get the best rates, enlist an independent broker rather than going directly to one provider. And finally, don’t forget to look at the group packages offered by professional associations and university alumni societies. If your association consists of dentists who drive BMWs to work, say, they may be able to offer you a lower rate than you’d get from an individual policy.

Home Insurance

Few people know the details in their home insurance policy. I certainly didn’t when one of our trees fell on a neighbour’s property and my husband spent hours of his own time chopping it up and hauling it away. Had I checked our policy, I would have discovered that our home insurance policy would have covered the cost of removal. So lesson number one: read your policy. If you don’t know what’s covered by your home insurance, it won’t do you much good.

The basics of home insurance are simple. If you rent an apartment or home, then you need contents insurance—also known as tenant’s or renter’s insurance—to replace the contents of your unit due to loss, theft or damage. It also provides you with personal liability coverage should someone hurt themselves while visiting your home, or if you cause an injury to someone else anywhere in the world. “So if you bump someone on a cruise ship and they fall down the stairs and sue you, you’re covered,” says Mitchell.

If you’re a homeowner, you’ll want a comprehensive policy, or “all perils” insurance that covers you for all conceivable disasters except a list of excluded events—typically earthquakes and floods. Just be sure to read the fine print. “One company may exclude water damage, while another company includes it,” says Mitchell. “Or some policies may restrict coverage during home renovations, while others have no such clause.”

You can pay extra to add “riders” to your policy to cover items on the exclusion list, and if you live in an earthquake-prone region like B.C., there’s a case to be made for buying earthquake insurance separately. But for most Canadians, sewer backup is the one optional coverage you really need. “It’s the most common claim these days, and it often costs up to $1,000 for $50,000 of coverage,” says Mitchell. If your basement is finished, that’s well worth the cost. “But if you only have a few items down there sitting in some Rubbermaid storage bins, you could save yourself several hundred dollars by opting out.”

So how much home insurance coverage do you need? Don’t confuse the value of your policy with the market value of your home, which includes the land it’s sitting on. Your policy only needs to provide you with the money to rebuild or repair your home if it gets damaged. These days most policies simply include full replacement value and do not set a maximum dollar amount, so you’re covered even if the insurance company underestimated how expensive it would be. Remember, though, that when you renovate, you have to let your insurance company know, as it will affect the replacement cost.

You can reduce your premiums by including a security system, a sprinkler system as well as by kicking the smoking habit. Also consider upping your deductible and only putting in a claim if your independent broker advises it’s worth the cost of future premium increases.

If you want to save more money, consider bundling your home and auto policies together. “This can save you up to 15% off the final bill,” says Marr. Or, pay your home and auto premiums annually instead of monthly. Insurance companies build in a financing charge of about 18% if you spread out the cost over a year. Whenever your policy comes up for renewal, ask your insurance company if there are ways you can reduce your costs without giving up significant coverage. A little negotiation could mean thousands of dollars of future savings.

Completely Free Life Insurance Member Benefits You Need To Know About

March 18th, 2015
life insurance membership benefits
Be Treated As A VIP With Your Life Insurance Policy

Owning a life insurance policy can have its perks and advantages. Life insurance companies often offer their policyholders special benefits for free or at discounted costs.

These benefits can include different items and will vary from company to company. When purchasing a life insurance policy, make sure you ask your life insurance company if they’re willing to offer any extra free benefits or perks to their customers.

While some life insurance companies will simply present you with extra benefits once you become a policyholder, others might ask you to sign up for a special membership in order to receive these benefits.

Let’s be honest. Life insurance can be expensive and we pay a lot of money for our policies. So it feels good to be treated well by these life insurance companies and get some freebies back.

With that being said, let’s take a closer look at some of these exclusive benefits that are available to policyholders.

Grants And Scholarships

Grants and scholarships are one of the primary complimentary benefits that some insurance companies provide to their policyholders.
A policyholder’s family members (spouses, children) are also eligible for the scholarships. These can be used to pay for college tuition fees, higher learning for adults and skilled trades accreditation programs. There are also orphan scholarships that provide children of deceased policyholders a scholarship for tuition if they ever decide to pursue post-secondary education.

Some insurance companies also offer emergency grants to policyholders and their families. These grants provide short-term financial assistance to members affected by a significant personal hardship, disaster or a large-scale emergency.

Access To Useful Services

Purchasing life insurance could also entitle you or your family members to special access to certain services.

Many life insurance companies offer their policyholders a free, personalized phone-based helpline to a qualified financial counselor who can offer advice and answer any questions about day to day management of money.

During tax season, your insurance company can provide you access to a qualified accountant or a firm that can file your taxes for free or at a discounted price.

Being a customer of a life insurance company could also entitle you to discounts when it comes to obtaining certain legal services from lawyers or paralegals. If your life insurance company has an in-house lawyer, it could offer you access to that lawyer for free or at a discounted cost.

Admittance To Special Events

Life insurance companies often provide their policyholders with exclusive access to special events. These events offer policyholders and their families a chance to relax and spend time together.

Some life insurance companies host these events themselves. An example of one of these events would be a company picnic for all policyholders and their loved ones with the food and entertainment provided by the company. Another example would be a camping trip organized by the company.

Life insurance companies that don’t host their own events can offer policyholders free tickets or passes to other entertainment venues such as concerts, movie theatres, theme parks and sporting events.

Gym or Fitness Club Memberships

Many life insurance companies have partnerships with gyms and fitness clubs. As a result, these companies can offer their policyholders free memberships to partnering gyms or fitness clubs.

A free membership is usually only available to the policyholder themselves. But, there are often discounted options for family members.
Aside from gyms and fitness clubs, life insurance companies could also offer memberships to other places of recreational activity such as swimming pools, tennis courts, etc.

Subscription To Media Services

One really cool free benefit that life insurance companies can offer to their policyholders is free subscriptions to media services.
This can include subscriptions to newspapers, premium websites, magazines and specialty cable channels.

Just be careful to make sure that you know how long your free subscription will last. Once this free subscription expires, you usually have to call and cancel it yourself. Otherwise, you could be charged regular rates on your credit card without your knowledge.

Discounts To Other Services

Some life insurance companies ask their policyholders to sign up for a special membership for free or a nominal cost. Policyholders who sign up for this membership can receive special discounts from other participating businesses.

For example, a member could receive a discount when checking into a certain hotel or buying an airline ticket from a certain company. Some of these discounts also apply when the member is travelling overseas.

The Ins & Outs Of Guaranteed Issue Life Insurance

March 16th, 2015

Guaranteed Issue Life Insurance is a no medical life insurance plan that does not require a medical test, or health questions, in order to get approved. This is similar to a Simplified Issue plan. The difference between the two is that a Simplified Issue plan requires a health questionnaire to be answered before approval.  

A Guaranteed Issue Life Insurance policy is a great fit for those that are already ill or have recently been diagnosed with a serious medical condition such as, cancer, heart disease or kidney failure.

If you are unsure about qualifying for traditional life insurance, our infographic on the top 5 diseases that make it hard to get life insurance may help you. 

guaranteed life insurance updated

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