Need Insurance?

Why get insurance?

Do you qualify for it?

How is insurance financed?

Term Insurance

Permanent Insurance

Conversion Rights

Guaranteed Insurability options

Mortgage or creditor insurance

Key person insurance

Insurance for estate conservation

Which is right for you?

Life insurance

Critical illness insurance

Long term care insurance

Personal health and dental insurance

How do I get started?

 


Why get insurance?

Insurance is a misunderstood product that has an important role in basic financial plans. It's simplest role is to cover short term financial risk like if an insured person passes away suddenly, then the life insurance benefit is paid tax free to the next of kin so that financially, nothing has changed (bills are paid, food is still on the table, educational plans for children are intact, etc.) despite such a tragic event.

Insurance though is also the simplest and only tax free method to transfer estate wealth to the next of kin. All life insurance benefits are completely tax free and like many wealthy Canadians, if you stuff your insurance policy with cash, all of this wealth will completely by-pass probate fees and estate succession tax liabilities upon your passing. During your life, you will still be able to access this money and under certain plan designs, investments held in the insurance policy are another source of tax sheltered investments beyond the RRSP or the Tax Free Savings Account.

Insurance can also magnify wealth on a cheaper basis (long term costs average $1 spent for every $4 received tax free). Many families chose life insurance as the mode to guarantee that their children will have a boost to their wealth when the parents pass away.

Insurance with its multiple uses is the best kept secret of the wealthy and a core part of financial plans. As KPMG (one of Canada's largest accounting firms) states, "life insurance plays many roles in estate planning." Contact us or your trusted advisor to find out more about what insurance can do for you.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Do you qualify for insurance?

Insurance is a privilege, not a right. Like homeowner's fire insurance, you can only get insured prior to the "fire".

Front end underwritten products (where the company sees if you qualify at the beginning and not after you make a claim) may be very difficult to be approved for. However, once approved, the claims process generally goes very quickly unlike back end underwritten products that check to see if you would have qualified only at the time of claim.

Key factors that can result in your application being declined are:

  • personal health (no medical conditions or any conditions being treated actively or investigated)

  • personal lifestyle (no smoking, no drug use, no risky activities like scuba diving and racing)

  • minimal travel (no frequent travel for recreation or for work)

  • family health history (no medical issues in your parents or siblings)

Once you are accepted for private insurance, the insurance cannot be taken away (unless it expires, or you don't pay and it lapses). That means that as you age and pick up medical problems or bad habits, this will not affect your insurance. In fact after 2 years, if you decide to commit suicide, that is covered too.

Getting insurance as soon as possible is the key to insuring that you qualify for insurance and that you keep your cost as low as possible. With unique things like conversion rights and guaranteed insurability clauses, you can keep the cost low in your early years but the insurance can grow as your needs and budget grow during your lifetime, even if you don't qualify to be insured anymore.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


How is insurance financed?

The best way to understand insurance is that it is like a line of credit that you are paying for up front. Your "benefit" is the credit that you get when you claim for benefits but the financing of this credit must occur prior to you receiving this credit.

The amount of time an underwriter believes that you will be financing the credit prior to receiving it is key to how your monthly cost of insurance is determined. If the time in between is shorter, your rates will be higher and if your access to this credit is for life, then the cost will be higher too.

Essentially all insurance is broken down into 2 types, Term and Permanent insurance.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Term Insurance

Term insurance is the cheapest product short term (less than 30 years). It is suitable for covering financial risk for things like mortgages, loans, starting new businesses and financial risk to your family in the short run.

Term insurance however is not a cost effective method of covering long term risks like funeral costs, and estate succession tax liabilities.

Term insurance expires generally between age 65-80 (depending on the product design) with some that will expire at age 100.

Term insurance also has no cash back function, so if you don't claim on it prior to it it's expiry, you will not get any money back.

If you already have term insurance, most term products have a conversion right so that prior to say age 65, a person can convert to a permanent policy without you being insurable medically or lifestyle wise.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Permanent Insurance

Permanent insurance is a cheaper option long term. Rates typically are stable and don't get cost prohibitive over time. Permanent plans will never expire and they have a cash surrender value (cash back) that grows over time (on a guaranteed or non-guaranteed basis).

Some serious benefits of Permanent insurance is that some policies (Universal Life and fixed pay period paid up Universal Life policies) offer the ability to have some tax deferred investment possibilities (if you have maxed out your RRSP and Corporate Class accounts are not appropriate for you). Most important is the ability to tuck away parts of your estate into the insurance policy and have it paid tax free to your next of kin upon your death. That means more for your family and less for the tax man.

That said however, also be aware that permanent plans are not necessarily appropriate for everyone and they should be the last tax sheltered option when it comes to investing for your future. The reason is that all life policies have a 2% premium tax on all monies going into the policy. From an investing perspective this means you have to earn more on your investments to get ahead.

Worse, typical management expense ratios are higher for investments in life policies and with premiums being withdrawn from your policy fund on a regular basis, if you have no need for life insurance or markets go sour, investments within life policies can be poor underperforming choices for the average person.

From my own experience, I tend to avoid market based Universal Life policies which can have very unpredictable results. The worst case being that all of the funds and the policy expire because the heavier management expense ratios, premium taxes, poor market performance and illustrations based on too high a return may result in negative returns for your policy fund.

Consult with your insurance advisor to find out if permanent policies are appropriate for you.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Conversion Rights

Most term policies offer the ability to convert to a permanent policy without medical evidence. What this basically means is that if a permanent policy is appropriate for you but you can't afford it right now, then you can opt for  a term policy and convert it in the future (usually up to age 65) even if you are medically not fit to qualify or your lifestyle has changed and you would be rated or declined.

Bear in mind that if your term policy is rated, the rating will pass over to your new permanent policy when you convert.

Also note that each year you delay the conversion, the cost per month will go up 3-10% on average (this accelerates more after age 45)

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Guaranteed insurability options

This option buys you the right to increase the amount of your insurance in the future based on a preset maximum amount and based on a preset schedule (eg. $150,000 per 5 years up until age 45). This right to increase the insurance does not require medical evidence.

Also bear in mind that each time you acquire more insurance, the new chunk will be priced based on the age that you acquire the top up.

For children, this may be a good option because nobody knows if they will truly need insurance in the future (will they get married?) and if they are no longer insurable in the future, this option will allow them to continue to increase the insurance as their needs require.

Bear in mind also that if there is absolutely no future need for increased insurance, this option which will increase your monthly cost may not be a good way to spend your money.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Mortgage or creditor insurance

(will be added soon)

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Key person insurance

(will be added soon)

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Insurance for estate conservation

(will be added soon)
 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Which is right for you?

(will be added soon)

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Life insurance

Life insurance is simply insurance that pays a death benefit on the death of the life insured. The benefit of this insurance only goes to the beneficiary and not the life insured.

Therefore, life insurance is an appropriate consideration for those with next of kin who are concerned about leaving debts with their loved ones or the loss of their lifetime worth of income which can impact future living standards and educational plans for family and children.

Term plans are available for short term needs like debts and mortgages and permanent plans are available for long term issues like funeral costs, estate planning and wealth creation for your next of kin.

For single individuals, life insurance is of little use unless they have plans to leave behind money to charities or if the person feels that they may get married in the future. For the latter situation consider a small 20 yr term policy with a guaranteed insurability rider.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Critical illness insurance

Critical illness insurance is relatively new. Considering that a critical illness like a heart attack or cancer can dramatically alter a person's life and need for money (eg. some medications, transportation, new treatments and changes to your dwelling to accommodate your health needs are not covered by universal health care or government programs).

It is estimated that almost 1 in 2 Canadians will suffer a critical illness before age 65.

From my experience, critical illness coverage may be a crucial financial defence that will prevent you from having to sell your home or dip into your reserves (like RRSP's) if you a critical illness makes you desperate for money especially when economies are down like 2008-2009.

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Long term care insurance

(will be added soon)

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Personal health and dental insurance

(will be added soon)

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


Suggested Plan Designs

While there is no absolute right or wrong design because everything is very person, the following decision maker guide can help you decide on appropriate insurance plans. Please consult with a licensed professional when making the final decision because even the smallest significant piece of information about you could change what is the best plan for you.

Are you getting insurance for your:

corporation private concerns

 

Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.

 


How do I get started?

The best thing to do is to contact us and discuss what your needs are, how you would like to finance it and what your budget is. Once we have discussed these key things, we will meet and discuss a range of costs regarding some of the best insurance options to meet your needs.

Due to company regulations, we can only personally discuss costs and we are not able to email quotes. All of our discussions are on a no fee and no obligation basis and most insurance discussions can be completed in 30-60 minutes.

For your convenience we have offices in downtown Vancouver, the Guilford area of Surrey and mobile services to the rest of the lower mainland (and under extreme circumstances the rest of BC).

To help us efficiently help you find the best options available, please complete the person to be insured info sheet.

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Feel free to contact us for a no obligation check-up and use the results to clarify your own situation and see what choices you have to face your challenges.