Archive for September, 2010

Top 7 Ways To Save On Your Insurance Premiums

Best ways to save money on life & health insurance premiums

1. Shop the Canadian insurance marketplace with a Life Insurance Broker

2. Plan your permanent and short-term insurance needs

3. Take advantage of falling term insurance rates and/or your good health

4. Quit smoking for cheaper insurance

5. Use multi-plan or multi-life discounts

6. Spend more money now on premiums to save money over time

7. Buy insurance when you are young

If you own insurance policies or are considering buying life and health insurance, you probably want to get the best deal you can. Insurance feels very much like another added monthly expense, even if some policies can act as long-term investments. Buying the best insurance policy for your needs and getting the best price should be your goal. Here are 7 ways you can save money on your life and health insurance premiums in Canada.

1. Shop the Canadian insurance marketplace with a Life Insurance Broker

If you have been approached before to buy life insurance from an agent in Canada and you don’t know much about how life and health insurance works, what they offer you could seem very reasonable. There are many insurance agents out there who only represent one insurance company and can only offer you coverage from a very limited product line. A life insurance broker will have access to all the insurance companies in Canada, and can go shopping on your behalf for the lowest rates. Your broker should be running some kind of insurance software to compare the rates for term and permanent life insurance based on your age, smoking status, gender, etc. There are various software programs out there that will survey the entire marketplace to find you the lowest cost, and a good insurance broker will have access to most of the companies listed on the report.

2. Plan your permanent and short-term insurance needs

The type of insurance you buy is as important as the amount of insurance you need. Once you have analyzed how much life and health insurance you need to be properly protected, it is time to decide if you should buy term or permanent insurance. Life insurance is most commonly sold as term insurance, universal life insurance and whole life insurance. Universal life and whole life insurance is considered permanent life insurance plans. When you buy permanent life insurance it is like you are purchasing that block of money over the rest of your life; like an extended mortgage. The price is much higher for permanent life insurance because you will own the plan’s benefit for the rest of your life and there are cash values inside the policy. Term life insurance is like renting your risk protection for a limited period of time. Term insurance is much less expensive but will increase in price at the end of the term period (10, 20 or even 30 years). The price increase is steep, so buy the length of term insurance you will need now.

If you are looking at permanent life insurance, consider a blended plan, with some permanent coverage for the rest of your life and some term insurance for the short-term risk protection you need today. Lump in your mortgage, debts, cost of raising children and sending them to school, etc. into your term insurance needs, and buy a smaller amount of permanent insurance for protection for your spouse and your ultimate estate needs.

3. Take advantage of falling term insurance rates and/or your good health

If you have recently purchased term life insurance in the last 5 years or so, you would be surprised at the price of term insurance today. There has been a quiet term life insurance war in Canada between the major life insurance companies. Each company is trying to get more of the term insurance market share, and they have been lowering prices to win new customers. The winner in this situation is you. Term life insurance has never been cheaper in Canada than it is today. Even if you are 5 years older, a new policy could cost you less than your premium for life insurance on a policy that is 5 years old. You should take a look at the rates in the market today to see if reapplying for a new policy would in fact save you money.

Also consider the benefits of locking in your term life insurance again for 10 or 20 years. If your policy is 5 years old, you are that much closer to your renewal date when the premiums will spike. Getting a new policy extends your time frame out many more years and keeps your premiums low.

If you are in better health today than you were a few years ago, you could qualify for Preferred rates on your insurance. Healthy people are given reduced premiums because they are less likely to die of an illness in the near future. Have you lost weight, taken up exercising, eating more healthy, etc? If so, you could possibly now qualify for a preferred rate term life insurance policy which will save you even more money.

4. Quit smoking for cheaper insurance

This is not meant to sound like a speech on why you should quit smoking. Everyone knows the risks associated with smoking, especially insurance companies. They have illness and death statistics of smokers vs. non-smokers going back almost 100 years. The older you are when buying insurance as a smoker, the higher your premiums. The price for life and health insurance can sometimes be triple the cost for a non-smoker.

If you have tried to quit smoking, though about quitting, or are in the process of quitting smoking, here is another good reason to do it. Your life and health insurance premiums will likely drop in half or better once you are a non-smoker. You are considered a non-smoker after 12 months without any form of tobacco or nicotine product (including aids to quit smoking like The Patch or nicotine gum). Once you are a non-smoker you should redo your life and health insurance immediately to save money. It is not uncommon for a person who has quit smoking to relapse and take up the habit again. If you have gotten new insurance policies as a non-smoker and then become a smoker again, the insurance company cannot raise your rates: you are then considered a non-smoker for the life of that policy.

5. Use multi-plan or multi-life discounts

The basic price for life insurance you see on the computer might not be the final price. Many companies will combine individual life insurance policies in the same household into a package deal, and waive the administrative fee on additional policies beyond the first one. Some companies will put multiple people each with different amounts of insurance protection into one policy, with only one administrative fee. Disability insurance can be set up with discounts where 3 or more people working in the same company come together and all buy their insurance at the same time, like partners in a small business. Be sure that your life and health insurance is set-up correctly with the advice of a qualified broker to take advantage of all the discounts possible.

6. Spend more money now on premiums to save money over time

This sounds crazy. How can spending more now save me money? There are two ways this can happen; buying longer term insurance plans now and quick paying your permanent life insurance.

For term life insurance, you can get a very cheap rate if you buy a Term 10 policy today. That is great if you only need the insurance for the next 10 years. What if you need the insurance for 20 or 30 years? The renewal rate after 10 years will be very high, and the cost of paying the renewal premium for another 10 years will be far higher than getting a Term 20 policy now. Here is an example: a Canada man age 40, non-smoker, buys $500,000 Term 10 life insurance today for $34.65 per month. This will be a total cost of $4,158 for his $500,000 of life insurance over the next 10 years. If he renews that policy, it will cost him $268.65 per month for the next 10 years, which is $32,238. His total cost for 20 years is $36,396. If he just bought a Term 20 life insurance policy today it would cost $60.65 per month, totalling $14,556 over 20 years. He will save $17,682.

Permanent life insurance can also be far cheaper if you quick pay your policy. This means instead of paying premiums for the rest of your life you pay for only 10, 15 or 20 years and then you are done. You own the life insurance and no further premiums are due. Let us look at a quick example: the same Canada man age 40, non-smoker, buys $250,000 whole life insurance with a level premium for life. That would cost him $154.58 per month. If he lived to age 80, he will have paid out $74,198 for his beneficiaries to receive $250,000 tax free. If he bought a guaranteed 20 pay policy, he will pay $196.25 per month, totalling $47,100 over 20 years saving the man $27,098. If he paid it up in just 10 years the monthly cost would be $300.63 which seems high, however the total cost is only $36,075. As you can see, the faster you pay for your permanent life insurance, the lower your total cost.

See Life Insurance Funding Options for more info on how to save money with different types of life insurance.

7. Buy insurance when you are young

The younger you are when you buy the insurance you need, the lower the total cost. Also, as you age everyone develops some health problems. These health conditions might make it hard for you to get the insurance you need, or your will be rated and insurance will cost more. Locking in a good price when you are young and healthy is best for your insurance plans, especially if you are considering permanent life insurance.

Let us look at an example of a 30 year old Canada woman vs. a 50 year old Canada woman, each buying $250,000 of universal life insurance. Both of them plan to pay premiums for only 20 years and then be done paying for their life insurance. The 30 year old woman needs to pay $99.08 per month. The 50 year old woman needs to pay $283.29 per month. Both will be done paying for their insurance in 20 years and own $250,000 of life insurance. Total cost for the 30 year old woman: $23,779. Total cost for the 50 year old woman: $67,990. If you want to save thousands of dollars on your life insurance premiums, start to plan early vs. later in life.

Life Guard Insurance can help you save money on insurance premiums

I hope these 7 ways to save money on life insurance have given you some good ideas on how you can save. At Life Guard Insurance we represent all the major life insurance companies and can negotiate you the lowest possible price for insurance at the highest possible value. Contact us about saving money on your insurance premiums today.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about the best ways to save on insurance premiums would also be very much appreciated.

Top 7 Ways To Save On Your Insurance Premiums

Best ways to save money on life & health insurance premiums

1. Shop the Canadian insurance marketplace with a Life Insurance Broker

2. Plan your permanent and short-term insurance needs

3. Take advantage of falling term insurance rates and/or your good health

4. Quit smoking for cheaper insurance

5. Use multi-plan or multi-life discounts

6. Spend more money now on premiums to save money over time

7. Buy insurance when you are young

If you own insurance policies or are considering buying life and health insurance, you probably want to get the best deal you can. Insurance feels very much like another added monthly expense, even if some policies can act as long-term investments. Buying the best insurance policy for your needs and getting the best price should be your goal. Here are 7 ways you can save money on your life and health insurance premiums in Calgary.

1. Shop the Canadian insurance marketplace with a Life Insurance Broker

If you have been approached before to buy life insurance from an agent in Calgary and you don’t know much about how life and health insurance works, what they offer you could seem very reasonable. There are many insurance agents out there who only represent one insurance company and can only offer you coverage from a very limited product line. A life insurance broker will have access to all the insurance companies in Canada, and can go shopping on your behalf for the lowest rates. Your broker should be running some kind of insurance software to compare the rates for term and permanent life insurance based on your age, smoking status, gender, etc. There are various software programs out there that will survey the entire marketplace to find you the lowest cost, and a good insurance broker will have access to most of the companies listed on the report.

2. Plan your permanent and short-term insurance needs

The type of insurance you buy is as important as the amount of insurance you need. Once you have analyzed how much life and health insurance you need to be properly protected, it is time to decide if you should buy term or permanent insurance. Life insurance is most commonly sold as term insurance, universal life insurance and whole life insurance. Universal life and whole life insurance is considered permanent life insurance plans. When you buy permanent life insurance it is like you are purchasing that block of money over the rest of your life; like an extended mortgage. The price is much higher for permanent life insurance because you will own the plan’s benefit for the rest of your life and there are cash values inside the policy. Term life insurance is like renting your risk protection for a limited period of time. Term insurance is much less expensive but will increase in price at the end of the term period (10, 20 or even 30 years). The price increase is steep, so buy the length of term insurance you will need now.

If you are looking at permanent life insurance, consider a blended plan, with some permanent coverage for the rest of your life and some term insurance for the short-term risk protection you need today. Lump in your mortgage, debts, cost of raising children and sending them to school, etc. into your term insurance needs, and buy a smaller amount of permanent insurance for protection for your spouse and your ultimate estate needs.

3. Take advantage of falling term insurance rates and/or your good health

If you have recently purchased term life insurance in the last 5 years or so, you would be surprised at the price of term insurance today. There has been a quiet term life insurance war in Canada between the major life insurance companies. Each company is trying to get more of the term insurance market share, and they have been lowering prices to win new customers. The winner in this situation is you. Term life insurance has never been cheaper in Canada than it is today. Even if you are 5 years older, a new policy could cost you less than your premium for life insurance on a policy that is 5 years old. You should take a look at the rates in the market today to see if reapplying for a new policy would in fact save you money.

Also consider the benefits of locking in your term life insurance again for 10 or 20 years. If your policy is 5 years old, you are that much closer to your renewal date when the premiums will spike. Getting a new policy extends your time frame out many more years and keeps your premiums low.

If you are in better health today than you were a few years ago, you could qualify for Preferred rates on your insurance. Healthy people are given reduced premiums because they are less likely to die of an illness in the near future. Have you lost weight, taken up exercising, eating more healthy, etc? If so, you could possibly now qualify for a preferred rate term life insurance policy which will save you even more money.

4. Quit smoking for cheaper insurance

This is not meant to sound like a speech on why you should quit smoking. Everyone knows the risks associated with smoking, especially insurance companies. They have illness and death statistics of smokers vs. non-smokers going back almost 100 years. The older you are when buying insurance as a smoker, the higher your premiums. The price for life and health insurance can sometimes be triple the cost for a non-smoker.

If you have tried to quit smoking, though about quitting, or are in the process of quitting smoking, here is another good reason to do it. Your life and health insurance premiums will likely drop in half or better once you are a non-smoker. You are considered a non-smoker after 12 months without any form of tobacco or nicotine product (including aids to quit smoking like The Patch or nicotine gum). Once you are a non-smoker you should redo your life and health insurance immediately to save money. It is not uncommon for a person who has quit smoking to relapse and take up the habit again. If you have gotten new insurance policies as a non-smoker and then become a smoker again, the insurance company cannot raise your rates: you are then considered a non-smoker for the life of that policy.

5. Use multi-plan or multi-life discounts

The basic price for life insurance you see on the computer might not be the final price. Many companies will combine individual life insurance policies in the same household into a package deal, and waive the administrative fee on additional policies beyond the first one. Some companies will put multiple people each with different amounts of insurance protection into one policy, with only one administrative fee. Disability insurance can be set up with discounts where 3 or more people working in the same company come together and all buy their insurance at the same time, like partners in a small business. Be sure that your life and health insurance is set-up correctly with the advice of a qualified broker to take advantage of all the discounts possible.

6. Spend more money now on premiums to save money over time

This sounds crazy. How can spending more now save me money? There are two ways this can happen; buying longer term insurance plans now and quick paying your permanent life insurance.

For term life insurance, you can get a very cheap rate if you buy a Term 10 policy today. That is great if you only need the insurance for the next 10 years. What if you need the insurance for 20 or 30 years? The renewal rate after 10 years will be very high, and the cost of paying the renewal premium for another 10 years will be far higher than getting a Term 20 policy now. Here is an example: a Calgary man age 40, non-smoker, buys $500,000 Term 10 life insurance today for $34.65 per month. This will be a total cost of $4,158 for his $500,000 of life insurance over the next 10 years. If he renews that policy, it will cost him $268.65 per month for the next 10 years, which is $32,238. His total cost for 20 years is $36,396. If he just bought a Term 20 life insurance policy today it would cost $60.65 per month, totalling $14,556 over 20 years. He will save $17,682.

Permanent life insurance can also be far cheaper if you quick pay your policy. This means instead of paying premiums for the rest of your life you pay for only 10, 15 or 20 years and then you are done. You own the life insurance and no further premiums are due. Let us look at a quick example: the same Calgary man age 40, non-smoker, buys $250,000 whole life insurance with a level premium for life. That would cost him $154.58 per month. If he lived to age 80, he will have paid out $74,198 for his beneficiaries to receive $250,000 tax free. If he bought a guaranteed 20 pay policy, he will pay $196.25 per month, totalling $47,100 over 20 years saving the man $27,098. If he paid it up in just 10 years the monthly cost would be $300.63 which seems high, however the total cost is only $36,075. As you can see, the faster you pay for your permanent life insurance, the lower your total cost.

See Life Insurance Funding Options for more info on how to save money with different types of life insurance.

7. Buy insurance when you are young

The younger you are when you buy the insurance you need, the lower the total cost. Also, as you age everyone develops some health problems. These health conditions might make it hard for you to get the insurance you need, or your will be rated and insurance will cost more. Locking in a good price when you are young and healthy is best for your insurance plans, especially if you are considering permanent life insurance.

Let us look at an example of a 30 year old Calgary woman vs. a 50 year old Calgary woman, each buying $250,000 of universal life insurance. Both of them plan to pay premiums for only 20 years and then be done paying for their life insurance. The 30 year old woman needs to pay $99.08 per month. The 50 year old woman needs to pay $283.29 per month. Both will be done paying for their insurance in 20 years and own $250,000 of life insurance. Total cost for the 30 year old woman: $23,779. Total cost for the 50 year old woman: $67,990. If you want to save thousands of dollars on your life insurance premiums, start to plan early vs. later in life.

Life Guard Insurance can help you save money on insurance premiums

I hope these 7 ways to save money on life insurance have given you some good ideas on how you can save. At Life Guard Insurance we represent all the major life insurance companies and can negotiate you the lowest possible price for insurance at the highest possible value. Contact us about saving money on your insurance premiums today.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about the best ways to save on insurance premiums would also be very much appreciated.

Term 30 from BMO Insurance is the next best thing to Permanent Life Insurance in Canada

 

For many young people in Canada, buying permanent insurance can be a challenge due to budget constraints. Term insurance is inexpensive but premiums increase substantially at renewal and coverage often expires long before you do. Oftentimes, when you need your life insurance the most your term insurance plan is no longer there. On the other hand, permanent insurance provides lifetime protection but it can be expensive for young families with he high cost of housing, school, kids activities, etc. in Canada. Why not get the best of both worlds: lifetime protection at an affordable price with Preferred Term 30 from BMO Insurance?

 

 

 

• Competitive entry-age level premiums, guaranteed not to increase for 30 years. BMO Insurance is usually the best price in Canada for Term 30 coverage.

 

• Renews after the 30th year and premiums remains level to age 100.

 

• Coverage for life, as long as premiums are paid when due. There is no final end to this term plan, where as most term insurance ends at age 80 to 85.

 

• Preferred rates available for coverage as low as $100,000. BMO Insurance can offer up to 30% discount on their term insurance rates for clients who are in good health.

 

• Conversion to any eligible permanent life insurance plan without further evidence of insurability. You can choose from any permanent plan BMO Insurance is offering at the time.

 

For many clients in Canada, term life insurane is a good option as it offers significant amounts of protection for a very reasonable premium. Term 30 life insurance does cost more than a Term 20 policy simply because BMO Insurance is offering to hold your premiums level for an extra 10 years before facing a renewal and a premium increase. Even so, if you were in your late twenties or early thirties, a term 30 plan would give you life insurance coverage for the majority of your working career – into your 60s. As an example, a 35 year old Canada man (non-smoker, standard rates) buying $500,000 of Term 20 life insurance from BMO Insurance would pay $43.20 per month for 20 years. At age 55 this man still needs his Term life insurance, and chooses to renew it for another 10 years. His monthly payment is now $716.40 per month. If he held this insurance to age 65, he would invest $96,336 over 30 years. Now, let the same Canada man buy a Term 30 life insurance policy from BMO Insurance, and he will pay $77.40 per month. At age 65, when this policy renews, his life insurance has only cost him $27,864 to have $500,000 of coverage for 30 years. He saved $68,472.

 

If you consider Term Insurance as renting a house AND Permanent Insurance as owning a house, then consider Preferred Term 30 as renting a house with the option of owning it … at guaranteed rates!

Term 30 from BMO Insurance is the next best thing to Permanent Life Insurance in Calgary

For many young people in Calgary, buying permanent insurance can be a challenge due to budget constraints. Term insurance is inexpensive but premiums increase substantially at renewal and coverage often expires long before you do. Oftentimes, when you need your life insurance the most your term insurance plan is no longer there. On the other hand, permanent insurance provides lifetime protection but it can be expensive for young families with he high cost of housing, school, kids activities, etc. in Calgary. Why not get the best of both worlds: lifetime protection at an affordable price with Preferred Term 30 from BMO Insurance?

• Competitive entry-age level premiums, guaranteed not to increase for 30 years. BMO Insurance is usually the best price in Canada for Term 30 coverage.




• Renews after the 30th year and premiums remains level to age 100.




• Coverage for life, as long as premiums are paid when due. There is no final end to this term plan, where as most term insurance ends at age 80 to 85.




• Preferred rates available for coverage as low as $100,000. BMO Insurance can offer up to 30% discount on their term insurance rates for clients who are in good health.




• Conversion to any eligible permanent life insurance plan without further evidence of insurability. You can choose from any permanent plan BMO Insurance is offering at the time.

For many clients in Calgary, term life insurane is a good option as it offers significant amounts of protection for a very reasonable premium. Term 30 life insurance does cost more than a Term 20 policy simply because BMO Insurance is offering to hold your premiums level for an extra 10 years before facing a renewal and a premium increase. Even so, if you were in your late twenties or early thirties, a term 30 plan would give you life insurance coverage for the majority of your working career – into your 60s. As an example, a 35 year old Calgary man (non-smoker, standard rates) buying $500,000 of Term 20 life insurance from BMO Insurance would pay $43.20 per month for 20 years. At age 55 this man still needs his Term life insurance, and chooses to renew it for another 10 years. His monthly payment is now $716.40 per month. If he held this insurance to age 65, he would invest $96,336 over 30 years. Now, let the same Calgary man buy a Term 30 life insurance policy from BMO Insurance, and he will pay $77.40 per month. At age 65, when this policy renews, his life insurance has only cost him $27,864 to have $500,000 of coverage for 30 years. He saved $68,472.

If you consider Term Insurance as renting a house AND Permanent Insurance as owning a house, then consider Preferred Term 30 as renting a house with the option of owning it … at guaranteed rates!

Making inheritance of the family farm fair for all children

If you own a family farm corporation in Alberta, you definitely have a very valuable asset in your estate. The family farm corporation probably makes up the bulk of all your assets, and is going to be a huge inheritance for any of your children who plan to take over the farm. What are your plans if you have more than one child, and some don’t plan to be farmers?

A family farm corporation in Alberta has special tax laws that make it very advantageous to pass on the farm corporation to a child inheriting the business. The entire asset can be passed onto a child at its original cost base so long as the child inheriting the farm will actively farm it. This means that the many years of capital growth of the farm value are deferred from generation to generation while the land stays in the family. Once land and assets are sold off, there is a capital gains tax on all those many years of capital appreciation.

In this article we will look at your options for compensating the non-farming children fairly while the farming child(ren) inherits the business. Ultimately we are recommending an Estate Equalization Strategy using Life Insurance in most cases.

Option 1 – make the non-farming child a shareholder

Option 2 – sell assets to pay-out the non-farming children

Option 3 – pay the non-farming children off with credit

Option 4 – non-farming children don’t get much

Option 5 – use life insurance to equalize the estate

Option 1 – make the non-farming child a shareholder

You could make the non-farming child(ren) into equal or partial shareholders of the farm corporation, thereby letting them have a vested interest in the equity of the farm. They would also be eligible for dividends if the farm was to make a profit. If they were given full voting shares then the non-farming children would have considerable influence on the operations of the farm, and could vote on how the business is run. If they were given preferred shares then they would be first in line for dividends from the farm corporation once all expenses had been paid.

The problem with this strategy is that non-farming children inheriting shares in the company tend to muddy the waters of the family farm corporation. The farming child who is investing their sweat equity into the business is in fact working for their siblings. This would be a very similar arrangement to a business partnership where there is a managing partner running the business and investment partners who put up the capital and have little active involvement in running the business day to day. But, in this case, the siblings of the farming child are not investors, they were gifted their equity in the business.

This arrangement could also be coupled with a legal agreement that the farming child has a primary claim on the farm assets and can buy-out the shares of the non-farming children as the years go by. This puts a lot of financial stress on the farming child – often too much stress on the person and the business to make them accept this kind of deal.

Option 2 – sell assets to pay-out the non-farming children

Another option would be to plan to downsize the farm, liquidate some of its assets to pay out the non-farming children. This strategy would allow the farming child to have a fully operational business without the influence of siblings or debts/obligations owing them. Often the remaining land and equipment are all paid for, but the size of the farming operation is significantly reduced. Remember, selling land and assets creates a capital gain and there will be significant taxes on this strategy, meaning even more land will have to be sold to realize a targeted net gain.

This is another stressful strategy, as land in Alberta has become very expensive. It would take many years – possibly a lifetime – to rebuild the family farm corporation back to the original size it was before it was broken up. Also, with the huge cost of equipment and input costs, a farm corporation tends to become more profitable once it reaches a certain size or critical mass, and then the risks of losing money year over year go down.

In order to expand the farm to reach its original size, the inheriting child would have to go into significant debt to repurchase land and assets to expand the business.

Option 3 – pay the non-farming children off with credit

Here the family farm corporation would borrow money to pay out the non-farming children so that the farming child inheriting the business would own it free and clear of their interest. Again, this saddles the farming child inheriting the family farm corporation with significant debt to be repaid, squeezing his/her annual profits and limiting the ability to grow the business.

Option 4 – non-farming children don’t get much

In this strategy, the parents who own the farm let their non-farming children loose into the world and there is no inheritance from the farm unless they return to actively farm the land. This just doesn’t sound fair. A child who likes farming stands to inherit a multi-million dollar asset while non-farming children get nothing (or very little in comparison).

This situation leads to family feuds, contested wills, and some of the ugliest legal fights you could image. Families are regularly torn apart over money, and the damage to relationships is often irreparable. Think long and hard about leaving non-farming children out of the will as it pertains to the farm corporation. It would even be a good idea to discuss the matter with adult children who are not planning on taking over the business. What do they think is fair, and what would they expect as inheritance from the estate?

Option 5 – use life insurance to equalize the estate

When using life insurance to create an Estate Equalization Strategy, the family farm corporation can budget the expense during the life of the farming parents for the ultimate inheritance of the non-farming children. It would be best to have a family discussion about what a “fair” inheritance for non-farming children would be. Fair does not mean equal division of the farm between all children. The farming child who will inherit and run the farm corporation has already invested years of sweat equity into helping out running the farm, and he/she is taking on all the risk that a farm business brings.

When there is some kind of agreement on what a fair inheritance for non-farming children would be, a life insurance plan can be designed to meet that need. The life insurance could be a level amount of death benefit or a growing amount of coverage to keep up with inflation. The benefits of a life insurance policy are that it can be easily budgeted for during one’s life, as it costs only pennies on the dollar per year to own the insurance coverage. The final death benefit is a tax free payment to the family farm corporation, which in turn can be paid out to beneficiaries’ tax free.

If you have never before looked at using permanent life insurance to equalize your estate, you should definitely take a closer look. There is no more cost effective way to create large amounts of tax free cash for you family farm corporation, allowing the farming child to buy-out the interest(s) of non-farming siblings and not have to liquidate assets or go into further debt.

To look more closely at an Estate Equalization Strategy using Life Insurance, be sure to contact us at Life Guard Insurance.

Life Insurance Funding Options in Calgary

life insurance in Calgary, there are basically two types of insurance products, Term life insurance and Permanent life insurance. Term insurance offers temporary risk protection for a very affordable price, especially in the early years of the term. Permanent insurance offers lifetime coverage, usually for a fixed or declining cost. One of the most popular types of permanent coverage is universal life insurance.

 

In this article we will look at 4 distinct types of life insurance, all for the same person, and see how well they perform from a pure cost perspective over 40 years. Our fictitious person will be a John Doe, an average Calgary man age 35, non-smoker, is normal health (i.e. standard insurance rates). John wants to buy $500,000 of life insurance and keep that amount for the rest of his life.

Term 10 Life Insurance

A term 10 policy, or T10, will be the lowest initial cost for insurance. The first 10 year term will be very inexpensive, but after each 10 year period the costs will begin to step up. The owner of the policy has the guaranteed right of renewal, meaning they can keep their insurance policy when it renews, if they are willing to pay the increased premium, and do not have to re-qualify medically for their insurance policy.

 

For John Doe we have found that currently BMO Insurance is the most competitive insurance company. The first 10 year term with BMO Insurance will only cost him only $290 per year. The second term will increase to $1,980, followed by $4,475 per year for the third term, and the final 10 years will be a whopping $11,740 per year (from age 65 – 75).

 

This is a total premium investment of $184,850 over 40 years.

Term 20 Life Insurance

A term 20 policy, or T20, is a good option for people looking for a stable premium for a good long time. Twenty years is usually long enough for the cost of raising children (however the costs of children never really goes away), or to pay off or at least pay down a mortgage and other long-term obligations. After 20 years a person’s financial risks have decreased, and maybe they don’t need the insurance any more. But what if they did?

 

Over a 40 year time period, a Term 20 life insurance policy will renew once. That renewal will be very steep, as the insurance company has to capture the increased risk for the next 20 years – a critical time when it is much more likely the client will die. For our John Doe, this is what it looks like. Canada Life is the most competitive insurance company, with the initial term costing only $475 per year. The second 20 year term renews at $6,200 per year (over 13 times the initial premium).

 

This is a total investment of $133,500 over 40 years.

Term 100 Life Insurance

There is a simplified life insurance option for people called Term 100. A Term 100 policy offers a locked-in, level premium for the rest of your life with no increases. This life insurance policy is simple, and has no cash values attached or any equity building up in it. Basically, you pay a set level premium for life, and when you die the entire death benefit is paid out to your beneficiaries. Plain and simple.

 

For our client, John Doe, his annual Term 100 premium from RBC Insurance would be $2,085. Over 40 years this would be $83,400 in total premium spent.

Universal Life 20 Pay Option

Our final comparison is a Universal Life policy with a guaranteed 20 pay option. This means the cost for the life insurance is paid up in 20 years, guaranteed. The insurance company asks you to pay a higher premium than a normal universal life insurance policy, but guarantees that the policy will be finished its annual or monthly payments quickly. These types of guaranteed paid-up life insurance policies are usually offered in 10, 15 or 20 years options. The faster you pay it up the higher your annual premium, but the lower your total investment.

 

For John Doe, the most competitive policy is being offered by Manulife Financial, called a LifeWise 20. This plan will have a cash value accumulated inside of it that will become very substantial over time, but is beyond the scope of this article. Let’s just purely look at the annual cost as a total investment to generate $500,000 of life insurance death benefit. John will have to pay $3,465 per year for 20 years. After that time he no longer has to pay any premium, and the $500,000 of life insurance benefit is paid up for the rest of his life.

 

John would have to spend $69,300 for the 20 year quick pay universal life insurance policy. As an internal rate of return over 44 years (the life expectancy of John Doe), an alternative investment would have to generate 9.68% annual interest compounded to grow $3,465 invested over 20 years into $500,000. And that does not account for taxation eroding the investment returns or the ultimate cash accumulated at death.

 

For a comprehensive report on this analysis, please click here to download the PDF of this example of Life Insurance Funding Options.

Life Guard Insurance is Your Life Insurance Broker in Canada

When shopping for life insurance, disability insurance or health insurance you might have been approached by any number of agents representing different companies to offer you advice instead of a life insurance broker. Very often agents who represent only one company cannot offer you the same quality and selection of life insurance and health insurance products in Canada that would suit your needs, or be the most competitively priced.

 

A Canadian life insurance broker will be able to offer you the best insurance advice, be able to shop the entire Canadian life insurance market on your behalf, and knows which insurance companies would be best suited to your needs. Not all life insurance brokers are created equal, however. Let’s look at some basic characteristics that make a Canada life insurance broker the expert that can serve your needs.

Your Canada Life Insurance Broker can access to all the major life insurance companies

A Canada life insurance broker should have access to any of the major life insurance companies in Canada. There is a core list of the top companies that your Canada life insurance broker should have contracts with in order to get you the best insurance deal. Here is a list in alphabetical order:

• Assumption Life
• BMO Insurance
• Canada Life
• Desjardins
• Empire Life
• Equitable Life
• Industrial Alliance Pacific
• Manulife Financial
• RBC Insurance
• Standard Life
• Sun Life
• Transamerica
• Unity Life

These are the top 10 life insurance companies in Canada today (Canada Life is the brokerage arm of Great West Life, and their products are very similar). There are a number of life insurance companies that recruit only career agents and train them to sell selective products not offered to the brokerage market. These companies include Freedom 55, Primerica and Sun Life Career Sales (some unique products). There are also career agents who only represent certain companies, even if those companies allow brokers to also sell their products. These captive agent companies would be RBC Insurance Career Sales, Desjardins, Industrial Alliance Pacific, Sun Life Career Sales and World Financial Group (sells main Transamerica policies).

 

If you are dealing with a captive agent, you will not have access to the entire Canadian marketplace to find the cheapest life insurance policy that meets your needs. And in some cases, like with Primerica, the life insurance policies are inferior to the standard policy sold in the market (in Primerica’s case, the company only sells term life insurance and has no permanent policies to convert the term to later in life).

 

If your Canada life insurance broker or agent doesn’t have access to at least 8 of the top ten companies, you could be buying a policy that will cost you much more than you should be paying in a competitive life insurance market.

Access to specialty insurance companies

Not everyone fits into the “average” Canadian mould. There are a number of specialized insurance companies that would be able to offer unique benefits for situations out of the ordinary. Below is a list of companies in the specialty market and what kinds of unique benefits they offer our clients in Canada.

• Assumption Life: very good for foreign travel – even insuring Canadians living overseas as ex-patriots. Can do online/telephone applications for clients in remote locations.
• Canada Protection Plan: Canada’s best non-medical life insurance company. Offers different types of plans for different types of health risks. If you are unhealthy and cannot qualify for regular life insurance, CPP will probably be able to offer you a policy.
• The Edge Benefits: Canada’s best specialty disability and living benefits insurance company for blue collar workers and trades people. Specialty products designed for higher risk jobs.

Access to these specialty carriers will round out your broker’s offering and make his/her advice appropriate for any situation. If you fit into an abnormal category, like travelling overseas regularly or you have a major health issue, your life insurance broker should be able to offer you some options.

Having technical expertise and negotiating power

Unfortunately, not all brokers have the kind of support they should have to best serve their clients. In the Canadian brokerage world, agents and agencies work with larger brokerage shops called Managing General Agencies (MGAs). These MGAs have build solid reputations with life insurance companies over time and have a large number of life insurance agents who process business through them.

 

The MGA provides ongoing training, expertise in designing complex insurance policies, ability to negotiate problem cases with the underwriters of a particular insurance company, and an efficient and up-to-date back office administrative system. At Life Guard Insurance we work with PPI Solutions. PPI Solutions is now the largest MGA in all of Western Canada, and partnered with Prairie Provincial Insurance it is the largest MGA in Canada. They have a deep relationship with insurance companies going back 35 years. They offer Life Guard Insurance the best back office support, state of the art online administrative and tracking systems, and the technical and underwriting support needed to get our clients the best policies.

Your Best Canada Life Insurance Broker

If you are already working with a Canada life insurance broker, check to see if they offer you all the options and support mentioned above. If you are working with a captive life insurance agent, you would be wise to get a second opinion before you buy (or on the insurance product you have already bought).

 

At Life Guard Insurance we can offer you all these options; Canada’s top life insurance companies and specialty carriers; technical excellence, underwriting support and negotiating power, and the highest level of customer service you should expect in the industry.

 

For help with your insurance planning, or if you are looking for a second opinion on your current life insurance and/or health insurance policies, please feel free to contact us.

Life Guard Insurance – dedicated to being your best life insurance broker in Canada.

 

 

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about being the best life insurance broker in Canada would be very much appreciated.

The Insurance Gamble: 4 Possible Win-Lose Outcomes

If you’re thinking about buying life and/or health insurance OR you are justifying why you shouldn’t pay money for this type of insurance, then this is worth a read. Here, we will look at insurance like a gamble or a bet – there is a cost, and there is a winning scenario and a losing one. How much could you win and how much could you lose?

Before we get into the 4 possible outcomes from either buying or not buying insurance, let’s set the stage. Imagine you’re in a casino, sitting at a table, gambling. You can either bet into the pot, or keep your money close. Here is the twist; if you bet and the cards are a winner you get to keep all the money you have and maybe add some cash to the pile. If you don’t bet and you lose, you lose everything you have. The bet is small, and your pile of cash in front of you is big.

Unfortunately, in this game if you win, you have become disabled, gotten a critical illness or died prematurely. Not a very good winning hand, but all you assets/wealth is protected for you and/or your family. If you lose, you still get sick, hurt or die, but the life savings you have built up can all disappear, leaving your family or you with nothing. There is a big chance each year that nothing happens – a pass, and you have to decide if you will bet again next year or not.

Now, let’s talk about the odds. Here are the chances each year of you either dying, getting injured or sick and can’t work, or getting a critical illness before age 65 (these numbers are the percentage chance each year until age 65):

• Chance of dying in any given year: 0.15% chance
• Chance of having a critical illness in any given year: 0.5% chance
• Chance of becoming disabled for the long term in any given year: 1.06%

If these odds seem low its because this is the risk each year, and cumulatively it builds. Total risk to age 65 of one of these events happening to you is 10% chance of dying, 33% chance of getting a critical illness and 50% chance of becoming disabled during your working years.

So, knowing the odds, would you place a bet or not? Here are the 4 possible outcomes.

1. You Buy Insurance, and Something Happens

If you buy life, disability and/or critical illness insurance and one of these events actually happens to you, you are protected. For the relatively small amount of premium spent you or your family will receive a huge amount of tax free cash to protect their lifestyle, replace lost income and pay off debts like your mortgage. The cost of the insurance should be in the range of 1-2% of your family income each year to protect you from all risks. You Win Everything!

2. You Buy Insurance, and Nothing Happens

If you spend the money on life, disability and/or critical illness insurance and nothing ever happened to you before age 65, you can consider yourself one of the lucky ones. So, what did you lose by spending your hard earned money on insurance premiums? Let’s assume you spent $1,000 per year for 35 years on life and health insurance. That would be $35,000 of premiums gone to insurance companies to provide protection that in hind-sight you didn’t need. This is less than one year’s income. This is only a fraction of the total income you made over those 35 years. This amount of money will not devastate you financially – it is a manageable expense. You Lose A Small Amount!

3. You Don’t Buy Insurance, and Nothing Happens

In this case, you have decided to not buy the insurance and again you are lucky – nothing happens through to age 65 when you retire. Since you haven’t spent any money on life or health insurance, you were able to invest that money or put a little more towards your family lifestyle spending – go on one more vacation every 3 years or something like that. You Win A Small Amount!

4. You Don’t Buy Insurance, and Something Happens

In this case you have bet on nothing happening during your lifetime, and you are wrong. Either you got sick, hurt or died prematurely, and you and/or your family is left without financial protection. All your savings could be depleted in a matter of months. The high cost of supplementary health care not covered by the Alberta Health Insurance Plan can add up quickly. Or, for instance, you died and your mortgage can’t be paid and there is no more income for your spouse and children to live on. In this case, You Lose Everything!

 

Those are the chances, costs and possible outcomes of buying or not buying life and health insurance protection. These risks are real, and no one is immune. People are either the lucky ones who get through their working life without any major life or health events, and there are the unlucky ones. If you happened to be among the unlucky group, having insurance protection would be great. Unfortunately, we don’t know what the future holds, and you have to buy insurance while you are still healthy (insurance companies will not insure a risk once it has occurred).

If you want to know how much insurance would cost to protect yourself and your family, please feel free to contact us at Life Guard Insurance.

Disability Insurance and Income Protection for Blue Collar Workers in Calgary

If you work in the trades, like a framer, carpenter, electrician, mechanic, farm worker, etc. you might have found it either difficult to get disability insurance in the past or very expensive. That is because disability insurance is based on Occupational Risk as well as your personal health risks and lifestyle choices (like smoking or not smoking). If you are in a high risk job, like being a lumberjack, it can be almost impossible to get disability insurance, and if the insurance company offered you a plan it would be hugely expensive – up to 10% of your annual income.

So, how can you design a plan that covers your risks of injury and illness and protects your family and lifestyle? One solution is to create a split plan with Injury Only Disability Insurance and a Critical Illness Insurance policy for major life altering illnesses.

Injury Only Disability Insurance

The best company in Calgary and Canada for this type of insurance is The Edge Benefits. The Edge has designed plans that are tailored to the risks of labourers, trades-people, truck drivers, and many other blue collar workers. Since many workers in physical labour jobs are more concerned with accidents and injuries, both on the job and off work, The Edge has split its plan into Injury Only coverage and optional illness protection. The Injury Only coverage is much cheaper for you than buying a comprehensive disability plan covering both illnesses and injuries. It can often be less than half the combined premium for just the injury protection.

The other goods news about Injury Only disability insurance from The Edge Benefits is that there are hardly any qualifying medical questions to get the policy. Basically, you have to currently not be disabled due to an injury, and if you had a pre-existing injury, that condition will not be covered for the first 12 months. Besides that, you can get the coverage easily and quickly, and cheaply!

OK – so one big risk is covered…injury causing loss of work and income. How about an illness?

Critical Illness Insurance to Replace Lost Income

Using a Critical Illness policy to supplement lost income is another great way of getting a type of disability income insurance. Now, a critical illness policy technically is NOT a disability insurance policy. It does not cover things like pneumonia, fibromyalgia, chronic cough, etc. What it does cover are major life altering illness and injuries that can keep you off the job for months, if not years. Cancer, heart attack, stroke, by-pass surgery, MS, Parkinson’s, spinal damage, organ failure, etc. (click here for a complete list of covered conditions).

If a common disability policy including illness protection had a 90 waiting period, meaning your benefits only start after 90 days of paying your own bills, what types of illnesses would keep you away from work for that long? Well, the most common types would be the illnesses included on the Critical Illness Insurance list. Also, Critical Illness Insurance pays out after 30 days, not 90 days. All benefits are paid LUMP SUM and TAX FREE!

 

For most of our clients at Life Guard Insurance in this situation, we design a plan that covers two years of gross income. That means, if you had a heart attack, 30 days after diagnosis we would have a cheque for you for twice your annual gross income to put into your bank account. That should last you for about 3 years of income replacement (considering you don’t have to pay tax on that money).

A Critical Illness Policy is usually much less expensive than illness protection on a disability insurance policy. Combining the premium savings on the Injury Only disability insurance from The Edge Benefits and a lower cost Critical Illness Insurance policy, you can feel confident you are well insured from things like a fall, car accident, heart disease, cancer, brain injury, etc.

Summary

This solution has worked well for many blue collar workers and clients of Life Guard Insurance. Putting together a non-traditional solution for disability/income protection insurance has saved our client a lot of money in annual premiums (usually $600 – $1,000 per year). It provides an even greater level of protection from major illnesses that could affect you, and you know that injuries suffered on the job or away from work will also be insured.

If you would like more information on how to structure an Injury Only Disability Insurance plan with Critical Illness Insurance, please contact us at Life Guard Insurance.