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The True Cost of Getting Seriously Sick
That's why there is Critical Illness and Sickness insurance
NOW YOU ARE HEALTHY; NOW YOU ARE NOT
You're at your annual check-up, expecting routine results, when suddenly your doctor shares alarming news about something found in your body. Or picture a beautiful summer day spent with your family, only to be interrupted by an excruciating pain in your chest, leading to an emergency trip to the hospital, and a week's stay because you just had a heart attack.
The reality is, being diagnosed with a life-threatening illness is akin to experiencing an unexpected accident. We often say, "We are all healthy until we are diagnosed." Without warning, your world is turned upside down. The last thing on your mind should be worrying about how to cover the exorbitant costs of medical treatment and long-term care.
THE STATISTICS
Let's delve into the statistics. Every single day, thousands of Canadians grapple with the harsh reality of heart attacks, cancer diagnoses, and strokes. Consider the staggering figures:
1/2: Cancer? Statistics show that one in two Canadians will deal with it at some point in their life. While the peak age of diagnosis is between 65-74,
1/3: Strokes? One in three victims are under 65; Approximately 10-15% of strokes occur in adults age 18-50, leave a significant portion impaired and in need of long-term care.
1/4: Heart disease? Well, it's more common than you might think, touching the lives of one in four Canadians. More surprisingly, one in every five heart failure patients find themselves back in the hospital within 30 days
These are not just statistics – they represent real people facing real challenges. Unfortunately, less than 10% of Canadians have this coverage.
WHAT ABOUT UNIVERSAL HEALTH CARE?
While hospital care is covered by the government, once discharged, individuals are left to fend for themselves. From treatment expenses to travel costs and hiring in-home care providers, the financial burden can become overwhelming. Did you know that almost all at-home cancer drugs cost over $20,000, with the average treatment course exceeding $65,000? It's an immense strain both emotionally and financially.
HOW DOES CRITICAL ILLNESS INSURANC WORK?
Enter critical illness insurance, a vital financial safety net during life's most trying moments. It provides a tax-free lump sum that can be utilized for anything related to an illness, whether covering treatment costs, home modifications for accessibility, or providing financial support for loved ones. It covers a wide array of conditions, including heart attacks, cancer, strokes, and more, offering comprehensive benefits such as coverage for medical expenses, travel, and in-home care.
WHILE MONEY CAN'T BUY YOU HEALTH
But perhaps the most important aspect of critical illness insurance is the hope it provides. It's a reminder that no matter what life throws your way, there's still hope. Even in the face of adversity, you can take steps to protect yourself and your family financially.
Invest in critical illness insurance today because you never know when you'll need it. Don't wait until you need it most; it could be too late or come at a higher cost. Trust us, your future self will thank you for the peace of mind it brings now, as well as the financial relief that it offers in the future.
BONUS POINT: While Critical Illness can protect you from the covered condition, a sickness plan will covers you for all conditions! Ask us how!
Book a time with us , or contact us for your personal quote. Your peace of mind matters to us.
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Related Links:
Financial stress after critical illness
Guide to critical illness insurance by Canadian Life & Health Insurance Assn
Ontario government mandate critical illness leave for workers
Critical illness plan or cancer treatment plan?
*Certain conditions apply.
This is not an endorsement of any particular coverage plans as each individual's needs are different. Please contact us for your specific situation.
The Best Things About it
You have options to have the premium return to you if you remain healthy and never file a claim*.
There are also options available for you to designate the money to be returned to your family in the event of your passing*.
Certain plans offer children riders, providing the same level of protection for your children too.
The Hidden Costs that Most of Us Missed
Universal health care is not really free!
IMAGINE THIS
You are enjoying a nice day out with your family, when suddenly you had a heart attack, or some sort of acute medical condition - think food poisoning or a life-threatening allergic reaction to something you did not know about... Yikes! ( How about the much worse scenario - you were diagnosed with cancer that requires long-term treatment and recovery?!)
ACCIDENT HAPPENS
You are rushed to the hospital, where you have to stay for a few days or weeks to get treated. You are in pain, but also relieved that your provincial health care plan will cover your in-hospital medical care. But what about the other costs that you may not have thought of? How will you pay for them?
THE HIDDEN COSTS
Hospitalization can have many hidden costs that are not covered by your provincial health care plan. These can include:
- Loss of income: If you are unable to work due to your injury or illness, you may lose your salary or wages. This can affect your ability to pay your mortgage, rent, utilities, and other bills.
- Some medications: If you need prescription drugs that are not covered by your provincial health care plan or your private insurance plan, you may have to pay for them yourself. This can be a substantial expense, especially if you need expensive drugs such as cancer drugs, which could be thousands of dollars a month.
- Parking / Gas: If nobody can drive you to and from the hospital, you may have to call private transportation - you probably will not be taking a bus. Even if some one can, parking and gas can be expensive, especially if you have to stay for a long time.
- Ambulance: If you need an ambulance to transport you to the hospital, you will have to pay a fee. The costs vary depending on where you live and how far you travel. Bottom line: it is NOT free!
- Air BnB / Hotel: If you have to travel to another city or province for specialized treatment, or if your family or friends have to stay near you, you may have to pay for accommodation.
- Food: Nobody likes hospital food. If you crave for something better, even at the hospital cafeteria, or if your family or friends have to buy food while visiting you, it can affect your budget and nutrition.
Other costs could include credit card bills, babysitters, medical appliances, rehabilitation or nursing care etc.
THE SOLUTION
As you can see, hospitalization can have many hidden costs that can add up quickly and put a strain on your finances. What if there is a plan that could pay up to $4,400 for one day of hospitalization, or up to $12,000 a month directly to you, in addition to any other benefits you may receive from other sources, starting with the very first day you are hospitalized* due to any accident or sickness?
YOU NEVER KNOW
Okay, not everyone will end up having a serious condition, but how about common conditions like appendicitis, kidney stones, arthritis, asthma, and pneumonia, cataract surgeries or hip replacement? Can you be 100% certain that you will be free from any of these common conditions as you age?
Don’t wait until it’s too late, contact us or book a time with us for your own plan quote if you think this plan is right for you, and take a proactive stance towards your health and financial well-being.
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Related Links:
Hospital parking fees contribute to financial toxicity to cancer patients
Ontario woman faced a $12K ambulance bill in Nova Scotia
How much does cancer drugs cost Canadians?
Medical Travel Accommodation list from Government of BC
*Certain conditions apply.
This article is written based on information provided by Combined Insurance. This is not an endorsement of the product as each individual's needs are different. Please contact us for your specific needs.
The Best Things About These Plans
Even hard-to-insure client could get covered when many traditional plans would have turn them down*. e.g. kidney disease, lupus, autism, epilepsy etc.
The second best thing? It covers accidents the same way, from new born babies to the 85 year "youngs"*!
A Bigger Base Salary May be Deceiving
Income Replacement Benefits: Your Under-Appreciated Financial Rescuer
The Income Dilemma
We don't judge; however, choosing Job A based solely on the dollar amount might mean losing out more in the case of sickness or injury.
Picture this: 45% of Canadians think disabilities are rarer than a unicorn sighting. Newsflash – one in seven Canadians is currently navigating life with some form of disability. It's like discovering that your favorite superhero shops at the same grocery store as you!
What Are You Really Choosing?
In the grand game of financial chess, your choice between Job A and Job B is your opening move. If you're eyeing that $80,000/year salary from Job A, it seems like a sweet deal, right? But hold your horses. Let's unravel the plot.
Job B may offer a slightly smaller paycheck at $78,500/year, but here's the twist – if a sickness or injury takes center stage, Job B could be your financial hero, paying you a tax-free $53,000/year while Job A leaves you with a big, fat ZERO. Now, if such offers aren't on your table, how can you protect yourself?
Life's Curveball - The Financial Challenge
Imagine this scenario: You're injured or struck down by an illness, and suddenly, your superhero cape is in the laundry. How do you cover your living expenses, mortgage, and keep the lights on? Nearly half of working Canadians are scratching their heads at that one.
Sure, there's the Canadian Pension Plan (CPP), but it's like waiting for a superhero rescue while your arch-nemesis laughs maniacally. You need to contribute, meet strict requirements, and cross your fingers hoping they'll swoop in when you need them.
Financial Superhero for All
But fear not, for there's a shining beacon of hope on the horizon – Income Replacement Benefits! It's like a financial superhero costume that fits everyone – whether you're saving the world from behind a desk or freelancing in your pajamas.
Did you know that over 500,000 Canadians take the plunge into self-employment each year? If you're one of them, you're now the proud owner of not just a business but also the responsibility to self-fund your disability insurance. Cue more dramatic music.
Income Replacement Benefits - Own Your Financial Destiny
With income replacement benefits, including but not exclusive to disability coverage, you're not just protecting your income; you're creating a forcefield around your finances that can save the day. Medical bills? Covered. Car payments? Check. Keeping your family's lifestyle intact? Absolutely!
And here's the kicker – you own and control the policy. No waiting for a bureaucratic superhero to decide your fate. The rates are guaranteed until you hit the ripe age of 65 (70 in some cases), ensuring that your financial fortress remains unshakable.
For Everyone - Financial Superhero Status Not Required
This strategy isn't just for high-flying CEOs or daredevil stunt performers. It works for all income levels and most occupations. Some plans don't even require income, so everyone in the family, grandparents and children included, could be protected. There are also guaranteed and simplified issued plans for those who may not be at their optimal health.
Intrigued? Excited? Eager to unleash your inner financial superhero? Reach out to us, and let's chat about securing your financial fortress. Because life's curveballs are inevitable, but with various Income Replacement benefit options, you can face them head-on – cape optional!
Insurance Kit Beyond Life Insurance
Insurance Kit is more than just life insurance because we believe that protecting our clients' financial well-being while they are alive is no less important than protecting their families when they kick the bucket. These protections are more affordable than most think. Just book a time with us and let us find the best plan for you!
Note: This article is based on the information from Edge Benefits and Combined Insurance. This is not an endorsement of these products for all clients as each individual's needs are different.
How much will you make?
Just a quick snapshot of your potential earnings till age 65:
Age 25 Ann. Income $35K - $2.3 mil
Age 35 Ann. Income $65K - $2.8 mil
Age 45 Ann. Income $120K - $3 mil
So, let the insurance company's money do the heavy lifting while you focus on keeping the family ship sailing smoothly.
Health & Dental Plan for Your Overage Children
Don't lose the coverage just because they are older now
If you have health and dental insurance coverage from your employer, and your children is setting off to be independent and explore the world on their own, this is a Must-Read!
On September 30, many dependents became ineligible for coverage under their parent’s group plan if they’ve reached the maximum age for coverage or are no longer enrolled in full-time studies. They’ll now be required to choose their own health plan, and for many, this will be their first time doing so. It's exciting but also could be costly down the road.
Good news: Some group plans offer dependents a 60-day window to transfer to a group conversion plan for continuous coverage – with no waiting period, and no medical questionnaire.
Group Conversion lets you continue health and dental coverage without interruption. You don't even have to choose the group plan with the same insurance company. Group Conversion is usually available for the initial transfer from any recognized Canadian group benefits plan within 60 days as long as you have been covered for at least 6 months under a group plan. And there's no need to complete a medical questionnaire, so there's no need to worry about prescription medications that you're already taking.
What does Group Conversion provide?
Group Conversion is an individual plan. While coverage may not exactly match what you had with your group plan, it will give you peace of mind knowing you can continue to get the care similar to what you're used to at an affordable price.
Unlike other individual plans, Group Conversion covers pre-existing* conditions and allows you to bypass the medical questionnaire. Some companies also waive the no claims waiting periods for dental and vision care benefits!
Some plans may even include:
- Mental wellness: for registered clinical counsellors, psychologists and online CBT.
- Family planning benefit: for fertility treatment and adoption coverage.
- Lifetime Maximum Drug coverage: for up to $250,000
*If you have no pre-existing condition(s), it may be more economical for you to opt for a standard personal plan.
Group Conversion plan is the right option for:
- Workers who are retiring
- Employees who are moving from full-time to part-time and are no longer eligible for benefits
- Workers who have been laid off
- Workers who leave a group plan to pursue self-employment
- Workers leaving employment who have existing medical concerns
- Overage dependents that are no longer eligible for coverage under their parents group plan
If you are one of those listed above, and you are looking for a more affordable option for your health and dental insurance for the family, book a time with us and let us find the best plan for you!
Note: This article is based on the information from Pacific Blue Cross. This is not an endorsement of this product for all clients as each individual's needs are different.
Attention!
To take advantage of these benefits, you would need to switch to a group conversion plan by November 30th. Make sure you check your benefit booklet or speak to your Human Resources department as soon as possible.
A Life-Changing Charitable Approach
Help your donation go further from day one
Many of us have a soft spot for charities, supporting causes that are close to our hearts, whether they be faith-based organizations or other meaningful initiatives. Some even go to the extent of naming charities in their wills. But did you know there's a groundbreaking and cost-effective approach that can make an even bigger impact? Enter Canada Life My Par Gift™ life insurance.
This unique product offers a tailor-made solution to enhance your charitable giving during your lifetime and provides the charity of your choice with significant benefits after your passing. The best part? It's a one-time premium payment that qualifies for a tax donation receipt, so no future commitments are required.
With Canada Life My Par Gift™, the charity is both the owner and beneficiary of the policy. This means they can take advantage of the policy's potential growth and even access cash flow while you're still alive. When the time comes, the death payout is directed straight to the charity.
But the benefits don't end there. The policy also offers the charity the flexibility to access cash as needed, either after the insured person's passing or by tapping into the policy's growing cash value. This opens up a world of possibilities, from covering unexpected expenses to funding groundbreaking research or other urgent acts of goodwill.
Moreover, the charity can use any potential dividends generated by the policy to further increase its cash value and payout on death. They can either opt for additional insurance coverage or receive the annual dividends as cash, giving them more control over their financial future.
As time goes on, the life insurance policy's cash value continues to grow, providing the charity with guaranteed access to funds that can be utilized during the insured person's lifetime. However, it's essential to keep in mind that any withdrawals or unpaid loans will reduce the size of the charity's eventual payout.
Not only does this approach benefit the charity, but it also offers tax advantages to the donor. The single premium payment qualifies as a charitable donation, making it a win-win for both parties involved.
So, if you're looking for a way to create a lasting legacy and amplify your impact on the causes you hold dear, consider the transformative potential of Canada Life My Par Gift™ life insurance. Your support can make a significant difference and help the charity thrive for years to come.
If you are interested in learning how you can make a greater impact for the community, Contact Insurance Kit today!
* In the case of a policy loan, if the loan plus interest exceeds the policy’s cash value, the policy will end.
** Any annual dividend paid in cash to the policyowner will result in a tax slip being issued to the registered charity in any applicable year.
*** All donation receipts would be issued by the charity, not by Canada Life. The recognized year of the donation made may be determined by a number of factors.
This post is written based on material provided by Canada Life.
The information contained is as of date of publication, and may be subject to change. This article is intended as general information only, please contact Insurance Kit regarding your specific situation, or consult your tax consultant for your personal taxation eligibility.
Don't Let PTSD be the Reason to Settle for a Lesser Policy
PTSD patients could get affordable coverage too
The Covid pandemic is officially over according to the World Health Organization. However, the impact of the the pandemic can still be felt by many.
For example, the stresses of the pandemic may have amplified existing symptoms for people with Post-Traumatic Stress Disorder (PTSD) and led to PTSD for others. About one in five Canadians who met the criteria for probable PTSD indicated that the worst event they ever experienced happened during the pandemic. About 1 in 10 stated that their worst event was related to the pandemic.
People with PTSD usually might find themselves being declined or rated, or given a deferred payout option when it comes to life insurance application. Here is an example on how Insurance Kit could help those clients still get an affordable option.
MEET Rachel, a 48-year-old mother, was diagnosed with post-traumatic stress disorder (PTSD) one year ago following the loss of her husband of 20 years. She is currently struggling to cope and has been on long-term disability.
While reflecting on her circumstances, Rachel recognized that the life insurance coverage her late husband had through his employer was inadequate. She is determined to spare her children from enduring the same financial hardships she is currently facing.
Other than PTSD, Rachel is 5'5" tall and weighs 237 lb. Thought on the heavier side, Rachel qualifies for immediate simplified issue coverage up to $500,000 with Assumption Life's Platinum Protection.
Tailored solution for Rachel is the Platinum Protection - Combination of $50,000 whole life insurance and $200,000 20-year term rider. The Total monthly premium: $141.39!!
If you are getting a deferred option elsewhere, don't compromise! Contact Insurance Kit today to get your personalized quote!
Related links:
Mental Health during Covid by WHO
Mental Health and Covid by Government of Canada
Mental Health and Covid by the medical community
This post is written based on material provided by Assumption Life.
The information contained is as of date of publication, and may be subject to change. This article is intended as general information only, please contact Insurance Kit regarding your specific situation.
How Much Are Your Non-Income-Earning Family Members Worth
No income, no disability insurance? Not so fast!
So you work hard to provide for your family, you got life insurance to make sure they are provided for if you passed away suddenly, and you also save up for your retirement diligently. Your company pays for your benefits, including disability insurance, critical illness insurance....so all ducks are in a row, right?
Not quite. Especially if you are self-employed without work benefits!
Work benefits, even when they are available, only provide a portion of your income with a waiting period before you can make a claim. So, what do you do when you are not working and the benefits have not kicked-in yet?
Also, these benefits usually end when you retire from your working life. Retirement is also when we may start facing health issues due to aging, or when we are more suspectable to serious injuries even due to a minor accident such as a fall.
What about your children or your elderly parents? Is your spouse a stay-home parent? If they get sick or injured, how do you pay for the extra medical expenses since they are not covered by any disability insurance because they are not income-earners?
Would you like to be paid for your sick days as a self-employed person? Or be paid even if you don't have an income?
If your answers are yes, there is a solution for you. For example, your 16 years and older family members could be covered for staying at home due to sickness or injuries diagnosed by a doctor. NO INCOME IS REQUIRED for $500/month in coverage. $1000/month in coverage requires annual income of $20K. Maximum coverage could go up to $3,000 a month with a $60K annual income.
According to the Canadian Institute for Health Information (CIHI), the average length of a hospital stay after a fall was 14.3 days, compared to 7.5 days for other medical reasons. With a regular disability plan that has a 30 days waiting period, you will not be able to make a claim. However, Insurance Kit could help you get a plan that covers that gap and then some!
If you prefer staying at home or at the bedside of your children or parents, rather than at your workplace trying to keep up with the bills, please contact us now for a discussion or a quote. They are very affordable; even if you have pre-existing condition, you could be covered as well.
Related Links:
1800 Canadians hospitalized every day due to a fall
Statistics on Injuries at work
Statistics on Injuries outside of workplace
The information contained is as of date of publication, and may be subject to change. This article is intended as general information only, please contact Insurance Kit regarding your specific situation.
There is more!
You and your family could be covered for up to 30 days nursing your cold or a bad back at home, or that injury that your child suffered from sports, or slip and falling on the ice. Since there is no waiting period, it is also perfect to cover you for the gap in your work coverage.
How Does Insurance Help With Retirement?
The CRA Approved Tax-advantageous Tool
In our last blog, we talked about how a whole life policy for children could serve as a tool to set them on the path to an income stream for retirement (or other needs for cash at other times). Some had asked: what if I am already close to retirement? Good news for those who have planned ahead - you could still enjoy the benefits of a whole life policy for yourself and your next generations. Here is how.
If you are single, you can do this on your own. If you are a couple, and your focus is income rather than immediate family protection (final expenses, survivor's living expenses etc), then a joint-last-to-die policy that pays out only when the last of the couple passes on, could be a better option because it is usually less expensive than having individual policies.
Let's say you are a 50-year-old couple, and you could set aside a $50,000 annual premium for 10 years (or whatever number you are able to comfortably set aside, may it be more or less than that). Your total premium over 10 years would be $500,000. At age 65 (when most of us would be retiring, or at least trying to retire), you could use the cash value in the policy to fund your retirement. The earlier you start, the bigger the accumulation that can be expected. That means whether you can retire comfortable depends on how much you "sow".
There are 3 ways you could access the cash value – make cash withdrawals, (which could trigger tax consequences); take out a policy loan from the insurance company (also could trigger tax consequences; or take out a collateral loan (usually no tax consequences) with a financial institution. The payout at death would then go to the financial institution first and any balance if available would go to the beneficiaries. For example, you could be able to borrow $50,000 annually (about $4,150 a month) based on the cash value in the policy at age 65, all the way up to your 90s. (We are living longer and longer, so it is not an unlikely occurrence!) There are significant tax savings that could be achieved with this strategy.
This way of using your insurance policy could allow you a more efficient way to generate your retirement income than a regular/conventional investment. This also explains why "buy term and invest the difference" may not be the golden rule that some believe. Also, remember the balance that would go to your beneficiaries? Under most circumstances (repeat: most circumstances), the insurance payout will be higher than the debt accumulated over the years. So, you could enjoy your retirement income stream without sacrificing your planned gifts for your loved ones or organizations. We would call it a win-win situation.
You could use the same strategy with the more investment-based universal life but many of us (or most of us) do not like the volatility of the market these days. Perhaps this strategy could be used to supplement your current portfolio. Please contact us to find the right policy for you,
1 Limits are set on the amount of deposits you can make to ensure the policy remains tax-exempt under the Income Tax Act (Canada)
2 Based on the dividend scale in effect at that time remaining unchanged for the life of the policy. Dividends are not guaranteed and are paid at the discretion of the Board of Directors. Dividends may be subject to taxation.
This article is based on the features of a whole life policy and is not an exclusive recommendation for clients. The information contained is as of date of publication, and may be subject to change. This article is intended as general information only, please contact Insurance Kit regarding your specific situation.
Learn A Little More...
We have marketing materials from various insurance companies that are available upon request. They are also available in the other languages such as Chinese and Punjabi. If you want to learn more about a specific company's offering, just ask!
Whole Life Insurance - A Gift of Many Blessings
One of the well-known traditions of Lunar New Year is the giving out of red envelopes (or Leisee, lucky money etc.) Children nowadays could get cash gifts from grandparents as well since it is easier than trying to figure what to buy for the child. Many parents would just let the child keep the money in a piggy bank. While a very good habit to nurture, there might be a better way to use those money. Children and grandchildren have just about everything they need today, so why not look farther ahead and set them on the course to a secure future by getting a life insurance policy FOR YOUR CHILD? (vs. on your child)
Whatever your child's future holds, a participating whole life insurance grows with them. It protects their insurability, provides access to cash value that they can use to help fund their education, purchase a home, start a business, supplement their retirement income, or eventually provide for their own family's financial wellbeing. It could be one of the smartest investments you make in your child's future.
HOW IT WORKS
In a market where guarantees are increasingly rare, a traditional whole life policy such as one provided by Equitable Life provides benefits including:
Guaranteed premiums, cash value and death benefit
Choice of two plan types to meet short or long-term goals
Choice of paying for life or as short as 10 years
The ability to maximize the tax-advantaged growth within the plan by making additional deposits. 1
Eligible to participate in the earnings of the participating account through dividend payments. 2
For example, a 20-year payment of a total of $48,000 ($2,400 per year) could provide you (or your new-born child) the access to withdrawals of up to $288,000 over 60 years, in addition to the protection of a permanent life insurance. 3
There are a variety of optional riders and plan features available to help tailor your child's plan to ensure it continues to meet their need.
If you are interested in learning more about a personalized plan, please contact Insurance Kit now.
1 Limits are set on the amount of deposits you can make to ensure the policy remains tax-exempt under the Income Tax Act (Canada)
2 Based on the dividend scale in effect at that time remaining unchanged for the life of the policy. Dividends are not guaranteed and are paid at the discretion of the Board of Directors. Dividends may be subject to taxation.
3 Equimax Estate Builder 20 pay participating whole life insurance with paid-up insurance dividend option. Monthly payment is $200 based on rates in effect on July 1, 2021 for a male, ae 0, initial face amount is $175,000.
This article is based on the tips provided by one of our partners - Equitable Life and is not an exclusive recommendation for clients. The information contained is as of date of publication, and may be subject to change. This article is intended as general information only, please contact Insurance Kit regarding your specific situation.
A Smarter Way to use those Cash Gifts
Even better is that while you use the cash gifts from the piggy bank to pay for the premiums of the initial years, you could use your Child Tax Benefits to fund the policy, and use the money within the policy to fund the child's RESP Plan. This could be a much better way to use those money than just putting them into the piggy bank, or to contribute to their RESP directly.
National Life Insurance Awareness Month
Could your life insurance policy use a check-up?
(The following content is from one of Insurance Kit's providers - Canada Protection Plan (CPP) with minimal edit.)
September is a time to pack up those great summer memories and start looking ahead towards fall. It’s also National Life Insurance Awareness Month*. While not as “glam” as some of the other celebrated months that are popping up on the calendar, National Life Insurance Awareness Month is an important one. Let it serve as a reminder to take a few moments to ensure you have adequate protection in place to provide for your family’s financial stability.
This starts with taking stock of your current situation. If you have life insurance in place (good for you!), now is the time to re-evaluate whether you have enough. Think about whether your circumstances have changed since you first purchased your policy. For instance, have you taken on a larger mortgage, are you facing new expenses such as renovations or education costs, is retirement approaching along with a significantly reduced income? Different stages of life have different needs. You’ll want to ensure that you’re adequately covered to protect your current assets and lifestyle. So ask yourself this:
Do you have a life insurance plan in place?
This merits way more elaborating, but suffice it to say that if you’ve got debt, life insurance is a fiscally sound idea. It’s also a smart way to cover your estate taxes or leave a gift for a favourite charity.
Do you need to extend your term?
If you foresee your debts extending well into the future, you may want to increase your term. While the ideal time to do this is while you’re young and in good health, any time is the right time to do this when you are facing increased expenses.
Do you need to re-jig your plan?
You may want to consider a combination of plans: a Permanent Plan could cover final expenses, and a Term Plan would cover expenses that eventually will be paid off – such as a mortgage or children/grandchildren’s education.
Do you need to increase your coverage amount?
If you’ve taken on additional debt such as a bigger mortgage or university costs, you can guard against saddling loved ones with debt by topping up the amount you’re covered for. A bit more on this last point: mortgages are typically the most common reason people choose to top up their life insurance policies. Why? Because compared with mortgage insurance, a Term Life policy pays your beneficiary the total amount that you insured. This gives surviving loved ones the flexibility to either pay back the lender and keep the house, or use the money for other purposes. Not only that, the payout never decreases, regardless of whether you have paid down your mortgage.
Whatever your health or lifestyle, age or stage, you have choices when it comes to life insurance plans. You may be looking to “top up” or simply be looking for a fast and affordable option for life insurance, as a first-time buyer. For example, CPP provides up to $500,000 for No Medical Insurance plans and coverage up to $1 million on all other plans. Best of all, it’s a fast and simple process to apply.
So as the leaves begin to fall outside, take a good hard look at whether you’re falling short of protecting your loved ones, given your changing circumstances. CPP offers a useful life insurance needs calculator to help you determine how much coverage you may need. (...)
The information contained is as of date of publication, and may be subject to change. This article is intended as general information only, please contact Insurance Kit regarding your specific situation.
As part of the National Life Insurance Awareness Month, we are offering a special promotion for a chance to win a free Will every September. Click the button below for details.
Types of Insurance In the Market
There are two main types of insurance available in the market today: One that covers you and me, we call them "People Insurance"; one that covers your possessions such as car, house, boat, or your business etc., we call them "Property or Business" Insurance.
"PEOPLE INSURANCE" - under this category, we have Individual Insurance and Group Insurance. Your work benefits is under group insurance - the company is your contract holder, regardless who pays the payment (which we call a "premium"). So, since you are not the policy owner, you really do not have a say or any control on what happens to it. And you lose it when you leave your company.
Group insurance is a great product because it helps businesses to keep their employees feeling happy about working there (that is called "employee retention"). It commonly includes life insurance, extended health insurance - drugs, dental, vision and paramedical services, and sometimes critical illness, disability or accidental death insurance. However, while it helps with cleaning one's teeth, or fixing a sore back, it does not help with lost income should a more than routine need arise.
PERSONAL OPTIONS
Companies that provides group insurance usually also provide an option for employees to convert it to a personal plan within a time limit. However, many people mistakenly believe that when they convert their plan, they are able to enjoy the same benefits at the same low rate as a "staff discount". Unfortunately, in most cases, the only advantage of converting your group plan is that you will get covered without medical evidence. There is no special rate for leaving employees, neither will the plan benefits be exactly the same as the original group plan.
Listed below are the types of "People Insurance" available in the market today.
LIFE INSURANCE
Term Insurance - 5 years to Life
Universal Life Insurance
Whole Life Insurance
Final expense Insurance
LIVING BENEFITS INSURANCE
Accident & Sickness Insurance
Critical Illness Insurance
Disability Insurance
Extend Health and Dental Insurance
Funeral Insurance/Plan
Injury & Illness Insurance
Long-term Care Insurance
Mortgage Insurance (life, disability, critical illness and/or loan insurance)
Note: Some of these insurance cover children either individually or as part of a family plan.
TYPES OF LIFE INSURANCE
TERM INSURANCE
Term insurance covers you over a fixed period of time (term), hence the name. It is usually renewable at the end of the term at a higher cost. The higher the term, the higher the premium. It is because you are locking in the lower premium for a longer period of time, similar to how a fixed mortgage rate is usually higher than a variable rate. Terms are available between 10 to 100 years depending on the age of the insured. Obviously, a 40 year term insurance plan is not likely to be useful for a 70-year-old.
PERMANENT INSURANCE
Technically, a Term-100 insurance plan is permanent insurance, because most of us do not live to be a centenarian. Sometimes Term-100 insurance is referred to as whole life insurance because it does cover your whole life. Term-100 insurance is like your car or house insurance - you do not get any money back even if you have not made a claim ever. You paid for the peace-of-mind while owning the policy. So even though you do not see it, you already enjoyed the benefits that it provides every day you go to bed.
However, in here we use the term "whole life" specifically for the other types of permanent insurance which are commonly known as Whole Life and Universal Life insurance. These two types of insurance both have a cash value build up so that it serves the purpose of asset accumulation and transfer within a possible tax-free vehicle under specific steps.
UNIVERSAL LIFE INSURANCE
Universal life insurance is an insurance protection and optional savings program 2-in-1. You can choose your cost of insurance payment options, monthly deposit levels, choose a level or increasing death benefit option, or make your own investment choices within a tax sheltered account. In other words, you have more control of how this type of policy will accumulate the cash for you. That also means you need to be more hands-on and have a little more know-how in this policy. No, this does not mean you need to be an investment guru; but you should still read the policy statement more diligently than just putting it in a drawer every month.
Due to the somewhat more investment-return related nature, universal life insurance does not have a set term of premium-paying period. If someone only pays the minimum amount of premium, the policy may lapse prematurely. Caution, caution!
WHOLE LIFE INSURANCE
Whole life insurance has gained popularity in recent years because of the certainly of premium level, as well as the potential of cash value growth with a relatively lower risk versus the other type of permanent insurance, and sometimes, even some other types of low-risk investment.
Whole Life insurance release dividends into the policy regularly for the asset accumulation side of things. The dividend rates are usually quite stable, with a lesser degree of fluctuation, due to the fact that it is not directly tied to the market performance. The value that accumulates within the policy is accessible either when you cancel the policy or if you decide to borrow against the policy value. Also because this is more hands-off, the premium for this type of policy is the highest among all.
HOW DO YOU CHOOSE?
If protecting your family is the destination (or goal) and insurance products are the ways to get there, Fixed-Term insurance would be like walking or riding on a bicycle. They are the most cost effective way to start the journey, but they might not be able to get your there. Imagine trying to walk across the country...possible, but not a good option for most people. Maybe you should plan for something that will get you there once you can afford more.
Term-100 insurance would be like taking public transportation. It is still relatively inexpensive, and it would be more likely to get you to your destination, which is now more reachable and with less effort and time. However, you are confined to the schedule and the routes available. You cannot get any value out of the bus you ride, unlike if you own your own vehicle, you could sell it when you want to change models. If you do it right, you might even make money on your used car!
That brings us to Universal life It is like having your own vehicle so you get to go where you want to go, when you want to go and on which route you want to take to get there. While you have the full control of the car, you do need to go learn how to drive, pay for the driving exam, the licence and insurance, buy a car, pay for gas and maintenance, and wash the car yourself. But you get the freedom and a more rewarding experience, plus you could receive more value than you put in, alas!
What Whole Life insurance is like It is like you can now afford to hire a chauffeur who is a good driver, who knows your car and knows your route to take you to your destination. You can close your eyes worry-free knowing that you will get there safely. Not only that, you will be arriving in a car that is well-maintained, nicely washed and waxed, perhaps even scented with your favourite air-freshener! You will still need to pay for all the expenses related to the car plus the salary of the chauffeur; however, you do not need to know how to drive, and you get the luxury and the peace-of-mind. Money well-spent to some, though not necessarily the best option for everyone.
Still want to learn more? More content will be uploaded later. Stay tuned!
WHO FIRST GOT THE IDEA OF INSURANCE?
Learn about the basics of Insurance in an easy to understand language.
Some may think insurance is a necessary evil or an unnecessary expense. However, ask the families who have received a timely payout after the untimely death of their loved ones, they certainly think otherwise. Since you are here reading this, I assume that you are interested in finding ways to protect your family and yourself. Welcome, you are in the right place.
Insurance Kit aims to educate Canadian in plain English on what you need to know about insurance. You will find an overview of insurance products and how they work. If you want a customized plan to make sure you are neither under or over insuring yourself or your family, please contact us directly.
So, let us start with a brief history of insurance -
WHO WAS THE GENIUS THAT INVENTED INSURANCE?
Short answers: Villagers somewhere a long, long time ago who banded together to help the widows of fellow villagers to bury their loved ones. Their children probably had to work as child labourers, so no education fund was necessary then.
The first traceable life insurance product could very well be the one found in ancient Rome where burial societies would pay funeral costs of their members out of monthly dues. Today, we call this "Funeral Insurance", or "Final Expense Plans". This is the most basic tool used by those who wish to relieve the burden of the costs of final expenses on their family after their passing but nothing more. Final expenses usually include funeral costs, legal fees, taxes, debts and probates fees etc.
A longer story for those who are interested:
The earliest form insurance could be found in the so-called bottomry contracts among the merchants of Babylon as early as 4000–3000 B.C. Hindus and Greeks also had a similar idea and started practicing Bottomry around 600 to 400 B.C. Under a bottomry contract, loans on a shipment that was lost at sea would not have to be repaid. Move forward to the 15th century, Marine insurance became a highly developed product in the market place. That would be the first insurance product as we know it today, and it was commercial insurance. It looks like the tendency of protecting our possession first is not a modern day problem!
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