How To Use Insurance To Provide Your Family With Financial Protection

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How To Use Insurance To Provide Your Family With Financial Protection

The best way to provide your family with financial protection is with solid insurance planning. These three types of insurance will ensure your family has the financial resources they need if you die, are injured, or become ill:

  • Life insurance.
  • Critical illness insurance.
  • Disability insurance.

Life Insurance

Life insurance is an inexpensive way to ensure your family will have access to a tax-free lump sum payment after your death. Whether you want to give your grandchildren a helping hand getting started in life or provide financial resources for a stay-at-home parent, life insurance can be a great way to do it!

You have two main options when it comes to life insurance – term insurance and permanent life insurance.

With term insurance, you’ve got life insurance coverage for a set period (for example, five years). Premiums for term insurance are lower than for permanent life insurance, but they will rise as you age or your health changes.

With permanent life insurance, you’ve got lifetime coverage. You’ll pay more in premiums at first, but the cost will be less overall than if you buy term insurance for your entire life. Some permanent life insurance policies also allow you to contribute money beyond your premiums, where it can grow tax-free.

Not sure which type is best for you? We can help you figure this out!

Critical Illness Insurance

With critical illness insurance, you will be eligible for a tax-free lump sum of money if you’re diagnosed with a significant illness such as cancer or a stroke. While anyone can benefit from this insurance, it’s essential for self-employed people who don’t have employee benefits to help tide them over while recovering or receiving treatment.

You can spend the lump sum any way you want, including paying off your mortgage, paying for treatment not covered by provincial health care, or putting aside money for your children’s future.

Depending on the type of critical illness policy you select, you may be able to get a “return of premium” option, which means your premiums will be returned to you if you never make a claim. We can explain how to option works and what coverage we think is best for you.

Disability Insurance

Most people assume that they’ll never become disabled. But the stark reality is that 1 in 5 Canadians are considered to be living with a disability. If you couldn’t work anymore because you became disabled, this could have a disastrous impact on your family’s financial stability – especially if you’re self-employed.

With disability insurance, you’ve got financial protection to ensure you can pay your bills and maintain your family’s standard of living. We can explain how to minimize the cost of your premiums while still getting the coverage you need.

Protect Your Family

Book a meeting with us today to get started with insurance planning.

Permanent versus Term Life Insurance – What are the Differences?

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Permanent versus Term Life Insurance – What are the Differences?

You know you need life insurance – but you’re not sure which kind is best for you. We can help you with that decision.

There are two main kinds of life insurance:

  • Permanent, which lasts for your entire life.

  • Term, which is only good for a set amount of time.

No matter which type of life insurance you buy – permanent or term – you can rest easy knowing you’ve provided financial protection for your family.

Permanent life insurance

Permanent life insurance is good for your entire life unless you choose to cancel it. It’s an excellent choice to give you peace of mind that you’ll always be covered, even if you develop major health issues later in life.

There are also benefits to having permanent life insurance beyond guaranteed lifelong coverage:

  • You can use the policy to build up a cash value – making it a good choice for low-risk investing.

  • You may be able to use your permanent life insurance policy as collateral for a loan, making it a good choice for business owners.

The main drawback to permanent life insurance policies is that the premiums are often more expensive than term life insurance premiums. If, however, you’re thinking long-term and can afford the premiums, permanent life insurance is a great way to ensure you’re always protected and can have some guaranteed money for your estate.

Term life insurance

Term life insurance is either valid for a set amount of time (such as five or ten years) or until you reach a set age – for example, 60. You should generally be able to renew your life insurance at the end of each term, but your premiums may go up.

Term life insurance premiums are cheaper than permanent life insurance premiums – at least, you are younger and healthier (as the risk of you dying is lower). Your premiums will increase as you age or develop health issues.

You can’t use term life insurance as collateral for a loan or use the policy to build up a cash value. There are lots of benefits to term life insurance, though – it’s a good choice for you if you want low premiums, easy-to-understand insurance, and only need it for a set amount of time – such as while you have a mortgage or young children.

We can help you decide between permanent and term life insurance

If you’re not sure what kind of life insurance is best for you, we can help. We’re happy to talk to you to get more information about your insurance needs. We can then discuss what each type of insurance will cost you and which type of insurance we feel is best for you.

Give us a call today!

Why Insurance Is So Important If You’re A Single Parent

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Why Insurance Is So Important If You’re A Single Parent

Your kids mean everything to you – and you want to make sure they’re protected no matter what. As a single parent, you must have the right health and life insurance options in place to make that happen. We recommend you consider all of the following types of insurance:

  • Disability insurance

  • Critical illness insurance

  • Accident insurance

  • Life insurance

Disability insurance

Disability insurance can provide you with an income if you become disabled and cannot work – whether it’s for a short period of time or a long one.

Most workplaces offer disability coverage, but it’s tied to that particular job, so you’ll lose coverage if you leave that job. As well, the coverage from your employer’s plan may not be sufficient to cover your needs if you become disabled.

It’s particularly important for you to look into disability insurance if you work as a contractor or have a job with no benefits.

Critical illness insurance

Critical illness insurance can help you pay for the costs associated with various serious medical issues (such as a heart attack, cancer, or a stroke) that aren’t covered by any other health plans or disability insurance. As a single parent, you may find the payout from a critical illness insurance policy especially helpful for paying for extra childcare or lost income if you cannot work.

Accident insurance

Life is getting busier than ever – and there are more and more of us on the roads. Unfortunately, more people on the roads mean more accidents. If you buy accident insurance for yourself or your children, the payout from the policy can bring in some extra income at a critical time of need if any of you are in an accident. You can use an accident insurance payout to help pay for anything from lost income to private home care.

Life insurance

Life insurance is critical as a single parent as your children are dependent on your income. Generally, we suggest that you get a policy that is worth at least 10 times your annual income, but you may need more if you have a lot of debt or you need the money to last a long time.

Your children should be the beneficiaries of your policy and you can name a trustee (such as a grandparent or other relative) to look after the money on your children’s behalf until they reach a specified age.

We can help!

If you have questions about what kind of insurance is best for you, we’re happy to answer them! We’ll walk you through all your options and put together an insurance package that’s just right for you. Call us today!

Life Insurance after 60- is it necessary?

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You may have had life insurance for as long as you can remember. You wanted to make sure that your family would be taken care of and be able to pay their bills if anything happened to you.

But now that you’re older and your children are grown – and hopefully your mortgage is paid off – you may not feel you still need life insurance. This could be a valid assumption; however, there are some circumstances under which it may still make sense for you to have life insurance. They are:

  • You still have substantial debt.

  • You have dependent children or grandchildren.

  • You want to leave a financial legacy.

You still have substantial debt

No one likes the thought of leaving their loved ones to pay their debts if they die. If, however, someone has co-signed a loan with you – for example, for a mortgage or a car – and you die, then they will be on the hook for the entire amount.

If you have life insurance and name your co-signer as the beneficiary, this will help relieve any financial burden your death could cause them.

You have dependent children or grandchildren

If you have children who are still dependent on you because they have a mental or physical disability, life insurance can be an excellent way to ensure they will still have access to funds after you die.  Lifelong care can be expensive, and a life insurance benefit will go a long way to helping fund it.

You may have grandchildren you are caring for or that you are not responsible for but want to leave money they can use towards higher
education.  A life insurance payout can be a great way to help a grandchild get a good start in life without having to go into debt.

You want to leave a financial legacy

You may not have dependent children or grandchildren but still want to leave them something when you die. Life insurance can be a great way to do this without cutting back on your spending during your lifetime.

Life insurance can also help make sure that you have something to leave everyone in your will. If you have a family cottage, it can
be complicated to leave it to more than one person or family. Life insurance gives you the option to leave one person or family the cottage and another person or family the cash equivalent.

We can help you!

If you’re unsure whether or not it still makes sense to have life insurance after the age of 60, we’d be happy to sit down with you and talk through your options. Give us a call or email us today!

Why Should I Review My Life Insurance?

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Why Should I Review My Life Insurance?

It’s great that you’ve taken the critical step of buying life insurance. But have you reviewed it recently to make sure that your policy is still suitable for you? It’s important to review your life insurance policy annually to check that your policy is up-to-date and see if you require any additional coverage.

There are several reasons you may need to change your life insurance policy. We’ve listed them below.

You’ve gone through a significant life event

You may have gone through a significant life event – such as getting married or divorced or having a child – in the past year. In this case, it’s important to consider changing your beneficiaries to make sure that your life insurance proceeds are distributed appropriately.

If you don’t update your beneficiaries, a previously named beneficiary could still be legally entitled to the money you want other people to receive.

You’ve changed jobs

Congratulations – you’ve got a new job or even started your own business! If you’ve started a new job, you may need more life insurance to account for extra income your family will be accustomed to or to account for a change in your employer-based life insurance policy.

If you’ve started a new business, you’ll likely need additional life insurance to help cover debts you may have taken on to start your new business. Plus, since you’re self-employed, you won’t have any employer-based life insurance anymore.

You’ve taken on some debt

If you’ve recently taken on some debt – such as a credit consolidation loan or a home equity loan – more life insurance may be a good idea. Additional life insurance can provide your loved ones with some much-needed extra income to help pay off debt or even pay for basic living expenses if you die.

You’re supporting family members

If your parents have moved in with you or have moved into assisted living, they may require financial support. Additional life insurance can help pay for this increased financial load.

If you have children ready for college or university, they’ll still need financial support from you. You can help secure their financial future with a life insurance policy that will help cover tuition costs.

You’ve bought a new home

You don’t want to leave your spouse or partner the burden of paying off a mortgage alone. Additional life insurance coverage can ensure they’ll have the funds they need after you pass and won’t be forced to sell at a stressful time.

A loved one has a change in health

If a loved one has recently had a change in their health or a significant medical diagnosis, then it’s essential to review your life insurance coverage. Your loved one may need expensive medical treatment or in-home support – which life insurance can help cover if you die.

If you have any questions about your life insurance coverage or want to make any changes, give us a call!

When should I buy life insurance?

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When should I buy life insurance?

Life insurance can benefit you no matter what stage of life you’re at. It’s never too soon or too late to buy life insurance. Not only will it give you peace of mind, but it will also provide your loved ones with financial support after you die.

Types of life insurance

There are two main types of life insurance:

  1. Term life provides temporary coverage for a set amount of time (for example, 10, 15, or 20 years).

  2. Permanent coverage is life insurance that never expires.

Term life is generally cheaper as it is only good for a set amount of time. Permanent insurance will cost you more in the short run but may work out less expensive in the long run as your premiums do not tend to increase as you age.

Life insurance in your 20s

In your 20s, you may feel like you’re immortal and have lots of other things you want to spend your money on. But you also likely have responsibilities – such as student loans your parents may have co-signed for or a mortgage with your partner. If something happened to you, your loved ones would be left alone to pay for that debt. Life insurance could help fill this financial gap.

Also, another great reason to get life insurance in your 20s is that it’s very affordable! You will have a low insurance premium because you are considered low risk.

Life insurance in your 30s

By the time you’re in your 30s, you may have several financial responsibilities – including a mortgage and children. If you’ve only had term insurance up to this point, you may want to consider converting it to permanent to help give yourself lifelong protection.

Even if you have life insurance through your workplace, you may want to buy additional life insurance. Separate life insurance can help cover you if you lose your job or lock-in rates while you are relatively young and healthy.

Life insurance in your 40s, 50s, 60s and beyond

At this stage in your life, you may still have a mortgage or dependent children. You may have even bought a cottage or a vacation property. No matter your financial responsibilities, if your estate doesn’t have enough cash to cover them, it’s essential to have life insurance still.

Now is an excellent time to lock in permanent insurance. However, if you find the premiums too high or know you only need life insurance for a set amount of time, term life may still work for you.

Your next steps

Now you know about the two main types of life insurance and why it’s crucial to have it, no matter what age you are. If you’re not sure where to go from here, contact your insurance advisor or us – we can help you figure out your next steps!

Group Insurance vs Individual Life Insurance

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Group Insurance vs Individual Life Insurance

“I already have life insurance from work, so why do I need to get it personally?” or “Work has got me covered, I don’t need it.”

While it’s great to have group coverage from your employer or association, in most cases, people don’t understand that there are important differences when it comes to group life insurance vs. self owned life insurance.

Before counting on insurance from your group benefits plan, please take the time to understand the difference between group owned life insurance and personally owned life insurance. The key differences are ownership, premium, coverage, beneficiary and portability.

Ownership:

  • Self: You own and control the policy.

  • Group: The group owns and controls the policy.

Premium:

  • Self: Your premiums are guaranteed at policy issue and discounts are available based on your health.

  • Group: Premiums are not guaranteed and there are no discounts available based on your health. The rates provided are blended depending on your group.

Coverage:

  • Self: You choose based on your needs.

  • Group: In a group plan, the coverage is typically a multiple of your salary. If your coverage is through an association, then it’s usually a flat basic amount.

Beneficiary:

  • Self: You choose who your beneficiary is and they can choose how they want to use the insurance benefit.

  • Group: You choose who your beneficiary is and they can choose how they want to use the insurance benefit.

Portability:

  • Self: Your policy stays with you.

  • Group: Your policy is tied to your group and if you leave your employer or your association, you may need to reapply for insurance.

Talk to us, we can help you figure out what’s best for your situation.

Contact US

Estate Planning for Young Families

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Having a family is a blessing and can also bring a lot of worry. A lot of this worry can stem from not being prepared for a disaster like if something were to happen to you or your spouse.

We’ve put together an infographic checklist that can help you get started on this. We know this can be a difficult conversation so we’re here to help and provide guidance.

The Children

  • What will happen to the children if both parents were to pass away?

  • Who would take care of them and until what age?

  • What would happen if only parent were to pass away?

Make sure you have a will that:

  • Assigns a guardian for your children

  • If there’s an inheritance for the children, who will take care of this? Make sure you assign a trustee for the inheritance.

  • Always choose 2 qualified people for each position and communicate your intentions with them to ensure they’re up for the responsibility.

Assets and Liabilities

  • What are your assets? Create a detailed list of your assets such as: Home, Family Business Interest, Investments- Non registered, TFSA, RRSP, RDSP, RESP, Company Pension Plan, Insurance Policy, Property, Additional revenue sources, etc…

  • What are your liabilities? Create a detailed list of your liabilities such as: Mortgage, Loans (personal, student, car), Line of Credit, Credit card, Other loans (payday, store credit card, utility etc.)

  • Understand your assets-the ownership type (joint, tenants in common, sole etc.), list who are the beneficiaries are for your assets

  • Understand your liabilities- who’s on the hook for paying back the loan?

Make sure you have a will that:

  • Assigns an executor

  • Provide specific instructions for distribution of assets

  • Always choose 2 qualified people for each position and communicate your intentions with them to ensure they’re up for the responsibility. 

Ongoing Needs

What are your family’s ongoing needs?

  • List out the living expenses

  • List out income needs

  • Do you still need to pay for school?

  • Determine if you have enough (assets minus liabilities) to take care of the family.

Make sure you review your insurance.

  • Once you determine how much need there is, review your life insurance coverage to see if it meets your needs or if there’s a shortfall.

Execution: It’s good to go through this but you need to do this. Besides doing it yourself, here’s a list of the individuals that can help:

  • Financial Planner/Advisor (CFP)

  • Estate Planning Specialist

  • Insurance Specialist

  • Lawyer

  • Accountant/Tax Specialist

  • Chartered Life Underwriter (CLU)

  • Certified Executor Advisor (CEA)

There are definitely unique situations in many families and things can get complicated so please use this when you feel it’s applicable.

Next steps…

  • Contact us about helping you get your estate planning in order so you can gain peace of mind that your family is taken care of.

The Best Way to Buy Mortgage Insurance

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Before buying insurance from your bank to cover your mortgage, understand the difference between self owned mortgage life insurance and bank owned life insurance. The key differences are ownership, premium, coverage, beneficiaries and portability.

Ownership:

  • Self: You own and control the policy.

  • Bank: The bank owns and controls the policy.

Premium:

  • Self: Your premiums are guaranteed at policy issue and discounts are available based on your health.

  • Bank: Premiums are not guaranteed and there are no discounts available based on your health.

Coverage:

  • Self: The coverage that you apply for remains the same.

  • Bank: The coverage is tied to your mortgage balance therefore it decreases as you pay down your mortgage but the premium stays the same.

Beneficiary:

  • Self: You choose who your beneficiary is and they can choose how they want to use the insurance benefit.

  • Bank: The bank is beneficiary and only pays off your mortgage.

Portability:

  • Self: Your policy stays with you regardless of your lender.

  • Bank: Your policy is tied to your lender and if you change, you may need to reapply for insurance.

We’ve created an infographic about the difference between personally owned life insurance vs. bank owned life insurance.

Talk to us, we can help.

Contact US

Accessing Corporate Earnings

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One of the financial planning issues that business owners face is how to access their corporate earnings in a tax efficient way.

There are 5 standard methods:

  • Salary

  • Dividend

  • Shareholder Loans

  • Transfer Personal Assets

  • Income Splitting

There are also unique ways utilizing life insurance and critical illness insurance to access your retained earnings. Please contact us to learn how we can get more money in your pocket than in the government’s.