Insurance is a crucial element in financial planning and wealth management. Without it, you expose yourself to financial ruin, both for yourself and for your family. In many cases, the expenses incurred due to a workplace injury, travel accident or death of a loved one can be beyond the savings or wealth that you have accumulated.
Knowing exactly how much insurance you need and what kind is something our office can assist you with. After completing a financial review, we can determine the best combination of coverage for your unique situation. We work with a number of insurance carriers and provide estimates for all types of coverage. Below are some articles explaining various types of insurance.
Within the life insurance category there are two main categories; term insurance and permanent insurance. If someone you care about depends on your salary, then life insurance is not an option: it’s essential. If you die prematurely without the proper coverage, your spouse and kids may be left without any means to pay the mortgage or put food on the table.
Term insurance is a temporary insurance that covers a person for a period of time, any where between 10, 20 or even up to 40 years in one year increments. It is just like renting. You pay for the insurance and have the peace of mind of being protected for a specific period of time, pay a set premium and have coverage for a set benefit amount. Once the term or period is up, the policy ends however term coverages can also renew at renewable rates. Term insurance is the most cost effective type of insurance that can be purchased for your needs. It is relatively inexpensive and transfers the financial risk of your family to an insurance company. The younger and the healthier you are the less expensive your insurance premiums are. The benefit of providing a family with an insurance safety net, could prove to be one of the best decisions you ever made. Having a spouse die is devastating in itself, but not being able to survive financially is a burden than can be avoided.
Who should consider purchasing a term insurance policy? Anyone who has dependents that rely on your income to survive. No one knows what tomorrow will bring. Each day we are alive is a gift but for one’s peace of mind, purchasing some type of term insurance is not an option but a necessity. No one should leave their family destitute should a premature death occur.
How much will you need? That will depend on how many children you have, your debts and how much income the family will need to survive without your income. A needs analysis can be used to help determine this number. Everyone should think seriously about their future and take the precautions necessary to protect our families. Generally speaking, term insurance is simple to understand, transparent and the premiums are quite low.
Permanent Insurance is divided into three products: whole life, universal life, and Term100. It is called permanent insurance because the coverage continues for life. Permanent insurance policies typically have an investment component as well as the insurance, and a “cash surrender value” if you cancel them. The premiums for universal and whole life policies are usually substantially more expensive than term insurance; often four to five times higher than those of a 20-year term policy. Once approved, you pay a fixed premium that will never increase. They also allow the policy holder to borrow against their cash value while they are still alive. Your beneficiary or estate receives the death benefit tax-free and it is protected from creditors. Your policy can also help your heirs pay the capital gains tax on assets you leave them—for example, a cottage or vacation home.
Whole Life: In a whole life insurance policy; the cost of administering the program are not disclosed and the balance of the premium becomes the investment or savings portion. The insurance firm decides what the insured will receive as a return and the insured cannot choose where they would like the money invested. The rate of return fluctuates up and down based on the economy. Quite often the insurance carrier will provide an illustration showing the guaranteed cash value that you can use while you are alive.
Universal Life: In a universal life insurance policy; the administration costs are identified and frequently guaranteed not to change for the life of the policy. These policies also disclose how the returns are calculated and can be shown on illustrations. Universal life policies offer flexible premiums that allow the insured to adjust their payments each year by accessing some of the policy’s value or skip a premium if necessary. The insured can also stop paying premiums at some point and have their accumulated cash value continue to pay the premiums. New policies offer a variety of investment options that are designed to provide returns that can mirror well known mutual funds.
Term100: This type of permanent insurance is the most straightforward and easy to understand. Premiums are level for your entire lifetime, they never go up or down. Unlike whole or universal life, there are no cash values and has no cash surrender values should you cancel your policy. As such, this type of policy sometimes has a much lower monthly premium than whole life or universal life. You can apply for the coverage you want starting at round $50,000 and your beneficiary or estate receives the death benefit. You can use a Term 100 life insurance plan to help ensure that your surviving spouse and dependent children have access to the funds they need to maintain their quality of life should you pass away.
Private disability insurance is an insurance that would be most important for individuals who are self employed and for those people who do not have any type of group benefit plans at their place of employment or simply don’t have enough through the group coverage. Disability insurance is designed to replace a portion of one’s income in the event that you become disabled or sick and are unable to earn an income for an extended period of time. Benefit amounts are calculated by your income earned and can be designed to fit anyone’s needs and budget. The insured generally receives approximately 67% (as an individual earns a higher income, a smaller percentage of it gets insured) of their income for a monthly benefit that is tax free if they purchase a private plan. In a group plan depending on who pays the premiums, the benefit received on a monthly basis may or may not be taxable to the employee.
A disability can result from a number of different causes that can be attributed to accidents that occur on or off the job, could include a serious illness or a mental health issue. You can choose to be paid from the date you become disabled or choose an elimination period anywhere from 30 days to 730 days. You are also given a choice of how long you would like the benefit period to be, which could be 2 years, 5 years or until you reach the age of 65. Disability insurance has many different options of coverage and riders that can be individualized to suit all types of professions and budgets. A disability plan is a living benefit that can protect you and your family during a difficult time of financial hardship.
Critical Illness insurance is an insurance that provides protection for individuals for up to 25 different health conditions depending on which insurance carrier is chosen. Today, many people who are unfortunate enough to be diagnosed with a critical illness are fortunate enough to survive the disease due to the many advances in our medical sciences. Thanks to critical illness insurance, a CI policy holder is given a tax free lump sum of money if they are diagnosed with, and survive (generally at least 30-day survival period) one of the specified list of diseases outlined in the critical illness insurance policy.
Each insurance company has their own list of illnesses, but the core standard of illnesses covered include cancer, coronary bypass surgery, heart attack and stroke. For an additional cost, the insured can add the other 20 or 21 CI conditions to ensure they have adequate coverage for all types of illnesses that they may be diagnosed with. The cost for this type of plan can vary depending on age, health factors and any added features they would like to add to the policy. A premium is what the insured pays for the policy; a benefit is what they receive from filing a claim against the insurance policy.
Like all insurance policies, different riders can be chosen that could include such features as return of premiums (ROP) on expiry, return of premiums on death, paying premiums to age 65 or to age 75, a 10-year or 20-year renewable plan (a plan where the premiums increase every 10 years) etc. ROP on expiry is a nice feature to consider, for as long as the insured does not contract any illnesses, they will be entitled to have all their premiums returned to them.
Statistics show that two out of every five Canadians will be diagnosed with cancer in their lifetime, every seven minutes someone has a heart attack and every ten minutes someone has a stroke. Becoming sick or getting disabled has a greater impact on peoples lives than death before the age 65. Critical illness insurance may be an option you should consider to provide you with a financial peace of mind when it comes to your future health.
Long Term Care
Long Term Care insurance is an insurance policy that is beneficial when one loses the ability to independently care for him or herself. Long Term Care insurance protects you in the event of a prolonged physical illness, a disability or a cognitive impairment such as Alzheimer’s or dementia. Each day we get up in the morning and go about doing our daily routines and activities. The day we can no longer perform 2 of the 6 daily activities independently, is the day we depend on assistance to help take care of ourselves. These activities include dressing, eating, bathing, toileting, transferring(walking) and continence (the ability to control one’s bowels).
Today Canadians are living longer thanks to the healthier lifestyles we are choosing and because of medical breakthroughs. Statistics show that as we age, the chances of us requiring some type of medical assistance increases. Although, we have provincial health care plans, the government does not take on the responsibility of fully funding the cost of a care home or subsidized facility. The majority of expenses that are incurred by the family must come out of the family’s pocket, which can cause a financial hardship. A government subsidized nursing home can cost an individual and their families any where from $2,000 per month. However, if a privately owned facility is desired the cost is substantially higher and can run any where from $3,000 and upwards, depending on the needs and wants of the individual. Most people will want the option of staying in the comfort of their own home for the longest possible time, before entering into a home care facility.
With a long term care policy, you have the option of choosing the type of care you want without having someone choose your destiny. The insured is entitled to a tax free monthly benefit that comes into effect if they lose their independence due to physical or mental limitations. The insurance company outlines the benefits, but gives the insured the option of choosing the benefit amount they would like to receive, the length of the payment period and the waiting (or elimination) period that would best fit their budget. Long Term Care is expensive and can quickly deplete a lifetime of savings. This (LTC) type of insurance is available to help you protect your savings, retirement income and from being a burden on your spouse and family and puts the financial responsibility on the insurance company.
Emergency Travel Medical
Emergency medical travel insurance is critical for travelers planning a trip as it financially protects them from unexpected medical emergencies resulting from an accident or sudden illness that may happen prior or during their trip. You can choose from a variety of plans, depending on your requirements and the amount of deductible you wish to pay. Sometimes completing a medical questionnaire is required based on your age and type of plan being considered. The questionnaire determines the rate category and the pre-existing condition stability requirement. Most carriers today offer coverage up to $10,000,000 for expenses resulting from covered events happening.
Generally speaking, EMT coverage is available in a variety of plans:
Single Trip Plans ~ this plan provides out of province/country emergency medical coverage for one trip only for the number of days purchased.
Multi-Trip Annual Plans ~ this plan provides the insured with emergency medical coverage for an unlimited number of trips during the policy year for the number of days purchased. For example, a 10-Day multi-trip plan provides coverage for any number of 10-day (or less) trips for the duration of the policy.
Emergency Medical Top-Up Plans ~ top up plans are necessary when the existing plan you have does not cover the entire length of your stay abroad. If you have purchased a 10-day multi-trip plan and your next holiday is two weeks in length; you will need to purchase a 4-day top up plan to cover the remaining 4 days.
Trip Cancellation ~ this type of coverage returns to the insured any non-refundable prepaid expenses if they are unable to travel due to a covered event prior to the trip departure date. Trip cancellation insurance must usually be purchased within a certain timeframe of booking the trip and the insured can choose amount of coverage required.
Trip Interruption ~ this allows the insured to fly home during the trip if there is a covered emergency.
All-Inclusive Travel Medical Plans ~ all inclusive plans cover not only emergency travel medical, but also trip cancellation and interruption.
Baggage loss/damage/delay insurance ~ specific amounts are provided to cover the loss, damage or delay of luggage due to a covered event.
Air Flight/travel accident ~ some carriers provide this type of coverage for death or dismemberment of the insured up to a specific dollar amount.
If you have an emergency medical issue while on holidays, it is necessary to contact the insurance company as soon as possible to open a claim. Some carriers pay providers directly so it is always a good idea to ask prior to payment as it means not having to submit receipts upon return from your vacation. As with most travel medical coverage, there are usually exclusions and reductions so it is always important to ask questions and read the policy manual so you are familiar with the contract. Some carriers now provide pre-existing condition coverage if you meet their stability requirements. Lastly, it is important to note that emergency travel medical policies are just that; they do not cover any scheduled medical treatments or services.
Greenfeld Financial offers emergency travel medical through two carriers: Manulife and Pacific Blue Cross.