Life Insurance as an Investment – Advisable or Not?

Photo source: thinkpanama

There are two basic types of life insurance policies: term insurance and permanent life insurance. Term insurance policies are generally prepared to cover you for a temporary period of time, usually 10 or 20 years. With a permanent policy, the insurance can go on for your lifetime. If you buy a permanent policy, there are three additional groups of these: Term 100, Universal Life and Whole Life. Universal Life and Whole Life are available in multiple variations. The best insurance for you and your situation can be found in cooperation with a qualified insurance advisor.

When you pay the premium for a Whole Life policy, it already includes the investment part, but in case of Universal Life policies, it is paid separately. Another difference is that for Universal Life policies, the variety of investment possibilities is wider. When you are deciding for the best life insurance, the key aspect is that it should fit your situation and needs. Supposing your needs are met and a permanent policy is within your budget, the following question is whether it’s a sound investment?

There are a lot of different and often contradictory opinions on this subject, partly as not many people really understand the topic of life insurance as an investment. The following are the pluses and disadvantages of using life insurance as an investment:

Advantages

* Earnings within the policy and the MTAR limits increase on a tax sheltered basis. Whole Life policies set the premium, so as not to exceed the MTAR limit, and Universal Life policies set a maximum premium, which keeps the MTAR line in mind.
* The face amount can be extended with the investment part on an increasing death benefit Universal Life insurance and the dividends on a Whole Life policy. These are added to the face amount and paid out tax-free.
* On a permanent policy, you can use the investment part to pay for future premiums. This way, you will be able to pay with pre-tax dollars, rather than after-tax.
* The minimum investment rate guarantees are adjusted to more than 4% in case of numerous Universal Life insurance products. This is a perfect feature for the risk adverse investor in today’s low interest rate world.

Disadvantages

* Permanent policies often have surrender penalties if the client cancels the policy within the first few years.
* Generally, it is not a great idea to purchase a permanent policy, if you don’t need a permanent life insurance, as the mortality charge for the life insurance would be higher.

Five Reasons against Buying Your Life Insurance Policy Online

You might think that as a life insurance brokerage with a specialization in the online marketing of life and health insurance, we probably shouldn’t publish articles with titles like this one. Our website has thousands of visitors every day, many of them contacting us with questions about possibilities of purchasing an insurance policy directly online. After pondering on this idea for a long time, we came to a conclusion that purchasing life insurance online would mean a disservice to our clients.
The following supports our reasoning behind why purchasing a life insurance policy online just doesn’t make sense:

1. Life insurance, when bought directly via a website, is looked at on a singular level and not as part of an overall financial portfolio. When reviewing life insurance, careful planning should be put into determining why the insurance is needed, how much is needed and what’s the optimum type of life insurance for a specific need. It is quite difficult to do this without speaking to a broker over the phone or in person.

2. The websites where you can directly buy a life insurance policy offer only a limited product selection. Most companies selling life insurance online limit their portfolio to a few carriers and in some instances, just one carrier with just a few of their products.

3. When you buy your insurance online, there is a danger that you might not fully understand all its features. When you buy your life insurance online, you might be surprised later about some nuances – for example certain ten-year term policies are not renewable or convertible, or may carry a higher than usual renewable premium, and so on.

4. Many insurance policies just belong to things that are too complicated to be sold online. There are too many details in some policies (for example Universal Life or Whole Life insurance) that cannot be disclosed when the policy is sold directly online. BMO’s Universal Life policy offers over 400 investment options. There are just too many details in the whole plan, which makes it difficult to be purchased online.

5. Any further communication would likely be with a call centre and not a broker.

Just to be understood right – of course the Internet is a valuable source of information when buying life insurance. You can find out all sorts of great information concerning life insurance on the Internet. Our Instant Quote Calculator or Needs Analysis Calculator are just a few examples of great tools when looking for a life insurance policy. But looking for information is very different to purchasing.

Sales are decreasing severely for the US Life Insurance

LIMRA International have announced this is the biggest fall since 1942 over the last six months for US life insurance. Bloomberg News reports that individual life insurance sales have dropped 20% in the second quarter of 2009 because savers avoided investments associated to stocks.

This however is a totally separate story in Canada. Steady and Whole life term policies have been used to offset losses which were 6% fewer than the US. All told, there has only been a 1% decline in annualized premiums so far in 2009.

A personal budget may be more inflexible in the US, but the majority of US citizens will still have life insurance as the basis of their financial planning. Without sufficient life insurance, an accidental death can create a financial tsunami in the typical household. For family members left behind, life insurance policies provide security from monetary issues.

Life Insurance plans don’t have to destroy the bank, there are ways to decrease your premiums. The tips below show you how to save dollars, whilst still buying the best deal for you.

Avoid accidental death insurance. Innocent customers are pushed to purchase this insurance by lots of Canadian insurance companies. With just over 2% of accidental death policies paying out they make a extremely profitable income to the insurance companies but a waste of your hard earned cash for you. When comparing this policy to a term policy the majority of the time the term policy is less expensive.

Keep an eye out for captive agents. They can only sell that organization’s goods. In comparison to companies that hire independent brokers, companies hiring captive agents often charge much higher premiums. When an agents is tied into one organization’s policies they are unable to browse for policies that best meet your needs or your pocket.

The cheapest policy is not consistently the least expensive. Look at the complete expense of your policy, there may be a big price increase later which could work out more expensive in the long term. A ruse insurance companies use to obtain your business is offering reduced premium introductory offers. Making the most out of low initial premiums works if you only want insurance on a limited basis rather than long term. The issue is, many brokers engage a one-size-fits-all principle. Many brokers and agents want to sell the policy and get out as quickly as possible, and not spend time working out what the best policy for you actually is.

See if you can locate a company selling preferred rates. The variation between preferred and standard rates can be very meaningful, particularly for term policies. A 40-year-old man, non-smoker would pay $62.55/month with Equitable Life for standard rates on a $500,000 Term 20 policy. The scheme would cost $44.55/month if the same male qualified for preferred rates. Preferred rate calculator – click here to see if you are eligible.

Make sure you are not over insured. To find out if you are over-insured and what insurance you may need try our Needs Analysis Calculator.

Don’t try and go it alone, use an independent broker. A broker that has access to the whole insurance market is more likely to accomplish your requirements than someone who has only got access to their own company or one or two others.

Is Canadian Tire Term Life Insurance all its cracked up to be?

Canadian Tire is Life insurance is not just backyard furniture and power tools as the name brings to mind. Their insurance plan was adjusted and put out to the people. A marketing drive was created by this firm whose underwriters are Canada Life. Below are the details of the Canadian Tire Term Life Insurance Plan. Applying is not difficult, you can do it by calling, mail or on the internet. There are seven health questions to fill in. You may find you have to provide more detail or be subject to a nursing visit if any of the questions are answered yes to. A critical illness plan provided by individual brokers is not the same as the terminal illness benefit provided by this plan.

I can’t see what the difficulty is: So explain it to me please.

Photo source: huntz

We are now going to consider the Canada Life individual term life plan to the Canadian Tire Scheme. Payments are a lot higher on the Canadian Tire plan. These increase by $40 for a 40 year old male smoker. The Tire Term plans are considerably higher for the same type of policy. The adaptability and modification of these types of policies are not available on the Canadian Tire policies.With limited benefits of $250,000 and the policies running no longer than 5 years, we are now starting to see the imperfections in this policy. Also there are extra premiums on this plan of PST. You can add riders to individual plans which give your additional benefits. Also you can combine it with another plan if you require. As the Canadian Tire Term Life Insurance plan is a group plan, you don’t get the tailor-made and personal advice of a broker to lead you to the best resolution for your situation. To give a run down: Although the Tire Plan looks great on paper your will be better off with a personal plan which suits your personal lifestyle. To find out more about the Canadian Term Life Insurance, please refer to our more detailed article.

How does an insurance agent earn their monthly paycheck?

All insurance agents, both captive advisers (those working for a single company) and independent advisors (those working for multiple companies) are usually paid commission when an insurance policy is put in force. If you decide to cooperate with an insurance broker, there are two main advantages for you: you can get the best rate on the market, and the broker will help you to choose the most suitable type and amount of coverage for your situation. Of course, the broker gets his/her commission paid from the insurance company. However, the media and consumer scepticism has done a lot to create misunderstanding. The following are points often misunderstood regarding the payment process.

“Life insurance commissions drive up the price of the policy.” Life insurance policies, whether sold by salaried employees or self-employed advisors, have distribution costs. With the price of the insurance product, you already pay also the cost of distribution. RBC Insurance, Manulife or other companies using multiple distribution models for their life insurance products usually charge the same rates no matter how the customer buys the product. The Manulife call centre, website or an independent broker will always sell you their $200,000 Term 10 insurance for the same price. “Life insurance commissions are negotiable.” Life insurance commissions are not negotiable. The situation is different from when you are buying a car or a house. Once again, the commissions are built into the distribution costs of the insurance and cannot be altered.

“The commissions for Whole Life or Universal Life insurance are higher than for Term Life insurance.” The life insurance commissions depend largely on the policy price. So the broker gets more money for a more expensive insurance. The initial price of Whole and Universal policies is higher than for Term policies, but these are bought only once. Term policies increase in cost as the insured gets older, so they will buy multiple term policies over their lifetime. Every time a new policy is purchased, the broker gets paid the commission, but also the applicant is older each time, so he/she has to pay a higher insurance rate. If the applicant’s health status has changed, the insurance rate will be also higher or, in some cases, the coverage won’t be available. The insured people should always understand how the various life insurance policies are structured so that they will be able to determine how much life insurance they need. “The commissions paid by some insurance carriers is better than from others.” Commission rates can vary slightly from one provider to another, but regarding that insurance commissions are a fixed cost within the policy, this should have no impact on the consumer decision. It is nevertheless very important that your broker has access to insurance from multiple companies, as some of them, while independent, work only with two or three. We can offer you products from 15 various life insurance providers, so that you always get the best price available on the market.

Photo source: rick

Collectibles insurance: Why not?

Photo source: Chris Devers

Hands up anybody who has ever collected anything in their lives. Most of people at some point started a collection of various stuff like toy cars, match boxes or bottle tops. Generally, after a certain period of time, these valued treasures have been given away or just disposed of.

For sure, there are some among us that have never given up this sometimes strange habit and have turned it into a lifelong hobby There is, however, a certain breed of collectors, who have taken this hobby to a higher level and have diversified their portfolios by investing in valuable coins or stamps.

So, who is the special insurance cover for? Think about this: average homeowner insurance is normally adequate to cover most items of value in your home such as appliances etc. But collectibles are a different matter entirely In certain instances low value collections may be covered, but submitting a claim to the insurer is fraught with difficulties and can often be unsuccessful. General home insurance policies offer no more than the material cost. Of course it is simple to claim for a broken TV set, but try claiming for a priceless rare Roman coin.

So, Mister Collector, what to do if that little collection of yours would cost more to replace than the new car on your driveway? Are you having sleepless nights being scared about its safety? Luckily, you won’t need to worry anymore. There are now special policies tailor made for these collections. AIG and Allianz are but two of many insurance companies that have specialist policies for valuable collections.

If you are a serious collector, it is most likely you will choose an ‘all risk’ policy which will insure your valuables against everything from fire to nuclear attack to ‘mysterious disappearance’ Mysterious disappearance cover is provided for in the Fireman’s Fund policy. Transportation and traveling doesn’t have to be a worry as both are covered in all specialist policies.

Since collections tend to increase in size and value over the years, insurance policy creators have included this in their policies as a way of attracting customers. New additions to your collection can be covered easily with a simple phone call to your policy provider. If you are nervous about going to collect a new addition, then a simple phone call to your insurer prior to going and your new investment is insured.

Obviously nothing can replace your cherished collection, should it be damaged by fire or stolen by some hard-hearted thief.

Nevertheless, if you can be compensated financially for the full value of your investment, then the pain should be more bearable.

Why not insure the snow?

A Walk in the Snow by Stuck in Customs

Weather insurance – doesn’t it sound funny? Well, in any case it represents one of the oldest forms of insurance. Weather has been the decisive factor for farmers and their earnings, ever since the beginning of agriculture. The modern weather insurance can cover far more than crops.

Rain is the primary target of weather insurance. The good news is that rain insurance is quite routine and quite easy to find. You can pick rain accumulation policies (you are able to select if your golf tournament will be ruined by ½ inches of rain or even ¼ is too much) or dry hours (number of hours with no rain accumulation in a period of time). Analogically you can take counteraction on snow, aiming on the inches per session or per storm. A unique version of this insurance is especially for municipalities and public organs, who need to cover extra costs by a special snow removal insurance policy.

And that is only where the whole business begins. A hot air ballooning show can insure themselves against undesired wind conditions with wind insurance. There is temperature insurance against bad weather, for example for an ice cream promotion event, to make sure the investment is not wasted.

Normally you can choose your own combination of the various policies needed for your event. Typical clients are film productions (and many insurance companies tailor special policies only for the film industry, including conditions of underwater visibility or lack of snow). Weather insurance is also popular with managers of sports events, concerts, festivals, trade shows… And all the other people, whose business doesn’t directly depend on weather, like me, selling disability insurance, can at least insure good weather for spare time activities and holidays.

This is really a new product, just getting to the customers from the whole world. French travel agencies (in cooperation with Aon France) are offering partial money reimbursements, when you experience more bad days than expected during your stay. A brand new sunshine insurance is now offered for customers of Lufthansa, the German airlines. A simple insurance policy is available for €20 ($31.24) for passengers from Germany. They can get €20 back for every day during their holiday when it rains more than 5mm.

Naturally, weather insurance is probably not needed when you are going to Tunisia or Greece. And I’m not sure if you are on your way to Vancouver, they will sell you weather insurance. But you pay nothing for asking.

Can you insure my birthday party, please?

Photo source: Pink Sherbet Photography

Life insurance, long term care, disability insurance – we all have bought at least one of these products. They were designed in order to protect financial safety of our everyday life. The choice of insurance types is quite wide, however conservative it may look at the first sight. But the world of insurance is more interesting than you would ever think And some special products offered may be a bit weird Events insurance is an example of such an insurance product

Picture yourself planning a great wedding ceremony full of romance – taking place on the beach, with roses all around and guest count going into hundreds. But you can never be sure what happens – just a while before the ceremony starts, you may step on your veil, slip off and break your leg. If you have purchased the right insurance, you could be able to save the worst. No matter if you want to insure a birthday party, a wedding ceremony or a bar mitzvah, nearly all attributes of the event can be covered if you choose a good product. The insurance can be prepared to fit your personal needs, but the most usual ones are liability and cancellation policies. But what to do if you have planned an outdoor ceremony and the weather shows you its unfriendly face? Even this is feasible to be covered by the insurance, if you have bought it in advance (around two weeks would be enough) and specifically asked for this protection.

And there are many more possibilities concerning your events insurance. If an unskilled photographer accidentally destroys the photos, the insurance will help you to retake it. In addition, all the gifts, jewellery and rental property can be insured And the bride might run away from the altar… A good insurance policy can cover even that.

Some of the biggest world insurance players offer event insurance. In Allianz, it is a part of the Fireman’s Fund subsidiary, whereas Axa also sells fireworks or Christmas light insurance. Some other companies can cover alcohol related accidents. A bit below $100 – that is the common rate for the basic coverage.

Shortly said, all your events can be insured from the beginning till the end.

Do Not Take Too Lightly The Significance of Disability Insurance

Disability by World of Oddy

Losing your mobility due to an unexpected accident connected to work or sport – that is the traditional explanation of the word ‘disability’ for most people. Nevertheless, just look at the statistical numbers and you will see that accidents are accountable for only about a half the amount of invalid people than serious diseases such as cancer, diabetes or heart diseases.

You and becoming invalid?

Twice more people under 65 years of age become long-term invalid than decease due to an accident or illness. But naturally the older is the person, the greater his/her chances of becoming invalid are:

* 3% of children younger than 14 years become invalid
* 4 in 100 young adults between 15 to 24 become invalid
* out of every 100 adults between 25 – 44 years, 7 are invalid
* out of every 100 adults between 45 and 64 years, 17 are invalid
* out of every 100 adults over 65 years of age, 40 are invalid
* 53% of adults older than 75 become invalid

At the moment 14 in 100 Canadians (4.4 million) are classed as invalid.

What do you get if you sign up for disability insurance?

There are various people who have various needs and come across various situations, therefore the selection of different types of insurance is quite rich. Life insurance, for example, is offered to guarantee a sufficient cash coverage for those that are stricken by the sudden loss not only emotionally, but also financially. On the other hand when a person becomes (totally) invalid, not only the person is not fit to maintain sufficient income for themselves and their family, but on the top of that the necessary medical and other care for this person takes even more money out of their pocket, or the pocket of their family that has to provide the extra care for the once self-supporting. So we can see that a good disability insurance can help you solve even more problems than a life insurance. Being classed as invalid doesn’t necessarily mean that the person is not able of some kind of employment (see the various definitions of disability), but it has been observed that around 15% of those filing for bankruptcy have done it due to illness or accident. There are some government contributions available for invalid people, however limited they might be. The coverage group plans don’t help to maintain your current income either, as they usually cover between 50% and 60% of the previous net income.

If you are thinking about applying for disability insurance, first think about the possibilities you would have in case you couldn’t earn a sufficient amount of money.

You could:

* rely on your spouse/family income
* spend your savings or retirement funds
* sell your property or other assets
* live on credit
* get a sufficient income from a disability insurance instead of your previous salary

Canadian Universal Health Insurance: the Common Prenotations

pills by erix!

During the many years spent in Life insurance Canada, I’ve had more than enough of occasions to answer questions concerning the ups and downs of both the US and Canadian health care system. Although non of them is hundred per cent, I absolutely hate some of the lies that are spread about the Canadian system. Let’s have a look at some of them.

“The health system in Canada is much more expensive than the system in the USA.”

To begin with, there’s this faulty assumption about the cost. It is often claimed that the Canadian system costs more than the US system, but in fact while Canada spends only 10% of its GDP, covering 100 percent of its population, the USA spends over 15 percent GDP, while at least 15 percent of Americans is not covered at all and even more Americans are left with not enough coverage. For example in 2005, the US government spent US$6,401 per capita on their health expenditures – that’s almost twice the sum spent in Canada that year – US$3,359.

“In Canada, it’s up to the administration to make a decision who gets the treatment.”

That’s totally wrong: the only people in charge of these decisions are in fact the physicians. On the other hand, the situation is quite different in the States, where in fact it is up to your insurance administrators to determine what treatment you are allowed to get, never mind what you doctor thinks.

“The plan only covers the bare basics, so you end up paying a lot on any extras anyway.”

Every province has its own rules concerning what is and what is not included by the public health insurance. The least you can count on is that the physician’s fees and all the hospital procedures will be included in the insurance – which are generally the most costly items. Other stuff like medical equipment, dental & vision care would generally not be included. Because it’s not too hard to average the cost of these extras, since all those big troublesome items are already covered by the national health insurance, number of insurance companies offers some additional low premium insurance that takes care of all these extras. For example the FlexCare Program from Manulife. All in all, to get the same level of service in the USA as in Canada, the Americans have to pay much much more. The system is simply running better in Canada.

“The biggest problem with the Canadian system are the long waits. In fact, Canadians rather travel to the US for their treatment.”

The situation doesn’t differ that much from the one in the States, because the waits associated with some specialist treatments (up to four weeks some selective surgery takes even longer. On the other hand, all urgent treatment, you will get it fast one way or the other. And, unlike in the US, noone cares whether you’re rich or poor. For example, if you cannot get urgent care you need (i.e. surgery) and you cannot get it as fast as it is medically required, you will most likely be sent to the US – at the expense of the state insurance. If you spoke to a Canadian who rushed to the the US for their treatment and had to pay for it themselves, they most likely didn’t need the treatment as fast as they wanted it.

“In Canada, the physicians work for the government. Also, you’ve no choice: you get your physicians picked by the government!”

Not true. The provincial government doesn’t act as an employer, since the physicians in Canada own their private practises just like their colleagues in the States, but constitutes the only insurer that the physicians have to deal with, therefore the paperwork is kept to the necessary minimum. Don’t worry: you get to choose your doctor yourself.