Term life insurance

Term life insurance is the most traditional and best-known form of personal coverage, paying out to the policyholder’s dependents in the case of death. The main advantage of this insurance is that it is lower priced initially than other types of insurance, but it offers few other benefits.

This type of coverage typically operates for a fixed term of 10 to 30 years, depending upon the policy, and pays out the benefit amount if the policyholder dies.

Permanent Life Insurance

Permanent life insurance offers coverage for a lifetime, with a guaranteed payout upon death.

You choose the death benefit that will be paid upon death. You make payments in to the policy fund. So that any amount you pay into the fund on top of the premium is invested and building up a cash sum over time. This cash investment enables the value of the death benefit to increase, or allows loans to be taken against the policy, with many people seeing this as a viable income stream for their retirement plans.

Universal Life Insurance

Universal life insurance offers an extremely flexible middle way, combining life cover with the chance to build up an investment income, at a lower cost than fixed permanent life cover.

This type of cover can be very flexible and allows payments be varied, depending upon the current financial circumstances of the policyholder. Money paid over and above the normal premium can be used to either increase the cash value or increase the death benefit.

Summary

The three types of policies: TERM, UNIVERSAL, and PERMANENT insurance offer different benefits depending upon the needs of the policyholder.

The most affordable option, a simple Term policy, offers temporary coverage, but no other investment potential, and is usually a prerequisite when taking out a mortgage or a large loan.

Permanent and Universal Life Insurance are more flexible, offering tax-free investment potential alongside the lifetime coverage, allowing money to be invested into the death benefits or the investment account.

It is always important to seek independent financial advice before committing to any major financial decision and to be aware of all the long term investment opportunities available.

One of the easiest ways for you to make an informed decision before you buy life insurance is to sit down with a Financial Advisor to evaluate your situation. A Financial Advisor can help you determine the type of insurance coverage that is best for your unique situation.

How would an illness affect your financial security?

Critical Illness Insurance helps ease the financial burdens caused by a serious illness. A Critical Illness Insurance Policy provides a lump sum cash payment to you upon diagnosis of a life threatening illness, such as heart attack, cancer, or stroke. Many policies make that payment 30 days after the diagnosis of certain specified life-threatening diseases such as cancer, stroke and heart attack.

With the lump sum payment from your policy, you can use the payment received from your policy in any way that you need to – for costs of care and treatment, home health care, debt payments, or replace income due to inability to work.

The Canadian Cancer Society reports:

• Almost 40% of women, and almost 45% of men will develop cancer during their lifetimes.
• Approximate 1 in 4 Canadians will die from cancer.
• An estimated 166,400 new cases of cancer and 73,800 deaths from cancer will occur in Canada in 2008.
• Three types of cancer account for the majority of new cases: in men: prostate, lung, colorectal; in women: breast, lung, colorectal.
• 30% of new cancer cases will occur in young and middle-aged adults ages 20-59 in their more productive stage of life.

The Heart and Stroke Foundation of Canada reports:

• There are an estimated 70,000 heart attacks each year in Canada.
• The leading cause of hospitalization in Canada is heart attack and stroke (15.4% of hospitalizations).
• 6.9 of Canadians between the ages of 50-64 are living with some form of heart disease or circulatory disease.
• Approximately 19,000 Canadians die each year as the result of a heart attack. Most of these deaths occur out of hospital.
• More than 50,000 strokes occur in Canada each year. That’s one stroke every 10 minutes.
• For every 100,000 Canadian children under the age of 19, there are 6.7 strokes.
• About 300,000 Canadians are living with the effects of stroke.
• After age 55, the risk of stroke doubles every 10 years.
• A stroke survivor has a 20% chance of having another stroke within 2 years.
• Of every 100 people who have a stroke, 75 will survive and have long-lasting disability as a result.

Critical illness coverage typically includes (depending on the type of policy you purchase):
Cancer
Coronary Artery Bypass Surgery
Heart Attack
Kidney Failure
Major Organ Transplant
Prostate Cancer
Stroke

Other conditions* may be covered depending on the insurance company:
Alzheimer’s Dementia
Kidney Failure
Loss of Speech, Hearing, or Limb
Paralysis
Parkinson’s Disease
Multiple Sclerosis

* Conditions covered by Critical Illness Insurance, depend upon the type of policy you purchase.

“If I died tomorrow, how much money would my family need?”

Insurance reduces risk and provides security for yourself and your family’s future. To know how much insurance you need, you’ll need to consider your lifestyle and what the possible risks that could affect it. When calculating how much life insurance you need, consider the following:

• Estate Expenses
• Funeral Expenses
• Mortgage
• Loans and Debts
• Replacing Annual Income (number of years?)
• Children’s education
• Resources available at death: Savings, Stocks, Mutual Funds, Retirement Funds, Life Insurance, and Other Assets

When you think of insurance, the first that comes to mind is auto and home insurance. Replacement of these assets in the event of damage can be very costly. Most people hold auto and home insurance policies.

Life insurance is essential to many families, giving extra security if the unthinkable should happen. The loss of a breadwinner is devastating enough, without having the added stress of worrying about how to cover the bills and mortgage.

Other types of insurance are equally important. Life events such as illness, accidental injury, loss of employment income, or a death in the family can affect family security. Yet these potential risks to your lifestyle can be reduced by the right insurance planning.

Changes in lifestyle also determine the types and amount of insurance you need. The amount of life insurance that you have will likely change throughout your life, depending on your life circumstances. Some of these changes might be getting married, starting a family, changing jobs or preparing for unexpected events.

Should you have Term, Universal Life, and Permanent Life Insurance?

To meet modern trends, life insurance providers also offer to act as an investment vehicle, building up a sum of extra equity over the lifetime of the policy. This can be withdrawn or borrowed against, and usually offers a tax-free sum on retirement or death.

Deciding on an amount of life insurance you should have requires careful consideration. A Financial Advisor can help you determine just how much insurance you need based on your age, your income, family circumstances and obligations, assets owned, and debts owed.

“Baby boomers have consistently had an impact on our society as we have moved through the decades, and this trend now continues in our attitude toward life insurance and financial planning. With baby boomers on the cusp of retirement their impact on the financial industry is undeniable.

“Where our reasons for obtaining life insurance used to be to provide security to our family in the event that something happened to us, we are also now asking ourselves whether we have provided secuity for our own future. Health care concerns, pension reform questions, and increasing life spans have all contributed to increased desire to fully understand investment options for making financial security a reality.”

To read the full article please go to http://www.insurance-canada.ca/consinfolife/infobytes/2010/Sun-Life-boomers-transform-insurance-1006.php

1. When should I retire? Typically, people make the decision to retire five years before they actually retire. The decision should not be made without considering all of the financial implications, including health care coverage and other benefits, current financial obligations and how those obligations will be met. Pre-retirees also should have a contingency plan in place in case of unforeseen events such as a layoff or illness.
2. How do I plan for my expenses and income? Advisors can help their clients identify monthly and annual expenses, as well as possible additional unplanned expenses they will have in retirement and develop a strategy to create income sources (pension, savings withdrawals, Social Security benefits, annuity payouts, etc.) that will pay for the expenses while protecting their clients’ long-term financial security.
3. Which funds should I draw from first? Most people understand the importance of diversifying their financial portfolio but when it comes to deciding how to convert their savings into income, many need advice to ensure they are making wise choices-considering tax implications and long-term investment strategies.
4. What required minimum distributions do I need to perform and when? As part of their financial portfolio, many retirees invest in various types of annuities to continue to grow their savings. But some annuities have required minimum distributions so it’s important to know when these distributions need to occur to avoid certain penalties and adjust your finances to minimize the amount of taxes needed to be paid.
5. What risks should I plan for when I retire? LIMRA research has shown that retirees aren’t always aware of all the possible risks they face in retirement. Advisors can help their clients protect themselves against risks like longevity, illness, inflation and market volatility that could compromise their financial security.

“Our research has found that less than half of retirees have a written retirement plan to ensure their financial security throughout their retirement,” noted Rice. “We hope these questions will inspire retirees and their advisors to develop a plan that will enable the retirees to live comfortably for the rest of their lives.”

About LIMRA

LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness.

To view this article please go to http://www.insurance-canada.ca/consinfolife/infobytes/2010/LIMRA-Questions-Retirees-Should-Ask-1004.php

Conatact Jay R. Gangnes today at 604 808-9962 to discuss your coverage options

Control – YOU own the policy, not your mortgage lender. You choose the beneficiary you want instead of the lender assigning itself as the beneficiary

Level coverage - Typical mortgage insurance declines as your mortgage balance decreases but the premiums stay the same. With life insurance, your coverage amount remains intact even as your mortgage balance decreases

Comfort – Typical mortgage insurance is underwritten at the time of death, when you need it most. With life insurance you benefit from insurance underwritten at the time of application.

Guaranteed benefits and premiums – Typical mortgage insurance rates are not guaranteed. With your life insurance policy the rates are guaranteed for the life of the policy

Explore your mortgage protection options and call today!

• Starting in 2009, Canadians aged 18 and older can save up to $5,000 every year in a TFSA
• Contributions to a TFSA will not be deductible for income tax purposes but investment income, including capital gains, earned in a TFSA will not be taxed, even when withdrawn.
• Unused TFSA contribution room can be carried forward to future years.
• You can withdraw funds from the TFSA at any time, for any purpose.
• The amount withdrawn can be put back in the TFSA at a later date without reducing your contribution room.
• Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.
• Contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a spouse upon death.

Contact Jay R. Gangnes today at 604-808-9962 to see how a Tax-Free Savings Account can be most beneficial for you!

**Source: Government of Canada