Insurance

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Critical Illness
Disability
Group
Guaranteed Life
Life
Mortgage





























































Critical Illness

Critical illness insurance attempts to fill the gap between life and disability insurance. Life insurance policies pay a benefit upon death while disability insurance covers lost employment income due to illness or injury. Critical illness insurance policies pay a benefit when the individual is diagnosed with a serious life threatening illness or condition.

The benefit is designed to assist survivors of these illnesses regain their physical and financial health. The benefit can be used for immediate heath related expenses, accessing US medical care, paying off the mortgage and looking after business interests. There are no limitations for what it can be used.

The benefit is typically payable 30 days after diagnosis according to the definitions in the contract. It is thus vital to analyze contracts not only based on the covered conditions but also the definitions of those conditions. The general rule of thumb is that if the premiums are paid with after-tax dollars then the benefit is tax-free. If paid with pretax dollars then the benefit can be taxable.

Premium structures vary between 10 year renewable term to level premiums for life. Most contracts have a built in provision to refund all paid premiums to the insured's beneficiary in the event of death by any cause. There is also the choice to pay an extra charge and receive a refund of premiums at a predetermined point should no claim have occurred.

Usual covered conditions:

  • Heart Attack
  • Kidney Failure
  • Stroke
  • Severe Burns
  • Cancer
  • ALS Lou Gehrig's Disease
  • Multiple Sclerosis
  • Blindness
  • Parkinson's Disease
  • Loss of Speech
  • Paralysis
  • Loss of Hearing
  • Coma
  • Loss of Limbs
  • Coronary Artery Bypass Surgery
  • Occupational HIV
  • Alzheimer's Disease
  • Major Organ Transplant





Disability

Disability insurance also known as Income Replacement insurance protects an individual against financial hardship created by an inability to work due to an accident or sickness. A monthly benefit is calculated as a percentage of income, usually capped at 85% of take home pay and is payable after the disability has continued for a predetermined amount of time called the elimination period.

Benefits continue to be paid so long as the individual meets the definition of disability in their contract and up to the chosen length of the contract period, known as the benefit period.

Contracts vary tremendously based on a number of factors that should be taken into account before selecting a plan. Also, disability insurance is usually integrated with an individuals group insurance plan and any government benefits that may be payable.

Items to consider when looking at disability contracts:





Group

Group Insurance contracts are a major part of an employer's benefit package for their employees. Most employers, in order to retain key employees and reduce staff turnover, set up a group plan in order to protect workers and their families.

Major components of group insurance plans are:





Guaranteed Life

Having trouble obtaining Life Insurance because of health problems? Golden Protection:





Life

The two major categories of life insurance are: TERM and PERMANENT.

Term Insurance is designed to address temporary needs and buys you protection for a specific period of time or "term". It has no cash value.

Permanent Insurance is used for permanent needs such as funeral expenses, taxes on your estate, charitable donations or passing on an estate to you heirs. Permanent Insurance policies can be divided into two categories: those with cash value and those without. Cash Value is the money that a policyholder puts into the policy contract above the actual cost of the insurance. Whole Life and Universal Life polices contain cash value while most Term 100 policies do not.

Term
Term Insurance is the lowest cost life insurance protection you can purchase. It is primarily designed for a specific purpose - income replacement, mortgage insurance, loan and debt protection, education funding etc…

Common premium structures are for 5, 10, 15, 20-year periods whereby the initial rate is guaranteed and locked in for that term period. Most term policies have a renewable and convertible feature. Renewable means that the plan will be automatically renewed at the expiry of the initial term period. Convertible means that it can be changed to a permanent insurance policy without having to provide medical evidence to the insurer.

Rates have been dropping. If you have not purchased term insurance recently, now is a good time to review your portfolio. Compare your rates with those below or click on the link for a no obligation on-line quotation system.

Term to 100
This type of life insurance policy provides level guaranteed protection to age 100. Unlike a term insurance policy whose premiums can increase at the end of the initial term, these premiums are locked in and level for the lifetime of the contract.

Term to 100 policies are akin to Whole Life insurance policies. However, there usually is no cash value build up or dividend participation in these plans. As a result, Term to 100 policies are generally less expensive than their Whole Life policy counterparts.

Key features of Term to 100 insurance:

Whole Life Insurance
The most common type of Whole Life insurance is straight life - you pay premiums for your whole life and the death benefit remains payable for your whole life These types of policies guarantee the level of premiums you pay regardless of your age or health, the death benefit or the accumulating cash value within the policy.

Alternatively, there are limited payment policies available. Under a limited pay policy, the premium payment period is condensed to a number of stated years or to a specific age of the insured. In the example of a 20-pay Whole Life, premiums are paid for 20 years and coverage continues for life. This is achieved by the cash value built into these policies. Not only do they make it possible to pay for a limited number of years they can also include the following provisions:



These are features that protect the policy owner against immediate loss when insurance premiums go unpaid. The cash value also permits loans to be made against the security of the policy.

Key features of Whole Life Insurance:


Universal Life Insurance

Universal life plans provide lifetime coverage but unlike a whole life policy, they feature an investment component. The investment fund is sheltered from taxes (certain conditions have to be met), but unlike the cash value in a whole life policy, the funds in the Universal Life contract are controlled by you, not the insurance company. This offers you the potential of receiving more insurance coverage for less premium, however it involves sharing some of the investment risk with the insurance company.

A Universal Life contract has two separate components: insurance and savings. If the policy qualifies under the Income Tax Act as an "exempt policy" then the savings component can grow tax-free inside of the policy. Insurance companies have procedures in place to ensure that policies are exempt and remain so for the lifetime of the contract. Part of your premium pays for the cost of the insurance coverage and the balance is invested in the savings component.

Investment options for the savings part range from: guaranteed investments (GIC's) to equity linked products such as market indices to actual mutual funds.

Upon the death of the life insured the face amount of the insurance portion plus the savings component are paid out tax-free to the beneficiaries.

Key features of a Universal Life contract:





Mortgage

When purchasing a home most people take out mortgage insurance protection with the lending institution they are dealing with. This is usually part of the application process and the premiums are usually blended in with their monthly or bi-monthly mortgage payments. More often than not, people do not realize what they are paying for, what the benefits are and what their actual cost is.

In a nutshell, mortgage insurance is life insurance that only protects and benefits the lending institution. If you die your lender is paid the balance of the outstanding mortgage and has no further interest in the property. An alternate solution is to take out private mortgage insurance with a Canadian insurance company. The premiums are generally lower than blanket mortgage protection. They are fully locked in and guaranteed for the contract term. Additionally you are underwritten as an individual and not classified with the less than insurable risks.

This following is a list of some of the benefits of privately owned mortgage insurance:



Basically, the benefits of private mortgage insurance far outweigh those offered by the banks or credit unions.