Health, Life, and Disability


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Insurance Solutions

Life Insurance Explained

Critical Illness

About Life Insurance

Term Insurance

Permanent Insurance

Mortgage Insurance


Long Term Care, Individual Health, Etc.

Needs Analysis

Critical Illness

What is Critical Illness Insurance?

Also referred to as Living Benefit Coverage, it is protection against contracting potentially life threatening diseases such as a heart attack, stroke and cancer and a host of other illnesses. This policy pays a lump sum benefit after thirty days of being diagnosed with a covered condition (90 days for cancer). There are no restrictions on how the funds are used, be it income replacement, a caregiver, medical treatment, paying off debts, vacations etc.

Given that almost one in three people will be sidelined with such an illness in their lifetime, it makes economic sense to offset this risk on an insurance company, so you can focus on recovery as opposed to expenses. Finally, these policies also offer a return of premium, for those who can afford it and like the idea of having potentially free coverage.

Policies are available for periods of 10 years up to age 75. The latest a policy can be purchased is age 65. Coverage is available for children and it is a great way to insure their future health.

Unfortunately, not everyone can qualify for a Critical Illness plan. Your health and the health of your immediate family members (mother, father, sister and brothers) will be closely looked at by all issuers. Once two family members have contracted the same covered condition before age 70, the chances of being covered for anyone else in that family decrease severely. Fortunately, those with different illnesses may still be able to protect their offspring or have their siblings protected.

About Life Insurance

What is the dumbest way to die?
“Without Life Insurance”.
(-sun life ad)

Life insurance may not be much fun to buy since it does not bring enjoyment. It does, however, bring peace of mind and is a critical part of any good financial plan. So what is Life Insurance?

It is a contract between a policy holder and an insurer, where the insurer promises to make a pre-determined (usually a tax-free) payment to a named beneficiary upon the death of the insured person.

In other words, it is a tax efficient way of protecting one’s family from the loss of income they will be without should a key income earner pass away suddenly.

Furthermore, it is a way of preserving one’s home (from mortgage payments), or their estate from probate and taxes (both income and capital gains) that are due upon death.
During my 20 years as a financial security advisor, I have several questions you should ask yourself when considering or reviewing your insurance:

  • Who is the coverage for? (spouse, children, siblings, parents, friends, charity)
  • How much will my beneficiaries need and how long will the funds have to last?
  • Is my policy portable and renewable and convertible?
  • Is my policy competitively priced?
  • What steps have I taken regarding my tax liability at death?
  • Do I have a good understanding of my policy?
  • Have my circumstances changed since I purchased my policy?
Term Insurance

Term insurance enables individuals with limited income to acquire the greatest amount of coverage for their dollar. The policy will last for a predetermined amount of time and will increase substantially should the insured decide to renew the policy at the end of the period. The insured can cancel the policy at any time, a luxury which is not afforded to the insurance company, regardless of one’s health. It should be noted that shopping for a new policy may well be cheaper than simply renewing, unless there has been a significant change in health.

My advice is that you begin to shop for new coverage at least six months prior to the renewal date, as you never want to replace a policy until you have been accepted for a new one, in case you are rated or refused coverage for health reasons you might not even be aware of. You will likely need to modify your coverage (higher or lower), as your financial situation and your need for insurance is likely to have changed from the time you originally purchased your policy.

The main factors to consider are the financial need or face amount (the death benefit), the premium (cost) and the term (length of coverage). The longer the term, the greater the cost as you are locking-in your health for a greater period of time. Think of term insurance as making a deal with the devil. He promises not to take your life as long as you pay. And if he changes his mind, it is he who will pay in spades. Given that you may never collect on your policy, term insurance allows you to pay the lowest price possible for your financial security.

Permanent Insurance

Permanent Life

Permanent life insurance protects the insured for their lifetime. Since the premiums are level, the policyholder is actually paying more into the policy than the actual cost of insurance in the early years. Therefore, their plan will accumulate a “cash value” which can be borrowed against in the future. The cash surrender value can also be accessed in full, should the insured decide to forgo their coverage.

Unlike Term policies which promise to pay the insured “ if” they die within a defined period of time, permanent policies (like level premium whole life), promise to pay out “whenever” you die, regardless of age. This guarantee is part of the reason why the premiums are much higher for permanent insurance. The other thing to remember is that upon renewal, the cost of a term policy can increase by a factor or 2-3 times and even more after the second renewal

Another benefit aside from the favourable tax treatment of interest credited to the cash values, is that the value of a whole life policy can be increased through the accumulation and/or reinvestment of dividends. It must be stated, however, that these dividends are not guaranteed and can produce greater or inferior earnings than prevailing interest rates at any point in time.

A permanent policy is the best way to ensure you can leave your family your business or your real estate upon your passing, as the tax-free benefit will provide them with the funds necessary to pay the “capital gains” owed at death.

I have a strategy that can result in a significant savings on a 10 to 20-year “paid up” permanent policy, for qualified individuals. Lets talk!

Universal life

Universal life insurance offers superior potential for growth of the cash value, with several investment options such as funds, indexes and GIC’s. There is much greater flexibility with these policies as opposed to whole life, regarding the premiums (including single and limited pay options) and the death benefit.

These plans are typically used by individuals (professionals and business owners) who can afford to overfund the policies to the extent they are allowed to do so according to the actuaries and tax laws, as a way of tax sheltering these additional funds until they are paid out at death or borrowed against. Keep in mind that that the opportunity for greater returns means there is a risk of losing money and having the policy underfunded should your selected investment suffer losses as opposed to providing you with an anticipated positive rate of return.

Note: Due to changes in legislation, UL policies will lose some of their luster beginning in 2017. It is recommended, therefore, to purchase your policy three to four months before the end of 2016 to be grandfathered with the rules as they exist today.

Mortgage Insurance

Mortgage insurance is protection for a loan which is secured by a property (typically a home) and is usually encouraged by the bank to protect their loan. Should the homeowner pass away, the insurance will pay off the mortgage in full, alieveating a major expense for the surviving spouse or family member.

Personally, I believe regular term insurance to be of greater value, as there is more flexibility as how to use the proceeds, as well as an option to reduce coverage as the mortgage is paid down, which would lower ones insurance costs.


How is the price of insurance determined?

Actuaries determine the price or premium based upon longevity expectations. They also factor in one’s age, sex, lifestyle and the medical history of the applicant and their immediate family. Basically, they determine the cost that must be paid per person so that within a pool, there will be enough funds to pay for an expected number of deaths per thousand. Their calculations enable them to determine how much each policy holder would have to pay so that there will be sufficient funds to pay out all the anticipated deaths, as well as have enough funds left over for the insurance company to earn a profit as an ongoing business concern.

Can everyone qualify for Life Insurance?

People with pre-existing health conditions can have their application for insurance “rated” (accepted but charged an additional premium for the added risk), excepted or declined. It will depend on the determination of the underwriter from information on the application and from the applicant’s medical practitioners.

Will the Insurance companies really pay for a suicide?

Yes. But only after a period of two years.

Why are there different costs for men and women?

Life insurance is generally cheaper for women as they tend to live longer than men. However, the scenario is reversed when it comes to Critical Illness Protection.

Long Term Care, Individual Health, Etc.

Long-Term Care and Health Insurance are two additional types of coverage Canadians are beginning to take advantage of. LTC is used to ensure you have enough funds should you lose the ability to perform a minimum of two of the five regular activities of daily life. They include, bathing, eating, toileting, dressing and the cognitive as well as physical ability to take their medication.
The funds can be used to provide for a stay in a care facility or for home care. Given that the costs of a care facility can range between $2,000-$8,000 per month (not including medication or a nurse), even a $500,000 RRSP can be diluted quite rapidly.

Individual Health coverage from a company such as Best Doctors, provides policy holders with not only access to a second opinion from some of the top physicians in their fields around the world, but also up to $10,000,000 in coverage as well as access to medications which are not paid for or are not available under Canada’s health system.

What else can insurance be used for?
Many business owners use life insurance for a buy/sell strategy, where they all take out insurance on themselves (paid by the business). Upon the death of one of the partners, rather than remaining a partner in the business (which can cause animosity and which they might not have the experience for) their beneficiaries receive the insurance proceeds.

A “back-to-back strategy” is one in which a person purchases an annuity with a large part of their assets in order to provide with an income for life while using part of that income to create an estate, using a life insurance policy.
What other kinds of Insurance should I consider?

Many people have some form of disability and health insurance through their group plan. Disability insurance provides the insured with up to 80% of their income (tax free) should they become disabled, after a waiting period of 30-60 or 90 days. These policies also have options such as cost of living allowances and Long-term care provisions.

Note: Many high level employees are insufficiently covered under their group plan because of the maximum coverage amounts which keep their plan affordable. They should consider a “top-up” or additional coverage to complement what they are missing. Be sure to pay for it personally, because if you get your employer to pay for it, the payment will become a taxable benefit.

Important: Before buying any insurance, please take the time to review some of the questions above and complete a needs analysis**. It will give you a starting point before you meet with an insurance agent. Also, remember to take any benefits you have at work into account when deciding how much coverage you need, as well as the fact the payment you receive is likely to be tax-free (so you might not need as much coverage as you first believed ).

Needs Analysis

The best way to determine your insurance needs is with our needs analysis.

Click Here to complete our needs analysis form

* Insurance products are provided through multiple insurance carriers.

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