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Why Canadians Aren’t Buying Life Insurance

September 27th, 2016
canadians not buying life insurance

According to a BMO survey, over half of all Canadians are concerned that their death will put their family’s financial stability in jeopardy. The survey revealed that 26% are very concerned. However, only about 43% (less than half of all respondents) say they already have or plan to purchase life insurance in the next 12 months. Of the people surveyed, 31% reported not having any life, accident, disability, travel, critical illness or long-term care coverage. Approximately the same proportion stated they are confident that their financial plans are sufficient to cover any insurance needs.

In spite of the complexity of the insurance industry, half of the Canadians surveyed felt they had an adequate amount of understanding about insurance products appropriate for their stage in life and 16% stated their understanding was very good.

This suggests that a large number of Canadians don't have adequate insurance protection and don't understand the complexities of the insurance industry.

The report also asked what types of insurance people own or plan to purchase within the next year. This is what they said:

  • Millennials (ages 18-34)
    • Life – 46%
    • Accident - 33%
    • Travel – 42%
    • Disability – 20%
    • No insurance at all – 24%
  • Generation X (ages 35-54)
    • Life – 44%
    • Accident – 22%
    • Travel – 33%
    • Critical illness – 21%
    • No insurance at all – 33%
  • Baby Boomers (ages 55-64)
    • Life – 32%
    • Accident – 27%
    • Travel – 41%
    • Long-term care – 15%
    • No insurance at all – 37%

Top Reasons for Not Buying Life Insurance

Approximately 31% of Canadians don't have any type of life insurance. These are the top 7 reasons people give for not buying coverage.

1. Lack of Technology - Insures are not taking advantage of technology.

Insurance companies are one of the few industries not taking full advantage of modern technology. They have at their disposal big data, mobile technology, cloud computing and other tools to deliver innovative products to their customers. Technology has made it possible for insurers to create and launch new digital offerings their customers would be very eager to purchase.

The problem is, most firms are sticking to traditional methods. The insurance industry hasn't changed very much at all over the years. In today's digital world, insurance customers expect the same type of experience they have with other companies. Their expectations have been shaped by fast-paced technology and instant results. The insurance companies that can step up to meet this challenge will attract more customers, build greater loyalty and cut costs.

2. Lack of Knowledge - Don't know what to do about it.

Canadians know they need life insurance, but don't understand it or don't know where to start. These are the main questions and concerns people have about life insurance:

  • How much coverage do I need?
    • You want enough insurance to cover essential financial obligations, such as paying off debts, income replacement and funeral costs.
  • Do I need more coverage if I have children?
    • If you have kids, you know they aren't cheap. You don't want to put an extra burden on your surviving spouse or appointed caretaker, so make sure you have enough coverage to help them raise your children.

Speak with an experienced insurance broker or advisor before deciding which type of insurance is best for you and what kind of policy you need.

3. Trust - Don't have an advisor they can trust.

How can you speak with an experienced advisor if you don't have one you can trust? Life insurance is a very personal topic you don't want to discuss with just anyone. However, it is also a very complex topic so finding a trained insurance expert is important. Experienced advisors can help you sort through the maze of options available and help you find the product that best suits your needs.

4. Finances – Many Canadians don't think they can afford life insurance.

The majority of Canadians consider life insurance an important factor in their financial plans, but when money is tight, insurance premiums are one of the first things to hit the chopping block. The Bank of Canada has been concerned about household debt for some time. According to a story in the Globe and Mail, Canadians have $1.65 of debt for every dollar of disposable income. This situation could potentially harm the financial stability of the country.

Canadians tend to shy away from purchasing new policies or increase current coverage during times of economic uncertainty and with their own personal debts at historic highs, many Canadians have cancelled their insurance in an effort to save money.

5. Health Issues – Most Canadians don't know about the variety of new No Medical Simplified issue options.

You may have heard that you can't get life insurance if you have been diagnosed with an illness or that your health condition will get you denied for coverage. This is no longer true. Today, there are many options available that allow you to get insurance without a medical exam. You may have to pay a bit more, but you should be able to qualify for a suitable policy.

6. Not Enough Time – People are just too busy.

There are only 24 hours in a day. Trying to divide this time into working hours, time spent commuting to work, eating and sleeping is tricky. You are lucky to have any time left to just relax or enjoy your family. Non-work days are reserved for cleaning, shopping or other chores you didn't have time for on workdays. During a few idle moments, you might think about getting life insurance, but the moment passes and you never seem to find the time. You have to make time. Mark it on the calendar and make the call.

7. Procrastinate – People always tend to put things off until tomorrow.

Canadians don't usually make the decision not to buy life insurance. They make the decision to put it off until later. Unfortunately, later they forget.

“Procrastination is one of the most common and deadliest of diseases and its toll on success and happiness is heavy.” Wayne Gretzky.

Life Insurance and High Net-Worth Individuals

September 23rd, 2016
life insurance high net worth
High net-worth individuals
want a single advisor.

High net-worth individuals are a key demographic when it comes to life insurance. However, with their complicated financial investments and riskier lifestyle, their life insurance needs can be very complex.

The Investment Executive published an article in its August 2013 issue on what high net-worth individuals want. The premise of the article was that Canada's high net-worth individuals preferred one life insurance advisor, rather than multiple advisors.

The survey was compiled from 4,400 high net-worth individuals from 21 countries in five regions. It highlights what high net-worth individuals are looking for in an investment management firm.

Of all the high net-worth individuals surveyed in North America, 52.8% prefer to work with a single firm, as opposed to multiple firms. This compares to 41.4% worldwide. Meanwhile, 50.9% of wealthy North Americans prefer to have a single point of contact, such as one life insurance advisor within a wealth management firm.

The question is, how realistic is this preference? Can one advisor be all things to one person?

In my opinion, especially in the high net-worth market, people need multiple advisors. The key is to make this seem seamless for the client. They don't want to have to remember multiple points of contact. There needs to be a quarterback who handles all inquiries and makes sure all the client's needs are being looked after. This advisor can co-ordinate with other specialists who look after the client's needs behind the scenes.

Creating this type of alliance isn't always easy. The life insurance advisor has to align himself with individuals who share similar values and have a similar customer philosophy. However, when it works, this type of network becomes a win-win for both the life insurance advisor and the client. The client receives great service and the life insurance advisor is able to build a fence around his clients. Plus, a stream of referrals from other specialists and happy customers comes his way.

To make things run smoothly, the specialists within this network can set up quarterly meetings and conference calls to make sure they're all on the same page on how they're servicing all their clients — including key high net-worth clients. They can also discuss different strategies for building more value into their practice.

The Medical Issue

The medical part of a life insurance policy is also more complicated for high-net-worth Canadians. In general, millionaires tend to take very good care of their health. They will often seek out world-class specialists and spend time in private clinics around the world. This makes the underwriting process difficult and time consuming. Medical records and reports have to be collected from each doctor that treated the applicant.

The lifestyles of a wealthy people can also be a problem. With their taste for fast cars, exotic vacations and extreme sports, their lives are put at risk more frequently. Plus, they may travel more and to more dangerous countries, which is a great concern to insurance companies.

High-Net-Worth Newcomers

The increase in affluent newcomers to our country has life insurance companies re-examining their financial underwriting guidelines. Great-West Life Assurance Co. (GWL) of Winnipeg and its sister company, Canada Life Assurance Co. of Toronto, have already made some policy changes for new high net-worth (HNW) Canadians. New permanent residents can now qualify for up to $10 million in life insurance coverage without proof of assets, as opposed to the previous $5 million limit. Insurance companies are also cutting down on documentation requirements in an effort to attract more affluent newcomers.

Studies show that approximately 25% of HNW Canadians are immigrants.

aman background
Aman Kapur, LSM Insurance Insurance Consultant

“[HNW immigrants] are a great market,” says Aman Kapur, a senior broker with LSM Insurance and CEO of Oakville, Ont.-based associate general agency Clarifynancials Inc., also known by the brand “I see a lot of value in it.”

Troy Haugen, senior vice president of individual insurance new business for GWL and Canada Life, agrees, “[HNW immigrants] are a substantial and important market for us that continues to grow within Canada. We want to ensure our policies and approaches stay current so that we can continue to meet their insurance needs into the future.”

Guidelines vary from one company to another, however increases in coverage limits for immigrants is becoming the norm across the industry. This provides more opportunities for advisors to sell bigger policies.

Pankaj Arora, insurance agent and sales manager at Desjardins Financial Security Independent Network's Mississauga Financial Centre, feels there may be direct link between the rising costs of real estate and increases in coverage limits. High cost housing in areas such as Toronto and Vancouver, have created the need for more coverage.

Tax and Estate Planning Benefits

High-net-worth Canadians, newcomers and regulars alike, use life insurance differently than the rest of us. Instead of merely providing a security net for our family, for HNW Canadians, insurance is an important part of their overall estate planning strategy. The demand for permanent life insurance has especially grown.

“There are lots of big clients who want to do estate planning and, for them, insurance is the best way of doing this,” says Arora. “They have lots of money. For them, taking a $500,000 policy is not enough. They are looking for more.”

A whole life policy can be used as a tax-shelter investment. Insurance paid out is not taxable, and if you have a policy that grows over time, any additional funds are also tax-free.

The tax benefits of some strategies will decrease after Dec. 31, 2016, when new federal rules take effect. However, Mark Halpern, chief executive officer of based in Markham, Ont. believes life insurance is still “a sophisticated investment in the scheme of a financial planner’s overall estate planning.”

Calculating Total Net Worth

Securing life insurance for newcomers has typically been an intense undertaking. Obtaining and assessing medical and financial information from a foreign country can make the underwriting process quite a challenge. In many cases more medical tests and more detailed documentation of assets are required.

“The insurance company is going to ask what the insurable interest is, and clients will need to provide some proof of assets,” Kapur says.

Insurance companies hope the changes to underwriting guidelines will reduce the amount of required documentation and make the whole process run smoother. One change is that clients can now declare foreign and Canadian assets on one form without supporting documents. Under the old rules, all foreign assets had to be verified. Now a portion of assets will be accepted without proof. When calculating the total net worth of an applicant, Canada Life and GWL will include 100% of Canadian, 50% of verified foreign and 25% of unverified foreign net worth.

The new guidelines give insurers less hard evidence of foreign assets, but insurance companies are confident the risk is worth the reward.

Staying Fit Can Save You Money On Your Life Insurance

September 22nd, 2016
manulife vitality life insurance

The cost of life insurance increases as you get older. It is also more expensive for people with less than perfect health. Even if you are in perfect health today, you could become ill tomorrow or your fitness level could drop, especially if you live a sedentary life. People generally become less active when they get older. Insurance companies are now launching new incentives to help keep Canadians fit and healthy longer.

Manulife, one of Canada’s top insurance companies, is introducing an innovative new product called the Vitality Program. This product rewards policyholders for maintaining a high level of health and fitness and Goodlife Fitness is going to help with reduced membership fees.

“You make choices every day. With Manulife Vitality, you get rewarded for the healthy ones.”

This is the first time such a program has ever been offered. The Vitality Program combines the benefits of life insurance with two great features:

  • The opportunity to save money on your life insurance premiums
  • The opportunity to earn valuable rewards for improving your health

We, at LSM Insurance think this is a great initiative. People who take care of their health and aim for longevity deserve to pay less for life insurance. Offering fitness-based rewards to policyholders is an excellent incentive to encouraging further progress and living a healthy lifestyle. Our Founder, Lorne Marr has recently launched his own initiative, Fit After 45, which is an online resource of fitness tips and advice from some of Canada’s fittest athletes, trainers and medical professionals over the age of 45.

How the Manulife Vitality Program Works

After you complete the application process, you will be taken to the online Vitality Health Review to determine your “Vitality Age.” This is basically your fitness level, which may indicate your health is at a level greater or lower than your actual age. Your goal is to improve this over time by exercising and adopting a healthier lifestyle.

Once you are issued the policy with the Vitality program, you can immediately start to accumulate Vitality Points by completing health-related activities such as exercising regularly, taking a health education course, getting an annual physical and even by getting a flu shot. How many Vitality Points you can accumulate during a one year period determines your status level in the program. The higher your status, the more rewards and benefits you can enjoy.

The Manulife Fitness Partners

Garmin and Goodlife Fitness have joined Manulife in their effort to inspire Canadians to become healthy and fit.

The first reward is a free Garmin vívofit 3, just for joining the program. This cool little piece of technology is a wearable, water resistant device that is capable of capturing data from all your activities, including swimming and resting. You can easily keep track of your progress and stay motivated on your road to health and fitness with the Garmin Connect feature which allows you to plan, save and share your progress. Automatically get recognition for meeting daily fitness goals, which is exactly what this program is all about. Plus, you can join challenges and compete against other Manulife Vitality members.

As a Vitality member, you can earn discounted membership rates at any Goodlife Fitness or Énergie Cardio club in the country. GoodLife Fitness and Énergie Cardio are Canadian fitness clubs and gyms with over 365 locations across the country. Most of the clubs are co-ed, however there are a large number of gyms exclusively for women.

The company was founded in 1979 as a humble way to help motivate Canadians to become healthy and fit. The founders understood that being surrounded by a group of like-minded individuals would solidify the commitment to fitness. Some people can jog every day or exercise at home, but most of us don't have that kind of dedication. We need more of a push and paying membership fees to a state-of-the-art club with a team of supporters is just the push we need.

Goodlife Fitness clubs are open around the clock, so you can work out whenever you like. Exercise at your pace or join one of the fabulous fitness classes for a total body workout! The friendly fitness experts are always ready help in any way so you achieve your personal health and fitness goals.

Benefits of Staying Healthy and Life Insurance

Among other factors, the premiums you pay for life insurance coverage are ultimately based on mortality statistics. Age and poor health are high risks that put you closer to death than youth and excellent health. However, you don't have to let age affect your health. By joining the Manulife Vitality Program or following Mr. Marr on his Fit After 45 journey, you can remain healthy and vital well into your golden years.

You can't stop the aging process, but you can stay healthy. Taking care of yourself by eating right and exercising regularly can dramatically reduce your risk developing various diseases such as type 2 diabetes, heart conditions and certain types of cancers. Which means you will be able to enjoy lower life insurance premiums with higher coverage.

To get the most benefits out of staying healthy, it's important to revisit your policy regularly – or at least before you renew. Inform your advisor about your current health status. If you neglect your life insurance and let it roll over into automatic renewals, you will end up paying a small fortune because it is naturally assumed that your health will decline over time and your premiums can rise exponentially.

By staying healthy, and backing this up with a health screening, you could renew your policy at a much lower rate.

Top 10 Most Obese Countries

September 19th, 2016
most obese countries

Obesity is not a disease, but it can lead to a wide range of health conditions such as diabetes, liver disease, hypertension and cardiovascular disease, as well as breast, colon and prostate cancer. Obesity is classified as having a body mass index over 30 kg/m2. The problem exists all over the world and has seen a steady increase over the past few decades.

According to the CIA’s World Factbook, the most obese countries are smaller nations such as American Samoa (74.6%), Nauru (71%), Cook Islands (63.7%) and Tokelau (63.4%), indicating there is no direct connection between obesity and the economic status of a country. Canada comes in at #48 on the list.

The World Health Organization says that a shortage of food and rising prices contribute to obesity in underdeveloped countries because the people find it difficult to eat a well-balanced, healthy diet. Filling up on empty calories and fried foods is usually their only option. The scorching heat is also a factor because people's physical activity levels are seriously reduced in extreme temperatures. The African continent is the exception, not including South Africa which has adopted many westernized lifestyles and become quite obese.

Obesity Rates Around the World

Pacific Island nations aside, the top 10 most obese countries in the world, according to World Obesity, are:

Egypt – 48.1% of women and 22.4% of men
United States – 40.4% of women and 35% of men
Venezuela – 32.4% of women and 34.2% of men
Libyan Arab Jamahiriya – 40.1% of women and 21.4% of men
Mexico – 37.5% of women and 26.8% of men
Iraq – 38.2% of women and 26.2% of men
Paraguay – 35.7% of women and 22.9% of men
South Africa – 39.2% of women and 10.6% of men
Saudi Arabia – 33.5% of women and 24.1 % of men
New Zealand – 32% of women and 29.4% of men

Canada didn't make the top 10 list of most obese countries. The survey cited that 23% of Canadian women and 27.6% of Canadian men are obese. However, those numbers are still quite high and if you fall into this category, you might want to consider some lifestyle changes.

Obesity and Life Insurance

If you have a weight problem, especially if you are obese, you have probably been denied life insurance coverage. This is because obesity often leads to other health conditions and insurance underwriters combine all risk variables to determine the classification given to an applicant.

A good broker can often assist in high risk cases by requesting a preliminary offer from the insurance company or sending a cover letter with the application. Ironically, many insurance companies use the same height and weight tables for males and females, so a cover letter explaining lifestyle issues or other variables can make a difference.

However, there is another option for obese applicants – Simplified Issue Life Insurance. These types of policies don't require medical tests and have fewer health questions. They come with higher premiums and lower face amounts, but pricing options have improved significantly in recent years.

The face amount of coverage is limited and the premiums on these policies are higher because the risk of potential loss is much greater. The chances of an insurance company paying out a claim for a life insurance policy without a medical exam is more likely than from a traditional policy.

When applying for a traditional insurance plan, you must have a regular medical exam. If your health is good and the medical history of your family is good, you may be approved for standard or even preferred rates. If you are deemed a health risk, you will be rated a high-risk applicant and charged extra or declined altogether.

A New Look at Obesity

Many organizations, including the Canadian Obesity Network, the Canadian Medical Association, the American Medical Association and the World Health Organization, now consider obesity to be a chronic, progressive disease, much like high blood pressure or diabetes. It is characterized by an excessive amount of body fat that can seriously affect your health.

Obesity has been described as a complex phenomenon involving a diverse and interactive group of factors including biological, behavioural and societal. Genetics also play a large role, however, genes are not the only players. Your physical environment, social activities, cultural practices and daily habits also make important contributions. You can't do much about your genes, but the other factors can be controlled, modified or discontinued.

In most cases, obesity occurs when you consume more calories than you burn, which means most people can prevent obesity. By eating right and exercising regularly, you should be able to control your weight, to some extent. You might never be slim and trim, but you may be able to get your weight down to a healthy level and qualify for a better life insurance plan at better rates.

Research has recently discovered more causes for obesity such as genetic factors and hormonal changes that can affect your appetite, energy level and fat metabolism. If you are born with a low metabolism plus lead a sedentary and unhealthy lifestyle, you are at a much higher risk of becoming obese than an active person with a high metabolism.

Doctors believe psychological factors might also contribute to obesity. A traumatic experience, emotional problems, depression and low self-esteem can all lead to excessive eating as a coping method. These problems also contribute to a lack of energy. Combined, all these factors are very likely to cause weight gain.

Mike Castagna | Consultant, J.W. Larmond Life Insurance and Benefits

September 17th, 2016

Mike Castagna
Disability Insurance Expert Mike Castagna

Mike Castagna

Consultant, J.W. Larmond Life Insurance and Benefits 

1. What type of disability insurance do you own?

I own a professional series disability policy that is non-cancellable, payable to age 65, with a 90 day wait period. I also made sure to add the future income option and cost of living adjusted benefit riders to my policy as I am young and wanted to guarantee my future insurability if I have a change in health.

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

I purchased as much as I was allowed to purchase based on my current annual income. As mentioned above, I also made sure to protect my insurability by adding on the future income option rider to my policy, which allows me to purchase more coverage as my income increases.

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

Disability insurance is absolutely underestimated. Many of my clients understand the importance of life insurance, but many don’t ever think about what their situation would look like if they got sick or injured and weren’t able to go to work and earn an income. Our ability to earn an income is the most important asset that we have and disability insurance is the best way to protect that asset.

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

The benefit period and the definition of disability are two aspects of a disability policy that people need to be aware of. Many group plans only cover you in your “own” occupation for the first two years and then definition switches to “any” occupation. This means that after two years, if you are capable of being employed in “any” gainful occupation (not necessarily your own), then you can be cut off your disability benefit.

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

While I believe both are very important to a proper insurance plan, I would definitely choose a disability insurance policy. This is because disability insurance protects your income long term. Critical illness is meant to pay you lump sum benefit to help you recover from a major illness, while disability insurance is meant to protect your income long term by paying you a monthly benefit while you are unable to earn your income.

Mike Castagna is a consultant at J.W. Larmond Life Insurance and Benefits. Mike is focused on helping his clients protect their financial well-being through the use of Life Insurance, Disability Insurance, and Critical Illness Insurance. Mike works with families, professionals, and business owners in developing extensive individual insurance plans as well as group insurance plans for businesses.

In his spare time, Mike enjoys playing soccer, hockey, and basketball recreationally as well as coaching soccer and football at both the high school and travel levels. Mike believes it is important to offer his time to coaching as he has had so many great coaches in the past that motivated him throughout his life.

<Back to Disability Insurance – What The Experts Own

UPDATE: Understanding Genetic Testing and Life Insurance

September 13th, 2016

genetic testing insurance

***UPDATE*** The following article discussing the impact of genetic testing on a life insurance application received a Twitter response from Moshe A. Milevsky. 

Milevsky is a tenured finance professor of 20 years at Toronto's York University where he teaches  undergraduate, graduate and doctoral students courses on wealth management, investments, insurance, and pensions.

In response to our article, he made the following comment:

(UPDATE: Understanding Genetic Testing and Life Insurance continued...) | 24 comments

Top 10 Life Insurance Trends

September 9th, 2016
life insurance trends

The life insurance industry needs a revolution which means an increase in non-traditional firms and a whole new way of thinking. While other companies have changed and evolved over the years, the insurance business has basically stood still. Technology has played a huge role in these changes, however insurance companies seem to have been left behind.

The entire insurance industry is getting too old, including the advisors. According to Paul Tsourounis, Director, Agency Development GTA at Gryphin Advantage, “The average age of an advisor is mid-to-late 50s. They can't relate to new clients – people in their 30s or younger raised on computers and accustomed to having the world handed to them at the click of a button. The industry needs younger advisors capable of using and making the most of new technology.”

Most of the trends in the insurance industry are related to technology or are driven by technology in some way. The majority of these trends are currently not too popular and will take a few years to be adopted by the mainstream. The Internet of Things will have a huge impact on the insurance industry with the potential to transform many parts of the process.

Big Data and non-traditional insurance practices are expected to complement the insurance industry by making the entire process more efficient. They will have a significant impact on insurers and customers, alike. Trends such as the growth of peer-to-peer insurance and customer adherence apps with the use of wearables will have a moderate impact at first, but are expected to play a larger role in the future.

1. More technology and Use of Internet of Things

The use of technology will help firms get away from paper and provide more efficient, instant results. Implementing big data and Internet of Things to create new products, help in pricing and develop customer adherence apps can make the entire process from start to finish run smoother.

The Internet of Things (IoT) refers to a network of physical objects that contain embedded technology to gather information about specific objects with the added ability to transmit information. The data transmitted by IoT can be analyzed deeper using data processing techniques for more helpful insights.

In the insurance industry, forms of IoT such as connected home technologies and wearables haven't seen much popularity so far, but they are expected to be widely used in the future. A decline in the cost of sensors, improved methods of communication and increased data processing power have been driving forces behind the widespread use of IoT.

Mimi Cheng, Business Development Specialist at BMO Insurance, sees this as an emerging trend vital to the industry, “More use of technology to support new business straight through processing. More use of technology to support risk profiling of clients (e.g. Fitbit, wearables); insurers offering discounts for clients as a result since they will have access to big data.”

2. Replace FSCO with a Regulator

The Financial Services Commission of Ontario (FSCO) is accountable to the Minister of Finance. It regulates financial entities such as the insurance industry, loan and trust companies and the mortgage brokering sector.

Lawrence Ian Geller, President - L.I. Geller Insurance Agencies Ltd. says, “My guess would be that, in Ontario, FSCO may be replaced by a Regulator that is more like the OSC than a Commission, as it is now. I would guess that this Regulator may be staffed with lawyers with no experience in or of insurance, other than as marginal consumers. I would also guess that those individuals might be more inclined to prefer that agents be, as in the OSC / MFDA / IROC environment, employees of dealers or other financial entities, with a preference for bank owned entities.

I would also guess that those individuals would be more inclined to wish to eliminate all commission and incentive income for agents and advisors (although not for banks and other financial institutions or brokerages that they might own).”

3. Renew and Refresh the Industry

As Paul Tsourounis, Tim Landry, Living Benefits Consultant, QTR Solutions also believes the industry is getting too old and outdated, “...concerns I have are the rapid aging of the industry...”

Trends towards a younger, fresher industry is definitely something leaders in the insurance industry would like to see and believe must happen in order for the business to survive.

4. More Focus on Profit than Customer Protection

Mr. Landry goes on to say, “[A trend I see is] the move to companies who are more concerned with corporate profits than customer protection. Frankly I think that the move away from mutual to stock companies is definitely not good for clients. I hope to see a move to requiring specific training in living benefits so that an agent who is licensed to sell these products is also specifically trained in them. Lorne and Chantal are two of a TINY group who actually understand this market. I hope the banks are forced out of this market. Do I actually believe that will happen? Not likely. I am hoping more women will be approached to buy these products.”

5. Investments

The premiums you pay to your insurance company are not held in a special account, waiting for you to make a claim. The money is invested. A trend seen by many insurance experts is the use of more derivatives, options, and hedging strategies to help support lagging bond yields as interest rates bottom out and trend up again. Sustained low interest rate environment on the in-force block will impact pricing on new products.

6. ‎Peer 2 Peer Insurance

The peer-to-peer method is a trend expected to be widely accepted in both emerging and mature markets. In emerging markets, the reduced cost of premiums will be a powerful incentive and in mature markets, the key drivers will be commoditized insurance product lines.

The premise is that premiums will be reduced because of a drop in fraud cases. All members are connected, therefore will not try to defraud one another. Policyholders will use their private information to decide whom to connect with, rejecting anyone they feel is a bad risk.

Processing costs can be reduced because small risks can be handled with the payback network and the cost of sales for the business model can be reduced because of the ability to onboard new clients through the network. Administration costs are expected to decline because of the reduced number of sales agents.

7. Increase in Prices

Prices are expected to rise because of more competition and the emergence of more non-traditional firms. Customers are expected to benefit from the this increase in competition and the trend seems to be heading towards a better customer experience.

8. Consumers will Force Change

Insurance companies don't seem to want change. They strive for mediocrity. Consumers have more say in how companies run these days, and they will force a revolution in the insurance industry. Millennials, people typically born between 1980 and 2000, are not buying insurance as much as older demographics. According to a recent LIMRA study, less than 20% of people between the ages of 18 and 34 are likely to buy life insurance. Insurance distributors will eventually be forced to design products and distribution models to cater to this group's buying habits and needs.

Millennials are a hugely underserved market which has yet to be effectively targeted by life insurance carriers. Our Director of Marketing Syed Raza, recently wrote in Forum Magazine "Most people don’t know where to start when it comes to searching for life insurance and as a result many never embark on the process of getting adequately covered. There are several possible reasons for their procrastination. It could be that consumer ignorance has led to general misconceptions regarding the actual cost of life insurance, with people assuming premiums are out of their budget without ever looking at accurate quotes. According to the 2015 Insurance Barometer Study, Millennials overestimate the cost of life insurance by 213% and Gen X overestimating the cost by 119%."

9. More Instant

We live in the world of “now.” Insurance companies are still still living in the past. Customers want results in an instant. Big Data analytics can help enable insurance companies to identify and report events in a fast and effective way. Further, leveraging advancement in predictive analysis can better help insurers get a better grasp on pricing risk. Insurance firms have to improve their data storage and processing capabilities. Future trends will lean towards firms picking data from the right sources and using new models and tools.

10. Find a Solution for the Future

Senior staff will get together with MGAs and advisors to find the best solution for the future of the insurance business. Change is needed, but it will take a team of industry leaders to make the necessary changes. One group can't find the solutions alone.

What to Consider When Getting Life Insurance

September 1st, 2016
lorne marr term vs permanent

 Life insurance is a great safety net for your family and an important part of financial planning, but where do you start? Understanding your insurance needs and buying the right policy for you can be tricky. This video was recorded in 2008, but the information is just as relevant and important today.

Here are some things to consider when shopping for life insurance.

Member of Assuris

Look for a company that is part of Assuris, the non-profit organization responsible for protecting Canadian policyholders. When a life insurance company goes under, Assuris minimizes the loss of benefits and arranges a quick policy transfer to a stable company, where up to $200 000 of your death benefits will remain in force. If your insurance companies is not a member of Assuris, you lose everything.

Term or Permanent

A Term Life policy covers you for the “term” or length of the policy. With a term policy, the premium starts low then rises as you get older. The average term policy can go up four times on a ten year policy and ten times on a twenty year term. Many companies now offer policies with level premiums for the duration, referred to as “level term” policies. While the premiums stay the same for the length of the policy, once this time expires the premium increases significantly. A term life policy has no cash value. Most term policies can be converted to a permanent policy regardless of any changes to your health.

With a Permanent Life policy, the premiums start much higher, but you have coverage for life, that is why it is often called whole life insurance. Plus, it has the added benefit of accumulating cash value. Permanent insurance premiums are usually guaranteed when you first buy the policy. Some plans allow you to pay for a set number of years and then never make another payment – your policy is paid in full. Universal and Participating are other forms of permanent life insurance that you may want to consider.


Insurance policies usually have some exclusions and limitations, that is why it is important to always read the fine print. For example, if you travel to places considered “hot spots” like parts of the middle east, and die while in that region, you may not be covered. The most common life insurance exclusions include:

  • Dangerous activity. If you die while participating in a dangerous activity like para shooting, auto racing, ballooning, rock climbing or hang-gliding, your policy may become void and proceeds will not be paid to your beneficiary. If these activities are part of your regular lifestyle and you stated this on your application, you may still get coverage, however your premiums will be higher.
  • Suicide. Insurance companies will not pay in the case of suicide because this could tempt people to kill themselves to pay off debts and relieve their families of financial hardship. However, if you commit suicide within two years of getting your policy, all or part of the premiums may be refunded.
  • Air travel. If you die in a commercial plane crash, you are covered. The exclusion refers to death as a passenger in a private plane.
  • Act of war. If death occurs because of an act of war, the insurance company won't pay. This does not include service people. Benefits are available for members and veterans of the Canadian Armed Forces.

There are all types of other exclusions, such as death as a result of drug or alcohol abuse. Make sure you understand all of the exclusions in your policy.

Added Premiums

People with illnesses such as diabetes or high blood pressure, not under control, may be declined for life insurance or have to pay an extra premium. However, if a policy is issued before you are diagnosed with such an illness, the company usually cannot cancel your policy or increase your rate until the current policy expires. If you are issued a policy with added premiums, but then get your condition under control, the company may remove the extra premium or make other modifications to your policy.

People declined life insurance for medical reasons may qualify for specialty coverage like critical illness insurance or guaranteed-issue life insurance. Keep in mind, these types of insurance come with hefty premiums. In general, any high risk applicant can expect to pay more than an average consumer in good health and living a stable lifestyle. The amount you pay or the amount of the added premium depends on the insurance company's rating system, which includes several variables, such as:

  • How long you have had the disease
  • Whether you have additional health risk factors
  • Heredity and family health history
  • Your health history
  • Current weight, height and age
  • Type of diabetes or illness
  • Type and frequency of medications you are currently taking. This includes birth control. Many women fail to mention this on an application because they don't think it is relevant – it is.
  • Glucose and blood sugar levels
  • What you are doing to control your condition

Type 2 diabetes is usually easier to control and has lower risk factors than Type 1, therefore added premiums tend to be more affordable. But, it all depends on how well the condition is managed. The same is true for people with high blood pressure. Uncontrolled, high blood pressure can lead to all types of other problems such as heart disease, stroke and other cardiovascular complications.

One of the most important considerations is what type of life insurance policy is right for you. Sales representatives can help, but no one understands your financial circumstances better than you do. Plus, sales representatives are trained to sell large policies, which may be more than you need. However, this doesn't mean you should buy life insurance through a bank or trust company. In these cases, you will be dealing with an employee and not a certified broker. If you switch banks, your insurance policy may be canceled.

Life Insurance with Accidental Death: Is it a Good Deal?

September 1st, 2016
accidental death insurance
Is accidental death insurance a good deal?

Canadians are constantly bombarded with life insurance offers. Although having adequate coverage is important, many of these offers are for specialized insurance or add ons that you don't really need.

Sun Life, Industrial Alliance and BMO Insurance all offer accidental death insurance through direct-mail campaigns and virtually every other life insurance company offers it as an add on to their policies. The ads are very tempting, with some offering a payout of as much as five times your coverage. A $500,000 lump sum, tax-free payout can be difficult to resist.

Before you sign up, you have to ask yourself if it is really a good deal. Is it worth the extra money? 

1. Accidental Death Insurance is one of the highest profit-grossing products sold by life insurance companies in Canada. The reason for this is because less than 5% of all deaths are caused by an accident, so the life insurance company rarely has to pay out a claim. If you have accidental death coverage as an add on, the main policy will still be paid, but if it is a standalone policy and the only coverage you have, your family will get nothing.
2. This is an even worse deal for older clients because the chance of dying as a result of an accident generally decreases as the insured ages. Health risks increase and the chances of developing a serious illness are much greater. You also have a good chance of living to a ripe old age and dying of natural causes, and that is why most accidental death policies expire at the age of 70.
3. There is no option to convert the coverage to an individual life policy. The reason is that accidental death policies do not ask for evidence of insurability at the time of sign-up (since the insured's health has virtually no impact on their likelihood of dying by accident). This can seem like a plus because people don't have to go through the hassle of a medical exam, but a big disadvantage if they want to convert the coverage down the road.
4. Accidental death coverage is often more expensive than equivalent Term Life Insurance because you are considered a higher risk.

BMO Insurance's accidental death policy is offered directly to consumers at four coverage levels. BMO's maximum issue on their accidental death plan is a $250,000 benefit. The cost is $22.99/month. Ironically, their Term 10 traditional life insurance policy, sold through their Independent Broker Channel, is only $15.30/month for a 35-year-old, non-smoking male receiving standard rates. By the same token, a traditional 20-year term policy would be $23.85/month.

It should be noted that BMO's Accidental Death Benefit plan does offer double the benefit (up to $500,000.00) if the accidental death occurs while travelling as a fare-paying passenger on a plane, train, bus, taxi, or any other public transportation. But once again, the number of deaths caused by one of these instances are extremely low compared to the number of deaths caused by an illness such as cancer, stroke, heart attack, or some other non-accidental event.

Why You Should Consider the Accidental Death Benefit Rider

The ads sent out by insurance companies list many reasons why you should consider purchasing an accidental death rider. A rider is an added benefit on top of your regular policy – an add on. The selling point is that if you work in a potentially dangerous environment or spend more time on the road than an average driver, you have a greater chance of getting hurt or killed in an accident.

Although it's true that these activities do put you in a higher risk category and can put your life in danger, but the chance of dying from cancer or heart disease is just as high or higher. What the company is really selling is fear. The natural fear of an untimely death will convince just about anyone to buy as much protection as possible. This protection comes at a very high price. By putting you in a high risk category, the insurance company can justify charging higher premiums.

In addition to higher premiums, the accidental death rider also comes with plenty of exclusions and limitations. The ads will tell you about the most common exclusions – suicide, sky-diving, criminal activity, race car driving, etc., but only after you buy the rider do you find out what other instances are not covered. Once you read the fine print, you may realize you aren't covered for nearly as many accidents as you thought.

Calculate How Much Coverage You Need

When you set out to buy life insurance, the first thing you must do is calculate how much coverage you need. As a general rule, you will want enough to pay off your debts plus about one year replacement salary to help your family through the transition period of living without your income. Will they need more money if you die as a result of an accident? No. However, they could face financial hardship if you are struck down with a serious illness and unable to work for several months before death.

The extra money you spend for accidental death insurance could be put to much better use, like a family vacation. Your family will appreciate the extra time and attention much more than the extra money in the event of your accidental death.

You can compare for yourself by visiting our Instant Quote Page, or do not hesitate to call us at 1-866-899-4849.


8 Most Common Reasons Your Life Insurance Application Will Be Declined

August 16th, 2016
commons reasons declined life insurance

For some people, getting the life insurance coverage they need is not easy. Factors such as health conditions and lifestyle choices play an important role in determining whether or not a company sees you as a qualified candidate. Lying on your application to hide potentially damaging facts won't help. It might get you a great policy at prime rates, but when it comes down to filing a claim, the insurance company will discover the truth, and your claim will be denied.

We reached out to Gisèle Babineau, Chief Underwriter with Assumption Life, for the most common reasons a person may be denied life insurance coverage. The reasons for being declined vary from one company to another, and there is also a significant gap between a re-insurer and insurer because many insurers do not shop their declines with their re-insurers. However, in general, these are the most common reasons why an application may not be approved.

Medical Reasons

A medical condition under investigation.

If you have some symptoms of an illness or disease, but all of the results aren't in yet, your medical condition is considered under or pending investigation. During this period, you are considered a high risk applicant and the insurance company may deny coverage or delay their decision. Once you are cleared of any possible long-term illness or disease, the company will probably approve your application or ask you to re-apply with the new doctor's report.

High grade cancers.

Cancer can develop in any part of the body. Where it occurs determines its type. For example, lung cancer develops in the lungs. All types begin as a tumor and how the affected tissue looks under a microscope indicates how quickly the tumor cells will grow and spread. Based on the appearance and other factors, doctors can assign a numerical “grade.”

The grade of the cancer is not the same as the stage. Stages refer to the size or extent of spread. Malignant tumors are very low grade and almost always be completely removed. High grade cancers tend to grow quickly and spread rapidly, putting your life at a higher risk.

Nervous disorders.

A nervous disorder or anxiety can be caused by stress or many other factors. It is usually defined as excessive worrying, apprehension, unexplained fear and nervousness. These disorders affect your emotions and behavior, and may manifest into real physical symptoms. Most people will experience mild anxiety at some point in their lives, but a nervous disorder can become a serious problem when the symptoms begin to interfere with normal functioning. This can affect your work, your ability to control a motorized vehicle and other situations that can put your life in danger.

Heart disease and other cardiac disorders.

Heart disease affects millions of Canadians, however the fatality rate has dropped considerably. People can now live normal, relatively healthy lives with a wide range of cardiac disorders and the chances of recovering after a heart attack or stroke have greatly increased over the past few decades. But, according to life insurance companies, these people are still a high risk and may deny coverage even if you have been symptom free for several years.

Uncontrolled diabetes.

With the right care, like a healthy diet, regular exercise program and proper medical supervision, and maybe an insulin regime if necessary, most diabetes can be controlled quite effectively. However, in rare cases a patient can lose control due to various circumstances such as emotional stress or tragedy. If you have been recently diagnosed, you might not yet have control of the disease. These situations put you at risk and therefore, your application for life insurance may be declined. Once you have your diabetes under control, you can reapply.

Non-medical Reasons

Alcohol consumption and drug use.

Alcohol consumption and drug use affect the way you think and react to situations, which can seriously impair your judgment and your safety. How much you drink or use drugs is a lifestyle choice and should be reported on your application for life insurance. Hiding these facts may help you get approved, but the truth will come out eventually. A glass of wine with dinner or a sleeping pill before bed might be harmless enough, but it should still be reported.

Motor vehicle infractions.

When you drive recklessly, you are not only putting your own life on the line, but you are also jeopardizing the lives of everyone else on the road. Multiple speeding violations or other infractions classifies you as a reckless driver. If you have a drinking and driving charge on your record, you are considered an even higher risk.

Criminal activities.

Most criminals aren't too eager to report illegal behavior. You may be very tempted to leave that part of the application blank or to answer “no” to any questions about criminal activities. One quick check into your record and the company will know, so you might as well be honest. Insurance companies have to consider the possibility of incarceration and how that can affect your health. The stress of incarceration itself can take a heavy toll on your health, but there is also the chance of contracting a disease that could lead to death, getting killed by another inmate or starting heavy drug use. Any one of these scenarios put your life at serious risk, and that's a risk the insurance company does not want to take.

These are just a few of the reasons why an insurance company may decline an application. If any of these situations apply to you, you can change your lifestyle choices and get your medical condition under control. You may also want to look into a No Medical Simplified Issue application. This is a non-medical type of life insurance policy, which means you don't need a medical exam. You will still have to answer some health-related questions and some restrictions may still apply, but you have a good chance of getting the coverage you need.

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