Understand the different types of life insurance to choose from

If you’re in the market to buy insurance in Canada you should really understand the four basic types of life insurance available. This article will give you a brief and clear understanding of the four major types of life insurance you might buy, the differences between policies, and the advantages of each.

You should keep in mind that the type of life insurance you buy today should solve your immediate risk needs (how much financial risk are you and your family exposed to) and be flexible enough to adapt to your changing needs in the future. This article won’t answer all your questions, but it will be a good overview, and you can always dig through our Canada website to find out more about the different types of life insurance.

Term Life Insurance

Term life insurance is the most basic form of life insurance in Canada. It is also the most affordable. With term life insurance you are “renting” your risk protection for a certain number of years (the term of the policy). The price is determined by the likelihood that you might die within that term. The term number of years on policies is usually 10 or 20 years, but you can also buy policies with a 30 year term. The longer the term you buy today, the more expensive the policy will be.

At the end of the term (say after 10 years on a Term 10 policy) your policy will automatically renew. That is, your policy will become more expensive and you will have the choice to keep the policy or not. The new premium at renewal is very high, and much more expensive than buying a longer term insurance contract today. If you bought a Term 10 policy, and kept it for 20 years, paying the higher premium for the last 10 years, you will probably pay more than twice the cost than if you just bought a Term 20 policy today. So, when buying Term Life Insurance, buy the term you need today and it will save you money.

Term life insurance is best used for protecting for short term needs, like paying down a mortgage or the financial cost of raising children. Your temporary or short term financial risks are most affordably covered with Term life insurance.

Term 100 Life Insurance

Term 100 life insurance is different than normal term life insurance. Term 100 is actually a permanent life insurance policy because it will be with you for the rest of your life, and will pay out a death benefit. Most Term 100 policies in Canada have no cash value attached to them (some do have a cash value component to them but are more like whole life insurance). The premium or price for Term 100 life insurance is level for the rest of your life – so the price you pay today will be the price you pay forever, no matter how long or short you live.

The advantages of Term 100 life insurance are that it is cheaper than most traditional permanent life insurance policies. You don’t have to spend as much money on premiums, which allows you to invest into other products like RRSPs and TFSAs. If you are looking for something permanent, simple, affordable and which doesn’t act like an investment policy, check out Term 100.

Universal Life Insurance

Universal life insurance is the most flexible and most complex type of life insurance in Canada. It offers you many choices to design a policy that will perform for you just the way you want it to. You can choose either increasing premiums or level premiums for life (like a Term 100 cost inside your universal life policy). You can invest additional money into the policy fund, up to a prescribed maximum, and get tax sheltered growth. You can also choose the types of investments you would like to have inside your policy fund, much like designing a mutual fund portfolio.

The advantage with universal life insurance is that it has the potential to perform very well, if market returns are strong. There is also risk that losses in the investment markets (which your policy fund is attached to) will lose you money and you might have to pay more premiums later in life. If markets perform well over the long term you would see a large tax sheltered profit inside your universal life insurance policy. It therefore acts as both risk protection and a long term investment plan.

Whole Life Insurance

Whole life insurance is the oldest and most traditional type of life insurance policy across Canada. Whole life gives you a set and guaranteed premium for the rest of your life, or you can quick pay the policy in 10, 15 or 20 years. There is a guaranteed cash value inside the plan so you know it will always have equity for your premium dollars invested. Whole life insurance also pays dividends (like profit sharing), so you will have a higher cash value than the minimum guarantee, and you could even have a growing amount of life insurance.

Whole life insurance offers people in Canada a strong, stable and proven long term performance investment policy with guarantees.  The cost for whole life insurance is higher, but you know you will never lose money, will always have equity and you will never pay more: simple, straightforward and guaranteed with the longest history of strong investment performance in Canada.

Life Guard Insurance can help you chose the type of life insurance that is right for you

Contact us, and we will connect you with a professional life insurance broker in Canada who can show you the different types of life insurance, and help you design a plan to meet your needs and your budget.

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 4 main types of life insurance in Canada would be very much appreciated.

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A Term Life Insurance Shopping Checklist

When shopping for term life insurance, you want to find the right amount of insurance coverage at a reasonable price with an insurance company you can trust. But for many people, getting started is the hardest part. That’s where the following Life Insurance Checklist from Life Guard Insurance can help.

1. What you would like your policy to achieve?

Ask yourself what it is you want your life insurance to do. For example, do you want to have insurance coverage that will:

• Pay funeral arrangements?
• Pay the outstanding balance owing on a mortgage and other debts?
• Offset the loss of your income? And if so, for how long?
• Contribute to the future education of your children?
• A combination of all or part of the above?

Knowing what you would like to accomplish with your life insurance policy and approximately how much you need to achieve these goals will help you determine how much life insurance you should consider purchasing. Our Life Insurance Needs analysis calculator is available to help you put a dollar value on the amount of coverage you need.

2. Who would you like to insure under the life insurance policy?

Most insurance companies offer a variety of life insurance products to suit your lifestyle and family needs. You can get an insurance policy on your own life, or you can get one policy for both you and your spouse (called a joint-life or multi-life insurance policy). There are usually discounts for combining life insurance coverage for joint or multi-life policies with the same life insurance company.

3. How long will you need life insurance?

Using a crystal ball to see the future isn’t necessary, although you should use a reasonable estimate of the length of time you will need life insurance. For example:

• When will your mortgage be paid off? The amortization period of your mortgage will often determine how long your term life insurance policy should be.
• When will your children be finished school? One day they’ll finish their education and having enough life insurance coverage to pay their educational expenses won’t be necessary.
• When are you planning to retire? You will have less income to replace and have built retirement savings at that time.

Knowing how long you’ll need life insurance coverage before you begin shopping will ensure you’re comfortable with the life insurance product you end up purchasing. Our instant online life insurance quoting tool can show you term 10, 20 and 30 year plans and even Term 100 life insurance for permanent coverage.

So now that you’ve got the how much, who and how long questions answered, you’re ready to shop.

1. Compare life insurance quotes from multiple companies:

It pays to shop around because life insurance rates can vary considerably depending on the product you choose, your age, and the amount of coverage you request. This is the easy part, because with life Guard Insurance you can compare all life insurance companies with an instant online life insurance quote anytime. The results will display the top ten life insurance companies in order of least to most expensive policies.

2. Which life insurance rate has been quoted – standard or preferred?

There are two basic life insurance rate groups you should know about when shopping for life insurance coverage: standard rates and preferred rates. Standard life insurance rates are the rates the majority of Canadians qualify for, while about 30% of the population is eligible for preferred rates.

Preferred life insurance rates are typically offered to very healthy people and means you may pay a smaller premium than most. Usually preferred rates are offered only once the results of the medical information and tests are known. It will depend on your blood pressure, cholesterol levels, height, weight, and family health history. But preferred rates are worth it. They could save you up to 30-35% off your quoted premium.

When comparing prices, make sure you’re comparing ‘standard to standard’ or ‘preferred to preferred’ life insurance rates. If you’re not sure, ask our brokers. It would be disappointing to find out you were quoted preferred rates at the beginning, only to find out you don’t qualify for them later. We suggest you quote standard rates and hopefully you are pleasantly surprised with a discount.

3. Review the life insurance broker’s availability:

How easily can you get a hold of the broker? What are their hours of operation? Whether it is through their website or telephone, the life insurance broker should be easily accessible to you should you ever have questions or need to speak to them about a change in your life insurance needs. All life insurance brokers partnered with Life Guard Insurance are local to your area and are available to help you in person, over the phone or via email.

4. Review the medical information required to obtain the policy:

Typically the more medical information you provide, the better the price. For a policy that asks few or no medical questions, you can bet the premium is higher for the same coverage then a plan asking for more information. Depending on the company, your age, and the amount of coverage you want, you could be asked to provide blood and urine samples, do a blood pressure reading, etc. This is called a paramedical exam, and a nurse will visit at no cost to you to complete it.

5. Consider a life insurer’s financial stability and strength:

A company’s financial stability is something to consider if you are planning on making a long-term purchase like life insurance. There are organizations out there, like A.M. Best, which evaluates insurers and provides a rating on their stability and strength. Also, all life insurance policies in Canada are backed by Assuris for consumer protection.

6. Ask about renewal options and requirements:

Once the initial premium is set, it is usually guaranteed for the length of the policy (often 10 or 20 years). But what happens when the policy expires? Most policies are renewable until you are 70 or 75 so don’t forget to ask your broker if you will have to take a medical to renew your policy. While your premiums will be higher on renewal, find out if they will also be guaranteed to remain level for the second term of the policy.

7. Confirm the policy can be cancelled without penalty:

Most term life insurance policies can be cancelled at any time without penalty. Make sure to check with your broker to see if the life insurance company has any unusual cancellation policies.

8. Consider the conversion options and restrictions for the policy:

As your life changes so do your life insurance needs and you may want the option to convert your coverage some day.

To convert a term life insurance policy means to transfer all, or part of the death benefit of the policy into a permanent life policy without a medical. For example, say you originally bought a term policy to protect a mortgage and children. Once the mortgage is paid and the child have grown, you might find it desirable to convert the policy into one that will give you a new level premium for the rest of your life, and a death benefit that is guaranteed not to expire as you age.

When you purchase your life insurance policy, find out if there are any limitations on your age at the time of conversion. In most cases, you have the option of converting up until you are 60 or 65. As well, ensure you are given several options of the type of policies you can move into: the more the better.

Final tip – Life Guard Insurance can help with your life insurance checklist

If you need help shopping for or applying for term life insurance, our local life insurance brokers can assist you. We have independent life insurance brokers across Canada who can find you the most competitive price for term life insurance and can walk you through the life insurance checklist so you know what you’re really buying. Contact us 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 a life insurance checklist would be very much appreciated.

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Small gestures for your spouse are the cement of any marriage

This article is going to be a big departure from my usual topics of life insurance and living benefits. I know, you might think, “who is he to be giving marriage advice?” Let’s get something straight. I’m not trying to give marriage advice; I’m just talking about small things that I have learnt through 13 years of marriage that might have saved our family from break-up and the financial devastation of divorce.

If there is one good piece of financial advice I heard in my life it was, “Stay married.” I would make a minor adjustment to that advice – Stay Happily Married. Just staying married doesn’t mean a couple are happy, and without harmony and unity in the marriage, finances can get way off track. People can keep separate accounts for totally separate agendas. Retirement isn’t planned together, and overall spending is not controlled for family values, but for individual wants and needs. Staying happily married allows financial planning to be a family affair, and saving and spending decisions are made together, with a plan for shared achievement of goals and dreams.

So, what’s with the banana bread?

By no means am I a role model for the perfect husband. I am too involved in my work, frequently inattentive, and seem to be unable to pick up on the smallest emotional cues of my wife. I know many of my failings, and others I am still blissfully unaware of (although I know my wife is trying to educate me on those ones too). What I have learned over my years is that every marriage has good times and it has bad times. It is in the bad times that a decision needs to be made – do you stick with your partner and rebuild your relationship (in some cases it requires total reinvention), or do you pack it in and find someone else to start over with?

I’ve always believed that you should stick with the trouble you know. There was a foundation on which a marriage originally built – love, passion, respect, admiration, etc. Finding those things again in the bad times seems like a very hard job, almost impossible, but it is certainly easier than finding those things out in the big bad world with people you don’t even know. And you shouldn’t have to do this all alone. Get some help – speak with a qualified professional who can give you some solid marriage counselling.

So, that leads me to my second financial tip – Paying from marriage counselling in MUCH cheaper than a divorce.

I thought this was an article about banana bread…

For most marriages there isn’t one big thing that destroys the relationship. A spouse doesn’t wake up one morning from a night of restful sleep, feeling refreshed and ready for the day, and says to them self, “I think I’m going to cheat on my spouse today.” Infidelity, for example, is usually the culmination of a long, slow slide into unhappiness, and the affections of another person seem so much better than struggling through another day with that “person” who makes you furious or hurt, day in and day out.

The long, slow decline of the relationship is usually a culmination of many little things. Little hurts, arguments, minor betrayals, which lead to mounting resentment. I know this because I’ve been there. There isn’t one big thing you can put your finger on and say this is when I fell out of love, because he/she did this! All those little things begin to add up, like debts owed to you, all accruing interest, and it builds and festers inside you creating an unending tide of negative emotions towards the person you should be in love with.

So, what can we do to rebuild a broken relationship and get back to being happily married?

Just give me the $100,000 banana bread recipe already.

Again, I’m no counsellor, and I don’t have a magic pill to prescribe you and all will be well again (again I advocate getting marriage counselling if you’re unhappy). It just seems logical to me to counteract all the little negatives with intentional little positives. Now, I said intentional positives. If you accidentally do something that wins your spouse’s approval, but you never intended to do it, it doesn’t count (like being awarded a vacation from work for being a workaholic). And, just to make things more complicated, you have to do your intentional positive act with a giving heart, and no expectation of reciprocity. That is, do something special, intentionally for your partner, without any other agenda except to make him or her happy.

So, here is what I did on the weekend. I made banana bread. Not just any banana bread, but the banana nut bread my wife loves. She likes my banana bread over anything you can get at the store, at Starbucks, even at the school’s bake sale (I’m not bragging or nothing but it is really good banana bread – come over to my house and try for yourself). I made a special trip to the grocery store to get the ingredients, and while she was out at yoga I whipped up my killer banana bread. I also made sure I cleaned up after myself, because who likes to come home to a messy kitchen. Yes, making banana bread is a small thing – very small in the whole scheme of things, but it was one small positive thing I did intentionally for her. Next time it won’t be banana bread but something else – also worth $100,000. It’s worth so much more to make a small step in a positive direction towards your spouse. And then make another step, and another. And before you know it you’re a mile away from the edge of the cliff your marriage was dangling so precariously from.

DON’T call Life Guard Insurance for marriage advice OR my banana bread recipe

Here at Life Guard Insurance we are insurance brokers and financial planners. We help you protect your loved ones and save for your future. But we are people too. We have been through the same challenges, the same ups and downs as all of you. Just because you don’t feel comfortable sharing your marital troubles with your insurance broker doesn’t mean they are irrelevant to the financial planning process. Divorce has a major negative effect on your finances. There is some truth in the old proverb, “Only the lawyers win in a divorce.” We just want to encourage you, if you’re facing marital difficulty; it’s worth your real genuine effort to make things better than just give up.

So, in conclusion, I just want to ask you this – what’s your $100,000 banana bread? Can you bake it for your partner 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 staying happily married would be very much appreciated.

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Basics of Long Term Care Insurance in Canada and why you might need coverage

Our latest video is all about Long Term Care Insurance – who will care for you when you’re older? This short 4 and a half minute video explains how the Canadian healthcare system is not able to cope with the burden of caring for so many aging Canadians as the Baby Boomers begin to weigh on our healthcare system. A great deal of the financial costs for long term care and elder care will fall onto the individual and/or their next of kin (adult children).

It is the legal responsibility of children to provide the necessary care for their aging parents, or pay for the in-home or facility care required. Be sure you are not a major financial burden on your children and you have the finances at hand to pay for the care you want and need. The longer you can remain in the comfort of your own home, in familiar surrounds, the better. The cost of such in-home care can run up to $6,000 per month, and can destroy an RRSP nest egg in just a few years.

With Long Term Care Insurance you will have the tax free cash you need at hand to pay for your elder care, either in the home or in a long term care facility. If you’re concerned about who will care for you as you age watch this video about long term care insurance. We hope you enjoy it.

Transcript of Long Term Care Insurance Video

Who Will Care For You?

Have you thought about who will care for you as you age?

 

Life expectancy in Canada is one of the highest in the world. More and more of us will live long into our retirement.  In the next 15 years, the number of senior citizens in Canada will double.

 

If you are a couple, there is almost a 50% chance one of you will reach age 90 or beyond.

 

Will your retirement plan provide income for 30 or more years after you retire?

 

If you are planning on your provincial Health Insurance Plan to look after you, you may be left without care.

 

It’s a matter of math. As more people age, the government will need to provide more health care, home care, and long term care facilities than ever before.

 

Fewer children are being born, so fewer workers are paying taxes to fund universal healthcare. Budgets will be limited, and many non-essential service will have to be cut.

 

If you can afford to pay for additional services on your own, you may have more choices, but be prepared to spend $3,500 -$6,000 per month over and above what your provincial government subsidizes for home care or Assisted Living Facilities.

 

It’s all too common we develop health problems as we age. The chance that you will need some form of long term care as you age is 1 in 2 for Canadians.  And you can plan to spend at least 3 years needing long-term care assistance.

 

There are already 2 to 3 year waiting lists for a fully sponsored long term care beds across Canada.

 

So, will the burden fall on your children? It can be very hard to ask adult children to put their lives on hold to care for aging parents. Yet, in Canada, it is the legal responsibility of families to provide care for their next of kin.

 

At some point, you probably will need assistance beyond what your children can provide. People don’t go willingly into a long term care facility – it’s a last resort.

 

It boils down to this — the longer you can remain in your own home, in your own comfortable environment, the better.

 

But, will you be able to afford an additional $5,000 per month to pay for private home care? If so, for how long?? The average Canadian’s retirement nest egg would be depleted to zero dollars in about 5 years if they chose to stay home and pay for care.

 

Long Term Care Insurance can give you that option – getting the best care possible in the comfort of your own home.

 

What if you could buy a long term care insurance policy today that would give you an additional $2,000 to $9,000 per month in tax free benefits? What if premiums would cost you only about 5% of the benefit amount?

 

That is possible with Long Term Care Insurance. It is the best financial solution to the healthcare tsunami that will hit as Canadian boomers weigh on our healthcare system. And it can be the best, most affordable solution to you, if you plan early.

 

With all its benefits, Long-Term Care Insurance can be a very complex.  Insurance policies have certain limitations. Benefits can be capped after reaching a certain dollar amount, or benefits may last only for a couple of years.

 

Will your insurance plan pay money directly into your bank account, or

will you have to submit medical claims to be reimbursed?

 

Will it cover only facility care, or is home care also included?

 

A Long Term Care Insurance policy has all sorts of options. And each will adjust your premium considerably – the better it sounds, the more it costs.

 

Life Guard Insurance has a network of professional brokers who will take the time to explain your options, and find the best possible policy and price for you.

 

We can help you plan for your healthcare and your peace of mind.

 

If you would like more information about Long-Term Care Insurance in Canada, please contact us at Life Guard Insurance.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about Long Term Care Insurance – Who will care for you as you age? would be very much appreciated.

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The financial impact of a critical illness

I don’t suspect you sit around imagining what would happen to your life if you were diagnosed with a critical illness. Unless you’re a serious pessimist, sitting around and worrying about the “what if I got cancer?” question isn’t a regular preoccupation of Canadians. That is where advice and guidance from a qualified insurance broker comes in. The financial impact of having a critical illness is just too great to ignore, and it’s almost too uncomfortable to talk about. Think of those people you know whose lives have been turned upside-down because of cancer, heart disease, stroke, Ms, Alzheimer’s, or many other serious illnesses. Most of us don’t even like to spend too much time dwelling on our friends and loved ones who are suffering from illnesses and injuries because it’s just too uncomfortable to think about.

But the reality is a critical illness can happen to any of us, at any time. Are you ready? Do you have a plan? In case you’re not sure what I’m talking about, let me explain. The Canadian universal healthcare system is designed to deliver primary care – that is treatment in hospitals and appointments with your doctor or specialist. Providing coverage for many expenses outside of the primary care system are the responsibility of the individual, including prescription drugs that are not administered through a hospital. Below are a number of major expenses that would not be covered by our healthcare system that could make a serious dent in your financial plans.

Prescription Drug Costs

Many critical illnesses require expensive prescription drugs. For example, chemotherapy or radiation treatments administered in hospital ARE covered by our healthcare system, but these treatments can often leave people in pain or with crippling nausea. The drugs that most cancer patients take to deal with pain and nausea are NOT covered by our healthcare system, and these can be very expensive, specialized medications (so as to not interfere with the chemotherapy drugs). I know some patients who were spending upwards of $500 per month just on nausea medication to deal with the effects of chemotherapy treatments, and this was out of their own pocket.

There are also many new, experimental drug therapies that have not yet been added to the approved treatments of provincial healthcare plans. These drug therapies are proven to save lives and offer a better chance of survival for many ill Canadians but until they are added to the approved provincial treatment plans, you would have to pay for these treatments out of pocket. Sometimes these treats, for once course of drug therapy, could cost $50,000 – $100,000 (no wonder the provincial healthcare systems are hesitant to add every new therapy to their treatment plans). If you knew you had a 40% greater chance of surviving your illness with this new drug therapy, would provincial coverage be a barrier to you? Would you have the money on hand to get this treatment, or would you have to settle to go without?

Travelling for Treatment

Not all specialists for a specific critical illness are right next door, in your neighborhood hospital. What if the treatment you need is offered only in one or two hospitals in all of Canada (think of the Sick Kids Hospital in Toronto which has some major specializations that can save a child’s life, but only in Toronto). Even though our universal healthcare system would cover the cost of hospital treatments, what about the travel to get there? If you were seriously ill and had to travel across the country, or just across your province, for treatment, would you want to go alone or would you want family to be at your bedside? The cost of travel for your family to attend you is not covered by our healthcare system. They would have to drive or fly to you (often multiple times if you are in for a long stay in hospital), stay in hotels, eat out, etc., etc. These costs can add up to thousands of dollars that are not covered and come out of your pocket.

Alternative Medical Care

Of course alternative medical care is not covered. The word Alternative means something other than the Canadian universal/provincial healthcare system’s coverage for treatment. If you want alternative care you are going to have o pay for it yourself. That could include things like:

• Immediate cancer treatment in the US at the Mayo Clinic
• Getting Liberation Therapy for MS in the US or Mexico
• Seeking alternative medicines and therapies that are not even approved/offered in Canada
• Getting new drug therapies in the US that are not yet approved by Health Canada

Either these treatments offer hope of a cure or higher chance of surviving your critical illness, or they are your personal choice for treatment because traditional medicine just isn’t working for you. Either way, you are going to need to find the cash to pay for these alternative medical treatments yourself.

Your Spouse’s Lost Income

Do you think you’re critical illness is suffered alone? No! The whole family goes on your journey or recovery with you, and your spouse more than all. It is usually your spouse who sits, night after night, by your bedside. They keep you company, read to you, and bring flowers to your room. They take a leave of absence from work to provide care for you at home and be with you through the tough times.

What happens to their income while you are going through treatments and recovery? If they are caring for you and not going to work, their income stops and you start living off your savings. How long will that last? How will it impact your retirement plans if you start spending your RRSPs as income today. When the family loses income from one parent/spouse/breadwinner they often lose income from both, especially through the rough times when care by one for the other is needed.

Care for the Caregiver

So, who is going to replace the caregiver if she (maybe he) is too sick to do it? This is usually the stay home Mom who cares for children and runs the home. If she becomes ill, then the family needs someone else to step in and help with ongoing childcare and housework. Unless you have an extremely strong support system and family close by, you will need to hire help, especially if the other spouse is trying to go to work and make an income to pay for all this. The cost to outsource the duties of the caregiver can run over $2,000 per month with childcare. It’s just another cost of getting sick that isn’t covered by our universal healthcare system.

Life Guard Insurance can help protect you from the unforeseen costs of a critical illness

Our brokers at Life Guard Insurance can help. If you want to plan for a financially devastating situation like the ones described above, we recommend owning critical illness insurance. It is an insurance policy that pays out a lump sum, tax free benefit 30 days after diagnosis of cancer, heart attack, stroke, and over 20 other major illnesses and injuries. Our advisors can show you how owning critical illness insurance can protect you and your family from the financial impact of a major health condition. Contact us 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 Risk of Critical Illness Can’t be Ignored would be very much appreciated.

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Moms do lots of work – unpaid – for the family which needs to be insured

A great article was recently posted in Advisor.ca called Does Mom Have Enough Insurance? about Canadian mothers who live at home not having enough life insurance to protect their family. I think this is an important topic, as much to discuss the value of unpaid work provided by stay home caregivers (usually Mom) and our society’s devaluing of their contribution to the home.

Have you ever thought about how much money you would have to spend to replace Mom with a paid caregiver? Imagine Mom gets cancer and needs additional medical care and can’t contribute her “work” to the family any longer. How would your family cope without Mom doing the cooking, cleaning and driving the kids around town every day? Now imagine Mom dies, and will never again contribute to the family.  In this article we will try quantify some of the costs of replacing Mom’s “work” to an average Canadian family.

What “Work” do Moms do?

Just because our society devalues stay at home Moms doesn’t mean their work is without a cost (as a side note, there are some stay at home Dads who care for children and do the housework, so for the rest of this article just consider yourself Mr. Mom). Very often while advising clients the stay at home Mom says, “I don’t work”. My answer to that is, “Then who takes care of the kids during the day and cooks and cleans?” Moms do a lot of work, but it just isn’t paid work, like a job as an employee or business owner. Let’s look at all the things Canadian Moms do at home:

• Care for children all day long if they are below school age
• Provide before and after school care for children
• Cook meals for the family and clean the house – daily
• Wash and fold laundry – daily
• Drive children around the city for extra-curricular activities
• Gardening, shovelling snow (not my wife but maybe you do it), grocery shopping
• Etc., etc., etc.

If a husband thinks he can easily continue working full-time, putting all his mental and/or physical energy into his paid work, and be able to also do all these things in the evenings and weekends he is very mistaken. That is a recipe for burnout, a messy home, Kraft dinner suppers, and stinky clothes. Let’s take a look at home much it might cost to outsource this level of care.

The Cost of Replacing Mom

To pay for child care, cooking, cleaning and other things Moms do can add up to a lot of money quickly. If you have young children, before school age, the cost of daycare is running between $8,000 – $10,000 per year in Canada, and that doesn’t include cooking and cleaning in the home. Dad would still needs to provide meals and clean the house, or he could hire someone to do this for about $15 – $20 per hour. Let’s also assume Dad needs a house cleaner to come over once a week to do the toilets, vacuum carpets, etc.

Let’s look at two costing scenarios – #1 has a live in nanny providing child care and cooking/cleaning services. #2 has daycare for two children plus additional cooking/cleaning services paid for weekly.

#1 – Live in Nanny

• Wages for live in caregiver – $1,500 per month
• Additional food and utilities for caregiver – $300 per month
• Providing a vehicle and gas so Nanny can drive kids around – $450 per month
• Total = $2,250 per month or $27,000 per year.
• If you needed a live in Nanny for 10 years (youngest child is about 3-4 years old) then the total cost will be $270,000 over the next 10 years.

#2 – Daycare and additional cooking/cleaning services (2 child family)

• Daycare costs for 2 children at $700 each per month is $1,400 per month.
• Before and After school program is $500 each per month is $1,000 per month.
• Assume each child will need 3 more years of fulltime daycare and then 7 years of before and after school. This adds up to $134,400 over next 10 years.
• Weekly house cleaner = $100 per week or $400 per month
• Additional food costs (eating out and readymade food from grocery store) = $500 per month extra food bill
• Babysitting for Dad while he runs errands or has time off = $100 per week or $400 per month
• Total for food and cleaning over 10 years = $156,000
• Total additional expenses = $290,400

These are not unrealistic numbers for the true cost of replace Mom with paid work. In both scenarios, Dad will be much busier than he has ever been before, but with enough help he might be able to still stay in his full-time job and have a good career.

Consider both Life Insurance and Critical Illness Insurance for Mom

There are two scenarios to consider when protecting Mom with insurance. The first is obvious – Mom dies and the family is left without a caregiver and house worker. What would happen if Mom became critically ill and was effectively disabled? She would need additional medical care which might not be covered by provincial healthcare – meaning more bills for the family, and the costs for the work not being done – as outline above – will still need to be paid for. The only silver lining in the situation with Mom getting seriously ill is that she might recover and go onto having a good, productive life. If such an outcome happened like this, then many of these additional costs are temporary, but still impactful.

Let’s assume Mom is age 30 and has two young children. What would it cost to properly insure her life risks and critical illness risks? Assuming she is a non-smoker in average health for a Canadian, she could get insurance very cheaply using term life and term critical illness coverage. Here are some examples of cost:

• Term 20 $250,000 life insurance – $18.27 per month (Manulife)
• Term 20 $500,000 life insurance – $26.55 per month (Equitable Life)
• Term 10 $150,000 critical illness insurance – $39.15 per month (BMO Insurance)
• Term 20 $150,000 critical illness insurance – $51.30 per month (BMO Insurance)

As you can see, you can insure Mom for all risks, for very large amounts of coverage, for well under $100 per month. Even the highest cost option above, Term 20 life and critical illness insurance for $500,000 and $150,000 respectively is only $77.85 per month. Wouldn’t it be worth a small cost now to guarantee your family’s future needs if the worst was to happen, and Mom died or became critically ill? I know it’s important for my family.

Contact Life Guard Insurance to make sure Mom is properly insured

If you have never looked at proper life and critical illness insurance for the stay home Mom in your family, we can help. Contact Life Guard Insurance and we will connect you with a local life insurance broker who can make sure Mom is properly protect and the family’s future is secure.

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 Canadian Moms needing proper insurance would also be very much appreciated.

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Learn about Critical Illness Insurance and if its important to you

Have you ever seen a really good video explaining how critical illness insurance works? We have one here. In less than 4 minutes our video explains how critical illness insurance protects Canadians from financial risk and the cost of becoming critically ill. In this video we explain:

• How and when you can claim your critical illness insurance benefit
• Ways you might use your critical illness insurance to get private health care, pay off debt, or spend more time with your family
• Get coverage for any amount up to $2 million in Canada
• Most people have about $120,000 of critical illness insurance coverage
• Critical illness insurance plan designs, Term 10 or 20, Term to 75 and Term to 100
• Return of Premium Rider – get your money back if you never have a critical illness
• Selfish insurance – just for you

We hope you enjoy our critical illness insurance video. It is one of our most stylish videos yet.

Transcript of Is Critical Illness Insurance Important?

What would you do if you became ill and your life changed dramatically?

 

Critical Illness Insurance protects you against risk if you experience a life altering illness or injury like cancer or multiple sclerosis, or if you experienced a heart attack, stroke, or had to have bypass surgery.

 

It pays you a tax-free lump sum living benefit, typically 30 days after you are diagnosed with a life threatening illness.

 

You can use your benefit pay out any way you choose.

 

Pay for additional health services, go to the United States for immediate healthcare treatment, pay off mortgage and debts, etc.  The choice is up to you.

 

Policies provide coverage to be paid out in a set amount such as 50, 100 or 250 thousand dollars in coverage if you become critically ill or injured. You can buy a policy worth up to 2 million dollars of coverage in Canada.

 

Everyone can benefit from a critical illness insurance policy, even in small amounts such as 25 or 50 thousand dollars. The most common size critical illness insurance policy in Canada today is about 120 thousand dollars of coverage. That would give you enough liquidity for 2 to 3 years income, pay off debts and give you freedom of choice.

 

How would you design a critical illness plan to suit you? There are several choices.

 

You can get a short-term critical illness plan such as a term-10 or term-20 policy that would cover you for a shorter term of 10 or 20 years. If anything were to happen to you during that period of time, you would get your tax free living benefit to use as you choose, like paying off your mortgage for example. A short term policy automatically renews after the 10 or 20 years is up, if you want to keep it, but it does get very expensive at that time.

 

You can get a term-to-65 or a term-to-75 policy which would cover you until that age with a level premium and then the policy would end.

 

The permanent version of critical illness insurance is term-to-100. This gives you coverage for the rest of your life and the price will never increase.

 

There are some very important riders and benefits you can attach to a critical illness policy.

 

A return-of-premium rider gives back all the premiums that you put in the plan if you never have a critical illness or injury. It’s like insurance on your insurance.

 

Why might you need a critical illness insurance policy?

 

Are you concerned about the healthcare system in Canada? Worried that it would not provide you with quick and immediate access to life-saving treatment? Critical illness insurance gives you cash to use to go to a fee-for-service country like the U.S. to get immediate healthcare.

 

If you rely on your income to maintain your living expenses, and you don’t want to re-leverage your home or liquidate your RSPs in order to have cash to pay for healthcare or replace lost income, a critical illness policy would give you an injection of tax-free cash to pay your expenses.

 

It is an excellent product that protects you from the financial burden of a life changing illness and injury.

 

It’s “selfish insurance” just for you – providing immediate tax free money in case your life changes in an instant with a diagnosis of cancer,  a heart attack, stroke, bypass surgery and many other illnesses.

 

Talk to us at Life Guard Insurance about your options and how critical illness insurance might be right for you.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about Is Critical Illness Insurance Important? would be very much appreciated.

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Watch and learn how personal disability insurance works

Life Guard Insurance has produced this new video to help Canadians who might need personal disability insurance understand how it works. If you couldn’t work and your income stopped, could you meet your financial obligations like paying the mortgage, utilities and buying groceries. The risk that you might experience a period of long term disability during your life is 50%. And if you were on long term disability, the average time you would be off work is 2.9 years.

Most people who are self employed or working on contract do not have any disability coverage. Many other Canadians work with minimal coverage, like Workers Compensation coverage, or their employer does not offer disability benefits. You can’t afford to be without coverage.

Learn what elimination period, benefit period and benefit amount means when designing a disability insurance policy.

We hope you enjoy this 4 minute video if you are looking for disability insurance.

Transcript of Do You Need Disability Insurance

If you became injured or ill and couldn’t work for several weeks or even months, could you still meet your financial obligations?

 

Would you be able to make your car payments?

 

Would your mortgage be in jeopardy of default?

 

If this worries you, then you probably need to take a closer look at getting disability insurance.

 

Did you know that approximately half of all Canadians will experience a long term disability during their working years?

 

The younger you are, the more probable you are to have a disability that lasts longer than 90 days.

 

And if that happened, the average time you could expect to be unable to work is 2.9 years! That’s a long time to live without income.

 

Most people do not have enough liquid cash flow to pay their rent or mortgage, car payment and other expenses if they cannot work.

 

That’s where disability insurance comes in. It protects your income and cash flow, and pays living expenses if you are sick or injured and cannot work.

So do YOU need disability insurance?

If you’re self employed or a business owner you probably do need some.

 

If you work for a company that doesn’t have a group benefits plan that includes Disability Insurance, you need to protect your income. Disability Insurance is the way to do that.

 

There are three main things to look at when designing a disability insurance plan that is right for you.

 

First is the benefit period. If something happened, how many years would you like to be able to receive benefits? Plans typically let you choose 2 years, 5 years or right through to age 65.

 

Next is the elimination period or waiting period – how long you have to wait before your benefits start. You can choose 30, 60, 90 or 120 days before your benefits kick in.

 

The longer you are prepared to wait the lower the premiums are today.

 

Then there is the benefit amount.

 

The amount of insurance you can get is based on your taxable income. You can’t insure more than you make. The insurance company prescribes an amount of tax free income that is less than your current earned income. Usually about two thirds of your income.

 

You can also add several types of riders to your disability policy to make it unique and more valuable to you.

There are different types of Disability Insurance.

You can purchase an injury only plan. This is ideal for blue collar workers in high risk occupations where they can get hurt on or off the job. If you have a higher risk job, you would pay more in premiums than if you had a lower risk job, such as one in an office.

 

Injury and Sickness Disability insurance is much more comprehensive. It covers you 24 hours a day from anything that would keep you away from your job.

 

If you are a small business owner, and your business might fail if you were not there, you can get Business Overhead Expense insurance. It would pay expenses like rent and salaries, and has tax deductible premiums for the business.

 

You can also get Key Person Disability Buy/Sell insurance, designed to buy out a business partner who can no longer return to work because of an injury or illness.

 

Disability insurance is a complex insurance product with many things that affect the premium you pay.

 

One of our qualified insurance professional at Life Guard Insurance can answer your questions and help design the perfect disability insurance plan to protect your income. Call us today.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about Do You Need Disability Insurance? would be very much appreciated.

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Medical Underwriting to Qualify for Life Insurance

You might have heard of the term underwriting before, but most Canadians don’t really know what it means. Underwriting is the process by which an insurance company assess risk and determines the appropriate premium.

Assessing risk and charging premiums have many variables that go into the equation. There is room for human error as the job of an underwriter requires both analysis and intuition. A very important factor is how well your insurance broker completes the application and how detailed the information is so the underwriter has a good idea about your health and other risk factors.

What do insurance companies need to underwrite life insurance?

An insurance company needs medical evidence, financial information and information about your job duties to properly underwrite you. The most important thing is the medical evidence for life insurance (on a disability insurance policy your job duties and occupational risk also play a major role in determining your premium). How healthy or unhealthy you are today is the most probable indicator of whether or not you will live a longer or shorter life.

Your medical evidence is capture in a few different ways:

• Your licensed life insurance broker will ask you a series of medical questions and dig deeper into the causes of any health conditions you might have.
• A paramedical test is often done, where a paramedical technician comes to your house or place of work and collects blood, urine, height, weight and blood pressure readings and asks many of the same medical questions over again (double checking the work of the insurance broker).
• If there are health conditions that need more explanation the insurance company will request a doctor’s report (Attending Physicians Statement or APS) to get more detail and clarification on the issue.
• For large amounts of insurance or if the client is older, a full doctors medical might be ordered where a doctor authorized by the insurance company conducts a complete physical on the person to be insured.

Only if you are applying for very large amounts of life insurance does the insurance company need financial information. A basic declaration about your income is sufficient unless you want more than about 20 times your annual earnings. For example, if you made $100,000 per year you can easily apply for $2 million of life insurance (from all sources) before they would start to ask why you need so much coverage.

Occupational risk is a factor for some life insurance applications. It all depends on how risky your job is. If you work on an off-shore oil platform, where you need to take helicopter rides through stormy seas just to get on and off the rig, an insurance company might not like that too much. The vast majority of jobs Canadians have are not considered risky – even fire fighters and police officers pay standard rates for life insurance.

High risk activities can cause a problem in underwriting

Your hobby, sport, or fun past-time is called your avocation for underwriting purposes. Many avocations are risky behaviours and can cause problems in underwriting. Dangerous sports like back country skiing or snowmobiling, hand gliding, mountain climbing, etc. are all going to be carefully looked at by an underwriter. Flying aircraft as a hobby (an even sometimes as a profession) is considered dangerous. Racing motorized vehicles is taboo.

You can expect to either have you policy rated for extra premium for these activities or have them excluded from the policy. If, for instance, you like to skydive, your life insurance policy will cover you for all types of death except if you died during a skydiving jump. That is an example of an exclusion.

How to avoid problems or errors through underwriting

Be sure your insurance broker does an excellent job of field underwriting. That is, he/she goes through all the medical questions thoroughly and gets additional information whenever you say YES to a medical question. Next, be prepared for the paramedical exam so that you put your best foot forward. Here are my 8 tips to being well prepared for the paramedical exam:

• fast for 10 hours minimum – only water (no juice, coffee or any food)
• mornings are often the best time to complete the test – low stress time of day
• eat healthy the day before
• taking fibre a few days before the test is good, as it can actually reduce blood cholesterol readings
• drink lots of water
• no alcohol for 24-48 hours before the test
• no heavy workouts the day before, as your body will be in recovery mode the next day, and have excessive proteins in the blood
• if you get sick with a cold or flu, rebook the appointment

If a doctor’s report is likely to be required, and your insurance broker should have a good idea beforehand if one will be needed, let your doctor’s office know this might be coming through. Ask them if the doctor can please complete the doctor’s report as soon as possible (one of the biggest delays in the underwriting process is getting doctor’s reports sent in).

Outcomes from the insurance application underwriting process

There are four possible outcomes when applying for life insurance once the underwriter has completed assessing your application for life insurance:

• You are in excellent health and are awarded Preferred Rates – a discount on your premiums.
• You are in normal health for a person your age and are give Standard Rates – the base price for the policy.
• Your health, avocation or occupation presents extra risk and you get Substandard Rates (also called a Rated policy) – you are charged more for your insurance coverage.
• You are Declined because your risks are too great and the insurance company is not able to take on the risk for any amount of premium.

Life Guard Insurance can help you shop for the best rates

Our insurance brokers at Life Guard Insurance know that different insurance companies treat risks differently. You might be too heavy for one company and a standard risk for another. We are able to shop the market to find you the best rates on life and health insurance because we have access to all of Canada’s major life insurance companies. Contact us today and we will walk you through the underwriting process.

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 insurance underwriting would also be very much appreciated.

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Another simple money saving tip – annual insurance premiums

When people think about paying for their life and health insurance premium they think monthly payments are standard practice, but in reality insurance products are designed for annual premium payments. The convenience of paying your premiums monthly is a very costly feature offered to you by the insurance company to help Canadians buy the insurance they need with regular, smaller monthly contributions instead of coming up with a lot of money once each year.

If you thought the monthly premium for your life insurance (or health insurance policies for that matter) is simply 1/12 of the annual premium, you would be very mistaken. Almost all insurance companies in Canada charge more for their monthly premiums than if you were to make annual premium payments. How much more? A lot more than you might think, but because it is broken up into very small monthly amounts it is easily overlooked.

Modal Monthly Premiums

Canadian insurance companies call the extra cost of buying your insurance with monthly payments the modal factor. This modal factor is a simple mathematical calculation to convert annual premiums into monthly premiums. The standard modal factor is between 0.09 and 0.0875. If you were to divide one year by twelve equal parts (months) you would have a factor of 0.08333. At the highest rate, 0.09, if you were to multiply that number by 12 (months again) you would get 1.08. That means it costs you 8% MORE to have a monthly payment plan for EXACTLY THE SAME POLICY as annual insurance premiums.

Cost Comparison – Monthly vs. Annual Premiums

Let’s look at two scenarios. The first will be a young (age 30 – smoker) man/husband getting $500,000 of term 20 life insurance. If he was to pay monthly vs. Annually for EXACTLY THE SAME POLICY we will see how much money he saves over 20 years. The savings here will be modest, as the total cost for his life insurance is low. Next we will look at a 50 year old woman (non-smoker) buying Term 100 life insurance which she will need to pay for over the next 35 years. Her savings will be much more dramatic over her remaining lifetime.

Scenario 1

Man age 30, Smoker – Term 20 Life Insurance for $500,000

• Monthly Premium = $70.65 (Assumption Life)
• Annual Cost = $847.80
• Cost over 20 years = $16,956

 

• Annual Insurance Premiums = $785.00 (Assumption Life)
• Cost over 20 years = $15,700

 

• SAVINGS = $1,259

Scenario 2

Woman age 50, Non-smoker – Term 100 Life Insurance for $250,000 (assume she will pay for 35 years)

• Monthly Premium = $208.35 (Unity Life)
• Annual Cost = $2,500.20
• Cost over 35 years = $87,507

 

• Annual Insurance Premiums = $2,315.00 (Unity Life)
• Cost over 35 years = $81,025

 

• SAVINGS = $6,482

Even for a low cost life insurance policy like the $500,000 for the young man, the savings over 20 years add up to over $1,000 for the 20 years he has the plan. It is like getting more than one year of life insurance premiums for free. For the middle aged woman buying some permanent lifetime protection, she will spend over $6,000 extra for exactly the same policy of she chooses to pay monthly vs. annual insurance premiums.

Life Guard Insurance can help you save with annual insurance premiums

At Life Guard Insurance our brokers will always give you the option to pay your premiums annually vs. monthly. This should help you save a lot of money over time, leaving more to invest in your retirement savings plan or pay for that annual holiday. Contact us to find out more money saving tips for your life and health insurance.

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 paying annual insurance premiums to save money would also be very much appreciated.

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