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What The Financial Experts Own – Lorne Marr

July 14th, 2016

Lorne Marr Director of New Business Development at LSM Insurance
Life Insurance Expert Lorne Marr

Lorne Marr

Director of New Business Development, LSM Insurance 

1. What Type of Life Insurance do you own?

I own two 20 Pay and one 10 Pay Whole Life policies and a Term policy. I was lucky enough to take out the Limited Pay Whole Life policies when I was quite young. Since that time premiums on these type of plans have significantly risen it cost. Plus I'm a lot older now :) My Father also took out a small Participating Whole Life policy with Manulife which I have maintained.

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

I purchased my first life insurance policy before I had any dependents. I did so because I wanted to lock in at a favourable rate. For subsequent purchases I did a needs analysis factoring in how much coverage my family would need if I died.

3. Do you believe in Life Insurance for Children?

I do - with the caveat that your other financial obligations are being covered. As mentioned my father bought my brothers and I each a small Whole Life Policy with Manulife. We have all maintained these policies and had a nice little bonus when Manulife demutualized.

4. What is The Biggest Life Insurance mistake people make?

Not buying enough life insurance or not buying any at all. Life Insurance is the most unselfish purchase someone can make because its not for you. This combined with the fact that most people don't won't to think about their own death leave a lot of people grossly under insured.

5. Outside of Life Insurance what other types of individual insurance are often over looked?

The chances of becoming disabled are much higher than dying over a 20 or 30 year window. Another variable is a lot of life insurance agents don't properly understand disability insurance.

Lorne was born in Toronto, Ontario. He started in the life insurance industry in 1993, with Metropolitan Life after completing his MBA at the University of Windsor and has been helping families and business owners meet their insurance needs for over 20 years. He has won numerous sales and services awards and has appeared in the Toronto Star, The Globe and Mail, The National Post, The Toronto Sun, The Investment Executive and Money Sense Magazine.

He is also a fitness enthusiast and has recently launch his own fitness blog, Lorne Marr Fit After 45.

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Life Changing Events That Trigger a Need For Life Insurance

July 12th, 2016
life changing events life insurance

There are dozens of reasons why someone would need life insurance protection. Most of the events that would trigger a life insurance need are life changing events that have a major impact on one's finances. Check out the reasons why you need coverage if you experience one of these life changing events.

Getting Married

Once two people get married, or are considered common-law, they automatically assume certain financial rights and obligations towards one another that otherwise would not apply. If one spouse is dependent on the other's income, the dependent spouse could face financial hardships if the bread-winning spouse were to suddenly die.

The loss of income alone could prove devastating to the surviving members of the family once emergency funds are depleted. It's not realistic to depend on help from extended family or government sources alone to be able to survive in most urban Canadian environments. Having adequate life insurance coverage would be necessary for the surviving spouse to maintain their standard of life.

Buying a Home

A new home is likely the largest single purchase anyone will make in their life. With the vast majority of home purchases, the buyer must borrow money from a lender in the form of a mortgage. If the person paying down the mortgage were to pass away, the other inhabitants of the home would have to find a way to continue making mortgage payments. Insuring your mortgage with individual life insurance is a good idea to cover that potential risk.

It's worth mentioning that when a home buyer applies for a new mortgage, the lender will usually offer mortgage insurance. These plans are riddled with negative features for the consumer. Things like post-claim underwriting, higher premiums and decreasing face amounts make these policies considerably less valuable than traditional individual term life insurance.

Having a Baby

Children are dependents and rely on their parents for food, shelter and future expenses like costs of post-secondary education. When planning for the worst case such as the death of a bread-winning parent, you need to factor in all the potential risks the child would face. The surviving parent or guardian should be financially equipped with enough money to last until the youngest child is at least 18.

When a new baby comes into the picture, coverage amount should typically be increased to cover this new liability. Use a child care calculator to get an idea of how much money you would need to replace should your death occur.

Changing Jobs 

Whenever you are switching jobs, you may lose access to group life insurance policies that you may need to rely on. Confirm with the plan administrator at your company to see whether or not you have the option to continue your life insurance policy once you leave. 

Also check with your new employer sooner than later to see what level of life insurance coverage your new benefits will provide. If the new employer does not offer life insurance or the face amount limits are too low, it's a good idea to take a look at individual life insurance plans to cover your needs.

Starting a New Business

When an entrepreneur starts a new venture it can be easy to overlook insurance needs. Business and Liability insurance is usually the first thing they will think of, without considering the potential need for life insurance should they pass away. Two risks that new businesses will face can be relieved in part by the concepts of key-man insurance and by funding buy-sell agreements with life insurance.

Key-man insurance will provide a payout to the company should a key person were to pass away. If it can be determined that the company has an insurable interest in the life of the key person, a life insurance policy can be taken out on their life. The company would be listed as the beneficiary. The death benefit would be used to replace the deceased employee and cover any additional switching costs such as training the new employee.

Buy-sell agreements are put in place when a partner in a company passes away and their shares and/or decision-making power within the company are inherited by a loved one. The family member, now a new partner in the company, may not be a good fit for the business so a buy-sell agreement forces the sale of the share back to the company. These buy-sell agreements are often funded by life insurance policies purchased by the company. The cost of the shares are usually based on a formula such as current market value times a multiple.

Term insurance policy coming up for renewal

If you own term life insurance, rates are only guaranteed to stay level for a specific term after which the rates change, usually increasing drastically. One thing insurance companies won't tell you is that they build a buffer into the pricing when renewing a term life insurance policy. They assume the insured is in poor health at the time of renewal and add this higher cost of insurance into the the renewal premium. If the insured is in good health, he or she should likely reapply for a new plan.

It important to never cancel an existing policy until the new plan is approved and in force first. If the new policy application is declined or rated it may be a better idea to pay the renewal rates with the existing policy. Thus, it's advisable to reapply for new term life insurance at least 6 months prior to the existing policy renewal date.


Other than switching to a new job, retiring may be another way you could lose access to group life insurance benefits. Some group policies will allow the plan certificate holder to convert their group life coverage into an individual permanent plan, however these plans can be very expensive as insurance carriers will build a buffer into the renewal rates of these individual permanent insurance options. 
The costs are these conversion options are usually much higher than the premium cost of comparable permanent plans available in the market. It's always best to shop the market for the best available coverage at the lowest rates possible by speaking with a licensed life insurance broker.  

What The Financial Experts Own – Promod Sharma

June 2nd, 2016

Life Insurance Expert Promod Sharma
Life Insurance Expert Promod Sharma

Promod Sharma

Actuary, Taxevity Insurance Advisory 

1. What Type of Life Insurance do you own?

I’ve developed insurance products for various companies and prefer designs with flexibility, accountability and transparency. I have universal life insurance for estate planning and term life insurance for temporary needs. I’ve avoided whole life insurance because the plans are opaque and transfer risks to the buyers.

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

I looked at how much monthly income my family would lose if I died and got enough life insurance to replace that for decades. When we had a mortgage, I made sure to have enough term life insurance to pay that off.

3. Do you believe in Life Insurance for Children?

Generally no — unless your kids earn enough to pay their own premiums. The death of a child is tragic, but doesn’t the loss of a parent cause more financial harm? Parents could invest in more insurance on themselves instead.

4. What is The Biggest Life Insurance mistake people make?

Getting the wrong life insurance. Here are some common ways:

  • Selecting Term 10 when Term 20 or Term 22 would be a better fit
  • Buying too much permanent insurance and too little term, and vice versa
  • Buying based on price without considering the insurance company’s reputation for flexibility, service and paying claims
  • Deciding what to get before knowing what’s available
  • Procrastinating, which makes you the insurance company

5. Outside of Life Insurance what other types of individual insurance are often over looked?

All of them. The risks magnify if you don’t have generous employee benefits and a defined benefit pension plan. If an illness or injury prevents you from working for months or years, what happens to your income? Disability insurance helps replace the income lost. The premiums look high but that’s because the risks and costs of getting disabled are high. If you have a dreaded condition like cancer, a heart attack or blindness, medical insurance only reimburses your eligible expenses up to specified limits.

What about what’s not covered? That could be your spouse taking time off work, renovating your home to accommodate a wheelchair or traveling outside Canada for fast treatment. Critical illness insurance reduces financial stress by providing a tax-free lump sum to use as you wish.

During retirement, you face the risk of running out of money. Life annuities provide guaranteed income you cannot outlive. Maybe a portion of your savings belong there? If you’re unable to look after yourself, who will? The cause could be dementia or losing the ability to do basics like eating and bathing on your own. Long term care insurance provides cash to use as you wish. Since insurance isn’t free and your health affects your eligibility, you face trade-offs. Ignoring the risks doesn’t stop them.

Promod Sharma (“pro-MODE”) is an actuary who developed life & health insurance products and later supported advisors. He now helps people in the Toronto region transfer financial risks with insurance. He’s written 800+ blog posts, recorded 250+ podcasts and published 100+ videos.

He’s a member of the Conference for Advanced Life Underwriting (CALU), a Fellow of the Society of Actuaries (FSA) and a Fellow of the Canadian Institute of Actuaries (FCIA). Promod serves on the boards of CARP Etobicoke and the Western University Alumni Association. You’ll find more details on LinkedIn.

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8 Reasons Why You Should Secure Permanent Life Insurance Before 2017

May 26th, 2016
new life insurance legislation 2017

New tax legislation is set to take effect on January 1, 2017 which will change the way policyholders are taxed for deposits toward certain life insurance policies.

Policies issued after 2016, also know known as G3 tax generation policies, will offer less exempt room over the long-term.

This new legislation will mostly affect affluent policyholders as the tax deferral features of these life insurance products typically benefit people in the higher tax brackets.

One major change is that surrender charges will no longer impact the allowable tax-deferral room in universal life insurance policies. Previously, if a policy had high surrender charges it would allow for high deposits eligible for tax deferral. Within the new framework, surrender charges will no longer impact how much tax exempt room is allowed.

Level Cost of Insurance (LCOI) Universal Life Insurance policies will be hit the hardest by the new legislation. Under the new rules, the amount of deposits allowed for tax-deferral purposes will decrease drastically.

Another type of permanent life insurance product known as Participating Whole Life, has an investment element but does not need to be managed by advisors.

Industry veteran and life insurance expert, Jim Ruta, explains in his recent column in the Investment & Insurance Journal why it’s a good investment to purchase Participating Whole Life insurance before the new legislation takes effect in 2017.

Here is a summary covering some of the points he made:

1. You can’t outlive whole life insurance. Your protection will be there no matter what, so long as your premium is paid.
2. Once established, it can pay for itself automatically if you can’t or forget – and that means growing cash value too.
3. Its value is predictable, guaranteed, never goes down and written down in black and white in the contract.
4. It’s almost like an unlimited tax free savings account because much of the internal gain is tax-sheltered and contributions are not limited.
5. It’s a financial multi-tasker and automatically converts from asset creator to asset protector to asset over time.
6. Its tax-advantaged fund gives you peace of mind when you need cash in health emergencies, financial losses or opportunities. Be your own banker.
7. Its value is not directly related to markets so you can sleep better knowing you are insulated from volatility.
8. Whole life is an outstanding counterbalance to traditional investments, which is one of the reasons why it’s always been great insurance for children.

In his column "Corner Office Advice" in the Insurance and Investment Journal, Jim Ruta gives actionable steps on how to succeed as an advisor. He also offers coaching services for agents who need help to launch their career to the next level.

How Much Commission Does Your Agent Get Paid?

May 20th, 2016

Life insurance commissions have been a recent hot topic in the Canadian personal finance community. Certain types of policies pay more first year commission (FYC) than others and this creates the potential for some unscrupulous advisors to give bad advice to their unassuming clients.

Consumers have the right to know how their agent is compensated for the type of coverage they are taking out. The risk of a few bad agents recommending only high-paying products is real, so consumers should be aware of how their agent is being compensated to make an informed decision based on their actual needs. 

Check out our infographic below which breaks down the commission payable on some common life insurance products.

infographic life insurance agent commissions

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Why You Should Avoid Life and Critical Illness Insurance for Credit Cards

May 16th, 2016
life insurance credit card
Beware of insurance offered by credit card companies

Life insurance or critical illness insurance attached to a credit card is sold as a way to pay off your outstanding credit card balance, but in the fine print you'll discover it's mainly a lucrative money-making scheme for the issuing banks at the expense of policyholders.

A one-stop shop for covering your credit card balance in case of illness or death probably sounds incredibly useful and convenient at first. After all, you probably use your credit card daily, so why not pay to clear your balance, should something happen to you, through the same credit card?

Problem is, credit card life insurance and critical illness insurance policies will never pay off your balance entirely.

(Why You Should Avoid Life and Critical Illness Insurance for Credit Cards continued...)

Why Being Financially Unprepared for a Disability Could End Up Costing You

April 29th, 2016
prepared for workplace disability

A recent poll conducted by RBC revealed a disturbing fact: 48% of Canadians said that they weren’t prepared to be off work due to a disability.

This stat shows that many Canadians still don’t take the threat of losing their income due to a disability very seriously. Many individuals, especially those from younger age groups, feel like they aren’t at risk from serious disabilities and don’t need to have contingency plans in case they are ever unable to earn an income due to a long-term disability.

Other working individuals assume that their employee health benefits plan and government health plan will take care of all expenses and replace their lost income should they ever be unable to work because of a long-term disability.

These assumptions couldn’t be further from the truth. According to Mark Hardy, Director of living benefits at RBC Insurance, nearly one-in-three Canadians will experience a period of disability lasting longer than 90 days during their working lives.

Hardy also explains that many employee health benefits offer limited coverage and do not cover 100% of the disabled worker’s lost income. Meanwhile, the government health plan usually doesn’t cover the cost of most medications and other expenses such as recuperative therapy, dietician consultations, exercise programs, home nursing, prosthetics, home care, child care, meal preparation and moving expenses.

So, what happens when you have to deal with a long-term disability that leaves you unable to work for an extended duration of time?

For starters, there’s the sudden drop off in your total income. If you are financially unprepared to deal with this monetary loss, you could lose the ability to afford the lifestyle you’ve created. This could include being unable to pay for your house, car and other regular expenses. If you are the primary earner in your family, losing or having a reduced income because of a long-term disability could cause financial burdens for the rest of your family as well.

The RBC poll cited above revealed that 78% of Canadians who go on long-term disability report that their finances are tight and they struggle to meet their daily expenses. 67% reported that their lost income causes financial strain on the other members of their household.

In order to cover their expenses, 29% of Canadians on long-term disability said that they needed to dip into their life savings. 34% said they had to take on more debt in the form of loans from banks, family and friends. 9% said that they had to cash in their RRSPs and leave themselves financially unsecured for their retirement years. 31% even said that because of their disability, their partner had to go out and find extra work in order to supplement the family’s lost income.

These figures show that Canadians often end up financially struggling along with the rest of their family if they become unable to work due to a long-term disability and have to deal with lost or reduced income.
This is where having disability insurance could prove to be crucial. In an event of a long-term disability that leaves you without your regular income, having the proper disability coverage could allow you to maintain your lifestyle, cover medical expenses and provide for your family while you recuperate.

Experiencing a long-term disability and recovering from it are stressful enough tasks on their own. Don’t add the financial burden of your lost income to your list of worries as well. Have a proper contingency plan in place and get disability insurance coverage, especially if you are primary earner in your family.

Reclaiming Old Life Insurance Policies

April 10th, 2016
claim old life insurance policy
Learn how to claim an old life insurance policy

Every year, thousands of policyholders in Canada pass away. However, not all of their beneficiaries receive the death benefit they are entitled to.

Since some beneficiaries don’t claim their rightful payout after the life insured’s death has occured, the insurance company has no way of knowing the insured has passed away.

Some insurance companies assign a time limit for any claim to be made. If you are unable to discover your policy and claim it within a year, then you might not be able to get your share of the money.

Discover your policy

If you believe that there is insurance money, waiting out there for you then you should visit the policy search service offered by the Canadian Life and Health Insurance OmbudService and ask for assistance.

OmbudService for Life and Health Insurance (OLHI) is an organization that assists and helps Canadians to find an old or lost insurance policy of a family member that died recently. OLHI will then contact its insurance company members and will request them to carry out a policy search.

If there is a lost policy death benefit out there for you, they will possibly track it down and find it. The Canadian Life and Health Insurance OmbudService requires two basic and important confirmations before it can proceed with a search:

  1. There should reasonable evidence that there in fact is existing unlocated coverage.
  2. There should be evidence to support the facts around the insured person's death.

Time Constraints

The good news is that the OmbudService search is absolutely free of cost, however, as mentioned earlier, there are time limits for the search to be conducted. The search will not be completed until three months have gone from the date when the policyholder died. Also, the search will not continue for more than 2 years after the death of the deceased. Make sure to carry out the search around that time.

Claim the policy

If you are finally sure that your deceased family member has left you money out there with your name on it then you will have to prove your claim to owning it. Firstly, search for some insurance related documents that belonged to the deceased policyholder.

You will then have to track down the deceased’s insurance company and ideally the agent who delivered that policy. Also, contact any of their financial advisors who might have relevant information about the deceased’s insurance policies.

You will have to attain necessary forms from the insurance company, in order to fill the required information and claim your unclaimed monies.

Later on, you will be required to provide further proof such as the death certificate of the deceased and the physician’s final report. For this report, you will need to contact the doctor who attended to the deceased at the hospital where he or she expired.

Reclaiming other financial instruments

There are other types of financial products that forgotten and unclaimed, which are worth mentioning:

  1. Other than insurance money, you can also reclaim money from your long-lost and old bank accounts. Sometimes when you switch your bank, without properly shutting down your old account, you tend to forget that there might be some lost funds left in there, that you can still claim.
  2. You can also reclaim a forgotten pension fund that you might not have collected but are entitled to. You will need to contact your previous employer and the pension administrator. To get your rightful share, simply contact provincial pension regulator to find out about your funds.
  3. If one day, you came across an old stock certificate that belonged to your grandparents or a deceased family member, you can find out its possible worth by consulting an online dealer or an evaluator and claim it too.

How Stress Impacts Your Life Insurance Application

April 2nd, 2016
stress life insurance application

No one in society is a stress-free person. Everyone has to go through stress at some point in his or her life. The quantity and frequency of stress in our lives are variable and can sometimes improve, or worsen situations that we are dealing with.

To succeed in life, you need some stress to counter problems and achieve goals that you’ve set over time. However, excessive stress might be dangerous for your physical and mental health.

What is stress?

Stress is a state of emotional and mental pressure that you feel when you come across challenging circumstances. You feel stressed out when you are not able to find solutions to some of your problems. Stress can sometimes go in your favor, boost energy within you and motivate you to resolve your problems, or it can either go negative resulting in Chronic Stress.

Chronic stress is a type of trauma experienced for a prolonged period of time; henceforth, it can lead to serious health problems such as high blood pressure, heart diseases, depression and other health concerns, that a life insurance company would be interested in knowing when you apply for an insurance application.

What causes stress?

There are many reasons that cause physical or emotional stress in an individual. Some examples of major stressors include:
• Financial problems
• Not able to meet the deadline in the office
• Losing your job
• Family problems and conflicts
• Isolation
• Discrimination
• Loss of a loved one
• Lack of goals in life
• Ongoing health problems

Everyone has a different way of reacting to stressful situations. A situation that creates stress and anxiety for one person may not seem stressful for another person.

The consequences of a Life Insurance application

Do you know that stress and depression can affect a life insurance application and its rates? When you are applying for a life insurance policy, you are supposed to take a medical examination, hence submitting all of your health history and records to an insurance company.

If you are suffering from high blood pressure or heart diseases and have poor health conditions, caused by Chronic Stress and depression, then your rates may be higher and you might have to pay more for your coverage compared to the person who doesn’t suffer from all of these symptoms.

These symptoms may have a huge risk to your health in the near future; thus, insurance companies might charge higher premiums for such greater risks and consequences, depending upon your life expectancy.

In extreme cases, your life insurance application could be outright declined by the insurance company. If you have a history of stress or depression, it is advisable to apply with multiple carriers at the same time, just in case some carriers decline coverage for you. It may even make sense to secure no medical life insurance before submitting applications for fully underwritten policies.

Dealing with stress

People who suffer from depression and chronic stress have different ways of dealing with it. Some might be on medications for long and others might choose the non-chemical approach, which includes natural ways of relieving stress.

Below are some of the ways that you could apply, to help manage stress in your lives:

  1. Move around: Research has proved that exercise, meditation and yoga can help ease stress and anxiety by keeping your nerves calm. Take a walk outdoors in the evening or morning.
  2. Talk it out: Talk to a friend, your loved one or whomever you’re comfortable with. Tell them what makes you stressful and look for a solution together.
  3. Healthy living: If you are a well-nourished person, your body and mind will be in a better position to cope with stress. Take healthy, balanced meals throughout the day!
  4. Sleep well: Get enough sleep at night, as it will boost your mind and body. A tired mind will think and worry about stress unreasonably.
  5. Limit caffeine: Taking too much caffeine throughout the day could aggravate the stress level, leading to anxiety and panic attacks. Limit your daily intake of tea, coffee and cigarettes.

Stress can lead to many problems in your life that you might not want to welcome, so take a deep breath and manage stress effectively as much as you can.

What To Do When Your Life Insurance Policy Lapses

February 29th, 2016
life insurance policy lapsed what to do
Don't let your life insurance policy become worthless

What happens to your life insurance coverage if your policy lapses? Will your insurance company be responsible for paying the death benefit on the insured's life if they suddenly pass away?

Don't bank on it. If you’ve missed the premium payments for your life insurance policy, and haven't made the missed premium up within a 30-day grace period, your insurance policy will terminate and will no longer provide any insurance coverage or benefits.

The 30-Day Grace Period

The Grace Period is the duration of time in which the policy owner is able to pay up any outstanding premium dues, without losing their insurance coverage. The Grace Period is typically 30 days.

However, if you’ve not made up the premium in that period of time and the insured person dies, despite missing out on the payment, the person will still receive a death benefit. Once the grace period ends, and the remaining premiums are not cleared, your life insurance policy will likewise, lapse.

Reinstate Your Policy

The good news is that if your policy lapses, you have the option of reinstating it or in simpler words, bringing it back to life. Once your policy is terminated after the grace period, reinstatement brings it back to an active or a functional status.

Insurance companies have different rules and regulations for policy reinstatement but with most companies, to reinstate your old policy you'll have to pay the outstanding premium dues and may have to profide proof of insurability. . The sooner you consider restoring your lapsed policy the better, as your future insurability is never guaranteed.

The best case scenrio is to avoid reinstatement altogether by paying up your missed premium within the 30 day grace period, so that you won't have to go through any new underwriting.

Consider Replacing The Coverage

To avoid this hassle, some people consider buying a new insurance policy instead of reinstating the previous one. In some cases policyholders may not be aware that it may be a better option to put their lapsed policy back in force instead of buying a new one, as it is could be cheaper. In other cases, it makes more sense to re-enter the market and purchase a new policy.

Update Your Carrier If Your Mailing Address Changes

Always take the necessary precautions by paying your premiums on time. Also, ensure that your insurance company has your current mailing address on file. Life insurance policies are long-term contracts and it's easy to forget to inform your carrier when you move. If they are sending out premium notices to an old address you may not know that your policy is about to lapse.

You can keep yourself well informed regarding the status of your policy and avoid it from lapsing if you are receiving all notices and keeping in touch with your agent on a yearly basis.

Take a Premium Holiday If You Can Afford It

It's worth noting, you can can avoid a universal life insurance policy from lapsing the policy’s accumulated account value. This value, which is deposited to the policyholder's account, keeps increasing over time, whenever a premium payment is made. Hence, they can use that account value to pay off the missed premiums and prevent the policy from lapsing.

Always remember, lapsing is the last thing you would want to happen to your policy! Therefore, never miss out on your policy premium dues or beware of the risks of policy reinstatement and replacement.

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