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How Will The H1N1 Virus Affect Your Life Insurance

It is very easy to become caught up with the fear that naturally develops when we hear words like “life threatening”, “breakout”, “pandemic”, or even just the word “virus”. As a result, our team wanted to help you answer the question “How will the H1N1 virus affect my life insurance?”

The Good News

The good news for those that already own life insurance is that it won’t; not even a little bit.

One of the benefits of obtaining life insurance at a young age, or anytime for that matter, is that it’s as though the life insurance company is taking a snap shot of your health at that exact moment. As long as you are honest and truthful with the information you provide, you are forever covered as long as you keep the insurance premiums and policy up to date, regardless if your health status changes in the future.

The Not so Good News

For those who don’t own life insurance at this time, this new breakout could play a substantial role in the possibility of whether you can or will be able to insure yourself in the future, should you be exposed to it.

Just because an insurance company may not ask the direct question like “Have you been diagnosed with the H1N1 virus?” does not mean you don’t have to worry about this new virus. In fact, most insurance companies will ask broad sweeping questions in their application such as:

  1. Have you consulted any physician within the past five years for anything not covered in the above questions or in this application?
  2. Are you aware of any symptoms or complaints regarding your health for which you have not yet consulted a physician?
  3. Have you had any symptoms, illness, injury, surgery, treatment or investigation, or been advised to receive treatment or investigation, or examination not mentioned above?

A simple yes to any of these questions could not only postpone your approval indefinitely, but also raise red flags that as a potential life insurance applicant, you’d rather not face.

Most insurance companies will not accept a new client if they are currently undergoing testing or treatment for any illness within the last six months, H1N1 included. What that means is that if you are exposed or worse, diagnosed with this virus, the insurance company could either rate your request for life insurance, postpone your approval, or flat out decline you for life, depending on the severity of your specific situation.

 Your Take-Away: If you are or have been looking to insure yourself or your family for life insurance, disability insurance or critical illness insurance, or may be considering raising your policy, we recommend that you consider doing so sooner rather then later.

Below are a couple of reasons you may want to consider when deciding if now is the time to look into adding to or setting up your insurance program:

1. You have visited a medical facility within the last 3 months and potentially been “exposed”
2. You have a friend, family member or colleague who has actually been diagnosed with H1N1
3. Insurance companies are far more flexible and lenient during the last two months of the year

Until next time, have  Terrific Thursday!

Chris and Elisseos

5 Reasons To Consider Life Insurance

Tim Cestnick is a well respected writer and columnist with the Globe and has recently written a great article entitled “Five Reasons to be Nice to Your Insurance Agent”.

Despite the fact that the title of this article comes across as very “Agent Focused”, Tim actually focuses on five great reasons to consider owning life insurance. The five reasons that Tim discusses include:

  1. Provide for Others
  2. Cover Final Disbursements
  3. Provide Equitable or Larger Bequests
  4. Shelter Income From Tax
  5. Maintain Business Health

I really enjoyed this article because Tim provides a very “birds eye view” of life insurance and some of it’s core and primary uses overall. The one that really sticks out to me however is point four entitled “Shelter Income From Tax”. After all, we live in a country where we can pay up to 50% of our income back to the Government in the form of taxes, so why wouldn’t we want to explore all of our tax shelter opportunities?

Your Take-Away: Life insurance is a topic that is not easily discussed in general conversation, and rarely ever praised. That said, the basic reason people purchase life insurance is love, and if you’ve ever received a life claim as a result of a loved ones passing, you have likely become a big advocate.

The good news however is that whether you want to purchase life insurance for others or not, it is still very much worth your time and effort to understand how it works and more importantly, how it can save you literally thousands of dollars of tax in a year. Most of us really aren’t aware of these kinds of benefits and how to properly structure life insurance for this purpose, but after looking at the facts and the numbers, you may just find that you’ve piqued your own interest!

Until next time, have a wonderful long weekend!

Chris

Couple Declined Their Mortgage Insurance Claim - The Toronto Star

Third party articles are always of interest to us, and this specific article in the Toronto Star is an eye opener for anyone. 

Ellen Roseman of The Toronto Star recently documented one couple’s fight to get paid on a death claim that was made through their TD Canada Trust. We’ve talked about the perils of Mortgage Insurance offered through your lender in posts before, but this story is a real life experience for one Toronto based couple and I’m sure it will make you question where you hold your insurance.

The good news is that despite the original decline of their claim, to TD’s credit they did revisit the situation once the Star became involved and later paid out the claim in full. The reality however is that had they not gone to the Star for help, they may never have received that money. And even if they would have, do you think they really wanted to have to fight for something they knew all along they were entitled too? Never mind the fact that they were also in the midst of dealing with the news of a terminal Cancer diagnosis. Perfet timing it seems?!?

Your Take-Away: The most chilling comment written by Ellen was quite poignant, and one you should seriously considering thinking through. Ellen wrote: “The lesson: Banks can issue insurance and deny coverage years later if they think there was misrepresentation on an application.”

I can’t help but think it may just be time to at least explore your other life insurance options, mainly because the underwriting is done up front, not at claim time. And after all, you’re most likely going to save some money too. Not a bad thing considering the current status of our economy!

Until next time, have a very Happy Easter!

Chris

Inadequate Life Insurance Leaves Spouse With Less - VIDEO

I came across this short video on YouTube talking about how much and what type of life insurance may make sense for you and your family.

What was very interesting was how much this reporter recommended each family consider insuring themselves for. The key he says is that there is no definitive answer for everyone, but that a true needs analysis be completed and reviewed on a regular basis. After all, how can you know how much coverage you need if you haven’t gone through the process of using a Financial Needs Analysis to help you determine that number.

Take a look at the below video to learn more about how much you need, how much your family could be out if something happened to the primary income earner, and what type of life insurance products are available.

This is a great life insurance summary in only one minute and 46 seconds.

Until next time, have a Magnificent Monday!

Chris

Use Life Insurance to Enhance Your Retirement

Life insurance is typically thought of as something that only benefits your family, not you.

Although the above statement is accurate, it can also benefit you…today. Many Canadians have used life insurance to supplement their retirement income through what’s called an “Insured Retirement Program” (IRP). An IRP is a financial planning strategy that usually offers tax-free supplemental retirement income through tax-exempt life insurance.

Typically with an IRP, the client buys a permanent life insurance policy (for example Universal Life or Whole Life) and deposits monies above and beyond the premium charges associated. The excess annual deposits are invested and benefit from tax-deferred growth. Upon retirement, the insurance policy is used as collateral to secure a loan through the bank, set up much like a Line of Credit. The lender then provides the borrowed funds tax-free to the client to supplement their retirement income.

Your Take-Away: If you are looking for a way to supplement your potential retirement income, have come close to maxing out your RRSP’s or simply don’t like them, and need a place to put some extra cash above and beyond your RRSP savings, this may be the perfect strategy for you.

If you fall into any of the above categories, you could benefit in the following ways:

Again, this is not a one size fits all strategy, but it can be very useful for those in specific situations. After all, it’s always better to save a dollar in tax then to increase your income by a dollar, isn’t it?

Until next time, have a Magnificent Monday.

Chris & Elisseos

What is Critical Illness Insurance?

Recent reports of individuals whose medical costs were not covered through provincial or personal medical insurance plans have caused many to wonder about their financial affairs in the event of a serious illness.

Unlike traditional life insurance that pays a lump sum at the time of death, Critical Illness Insurance (CII) pays a lump sum benefit upon the diagnosis of a critical illness, such as cancer, heart attack, or a stroke. It was designed to help meet the high costs associated with serious illness, and to help you maintain your lifestyle during and after recovery. Upon diagnosis of a critical illness, there is a brief waiting period – often as little as 30 days. Once this expires, the policy pays out a lump sum cash benefit. The choice of how to use the benefit is yours, and it is tax-free.

Your Take-Away: It has been reported that 1 in 4 Canadians will be diagnosed with Cancer prior to their 65th birthday. If you happen to be one of those unlucky Canadians, the last thing you want to have to deal with as a family are the high medical costs that can be associated with getting better. Because your benefit is tax free, you can choose to use your payout in the following ways:

  1. Taking advantage of special treatments, alternative therapies or immediate surgery that may only be available in other countries such as the U.S.
  2. Modifying your home or vehicle to meet any mobility requirements as a result of the illness
  3. Allowing a spouse or family member to take a leave of absence from work
  4. Reducing overall financial stress

This product, although not new, is something that has only recently been gaining significant press in Canada.  I can say without question that this is something you and your family should be looking at in order to protect the financial future of those you care about.

Until next time, have a Terrific Thursday.

Chris

How do Life Insurance Ratings Work?

A fantastic article at Canadian Business Online was posted entitled “Life Insurance: On The Edge”.

The author Dan Bortolotti tells two stories of individuals who applied for life insurance. One applicant was declined for life insurance because of evidence in his medical stating that he may have diabetes which was news to him, that he later confirmed was the case. The other applicant was told he would be heavily rated for life insurance based on his personal hobby of flying planes. The basic premise of the article is that understanding what life insurance companies look for is essential prior to applying for coverage.

Your Take-Away: According to the article, approximately 60% of applicants are provided with standard rates which should be the premium your Advisor or Broker is quoting you. On the flip side, almost 30% of applicants will actually be considered a preferred client and will pay a smaller premium then a standard policy. What’s scary though is that the remaining 10% of applicants will be outright denied coverage or given a rating based on their health.

The long and short is that if you do end up one of the unlucky few that is declined or rated when applying for life insurance, my recommendation is that you shop the market first, and then take your best offer. After all, the insurance company will look at issues such as your own personal health, your personal hobbies and your family history which means they are making a very educated decision. If you’re rated, it’s probably because you need the life insurance coverage more then the average person.

Until next time, have a Terrific Tuesday.

Chris & Elisseos

Life Insurance Explained: How Much is Enough? (Part 5 of 5)

In the final post of our “Life Insurance Explained” series, we want to answer the question “How much is enough?”

There are many different ways to determine how much life insurance is needed, but it is essntial to know that there is no “one size fits all” formula. Each situation is different and it is important that the formula you use to define this all important number is specific to your own situation.

Your Take-Away: Of the different formulas that are available, let’s look specifically at two of them.

The first formula that some of the more experienced generation of Advisor’s use is to simply define the income you would want replaced and then determine how much capital is required to provide that income stream at an assumed interest rate. For example, if you lost your Spouse or Partner and you needed a $100,000 income to properly maintain your lifestyle, you would need approximately $2,000,000 of capital invested at 5% to earn the before tax income you are looking for.

The second, and somewhat more specific formula is to actually take into consideration items such as your assets, liabilities, income needed AND for how many years that income is needed. The best way to use this formula is to work with a life insurance calculator. Most banks, insurance or investment companies all provide this tool for consumers and it is definitely worth referencing when trying to determine what you require. One great calculator for this purpose can be found on the Manulife Financial website.

In the end, it is always best to seek the advice of a qualified Professional, but it definitely doesn’t hurt to learn for yourself how these assumptions are used and how much life insurance actually is enough.

Until next time, have a Terrific Thursday.

Chris & Elisseos

CBC Exposes Bank Mortgage Insurance

VIDEO: The CBC Reports on Mortgage Insurance

The above video was put together by CBC is a tremendous example of the downfalls of purchasing ortgage Insurance through your bank.

As a Mortgage provider, we have done our research and are well versed on the difference between opting for the mortgage insurance provided through your lender and owning personal life insurance for the purpose of your mortgage. In fact, that is why we recommend that each of our mortgage clients purchase personally owned life insurance for this purpose. We know that almost all individuals will save money on the premium, but that is only one part of the many benefits that exist.

Your Take-Away: As a home owner, it is 100% in your best interest to explore your options. If you choose to own personal life insurance for your mortgage over the lenders mortgage insurance, you will benefit in the following ways:

  1. Ownership: You will own the policy and thus choose your beneficiary as opposed to having the bank as your beneficiary
  2. Portability: Your mortgage insurance will go with you whether you buy a new home or change lenders as opposed to having to reapply if you change lenders
  3. Level Benefit: You will receive the benefit you apply for at claim time as opposed to simply having your mortgage paid off at whatever value it is
  4. Underwriting: We underwrite at the time of application which means you are approved once you receive your policy as opposed to doing the bulk of the underwriting at claim time

Enjoy the video, and don’t forget that it is well worth your time to do a bit of research before simply “signing off”.

Until next time, have a Terrific Tueday.

Chris & Elisseos

Life Insurance Explained: Universal Life Insurance (Part 4 of 5)

We have looked at both Term Life Insurance and Whole Life Insurance previously and today we want to better understand how the two of them helped to create Universal Life Insurance.

In some ways, you can look at Universal Life Insurance as a “hybrid” product combining the best of both worlds when it comes to Term and Whole Life. With this type of insurance, the objective is to pay an Estimated Level Premium (ELP) that will stay level for life or the period of time you select. Inside of this policy are two primary components; namely the Cash Surrender Value (CSV) and the Insurance cost. Depending on how you structure this, you can use it to protect you and your family with a level Cost of Insurance option that is guaranteed for life, or you can use it to create wealth for yourself by over funding this policy and by using an Annual Renewable Term cost of insurance.

The reason this is considered a hybrid product is because the insurance industry has combine both a term insurance component with the ability to over fund your policy and thus create a cash value. The difference in this case is that the premium you pay is not guaranteed and is based on the success of your investment choice and of course the market.

Your Take-Away: This type of life insurance can used for someone who wants a level cost of insurance from now until death but who may want to take advantage of the tax shelter it provides or “pay it off” in a certain time period. The level cost of insurance is guaranteed within the policy, however it is important to note that your premiums are not. This can also be used for someone who may or may not have a need for life insurance but who has extra cash flow that are looking to protect their assets from the tax man or creditors.

Again, this form of life insurance can be a great vehicle for many Canadians, but it safe to say that this structure will not make sense for everyone. Each situation is different and understanding your options and financial status is key to helping you make the right decision on what “concept” or product is right for you.

Until next time, have a Terrific Tuesday.

 Chris & Elisseos

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