Posted 06 Jun 2014 by Melissa Allan
Having the right life insurance protection can make a big difference in your life and the lives of those close to you. A proper financial security plan that includes life insurance can mean the difference between leaving your estate financially secure and leaving behind debts and an inadequate income. Because of the many options available in life insurance policies, a knowledgeable, trained life insurance advisor is invaluable in finding the right policy to meet your present and future needs most effectively.
There are two basic types of life insurance: permanent insurance that provides protection for life; and term insurance that provides insurance coverage for a specific number of years. Both types pay a death benefit if you should die with the policy still in force.
Basic term insurance policies are generally for a specified period, such as five, 10 or more years, or to a specified age. These contracts tend to have lower premiums while the life insured is young, but when renewed for an additional term period, the premiums can rise significantly. Term policies are ideal to cover large obligations over a short period when funds available for insurance are small. Most term policies can be converted to a permanent policy under certain conditions.
Term-to-100 policies are often seen as permanent insurance but their main characteristics are similar to other term insurance policies. Most term-to-100 plans don't build cash values or pay dividends. They provide a death benefit to age 100, if the policy is kept in force, and have level premiums, regardless of changes in age or health.
Whole life is a common permanent policy, also called participating life insurance, that provides a guaranteed death benefit, expressed as the face amount, for premiums that are usually guaranteed to remain level regardless of age or health changes throughout your life. Whole life policies often pay dividends. These policies accumulate a cash value that may be borrowed against, used to continue coverage if premiums are missed, or withdrawn. Participating insurance doesnt require hands-on management by the policyowner. Instead, the insurance company manages the assets backing the cash value and the death benefit.
Universal life is a permanent interest-sensitive policy that is more flexible and provides a traditional life insurance component with a tax-advantaged investment component. You can decide how much goes into each and increase or decrease your premiums and the death benefits within some limitations. Premiums and benefits can be readjusted at specified times, depending on your insurance needs and on what choices you make in the investment side of the policy. You select an investment mix that is as individual as you aretaking into account your financial goals and circumstances and the amount of investment risk youre comfortable with. This type of policy is attractive for people who want to actively manage their life insurance policy.
There are three main types of insurance that can be classified as "Living Benefits". These are:
- Disability insurance
- Critical Illness insurance
- Long-term care insurance
Accidents and illnesses are facts of life. They could happen to anyone at any time. Did you know that...
- 1 in 3 people, on average, will be disabled for 90 days or longer at least once before age 65.
- The average length of a disability that lasts over 90 days is 2.9 years. Sources: 1985 Commissioners Disability Table A (Experience Table) & CIA 86-92 Aggregate Mortality Table
Great-West Life offers a wide range of disability insurance coverage designed to meet a variety of personal and business needs. With 65 years experience in the disability insurance market, they are a leading provider of disability insurance for Canadians.
Disability coverage can be customized to address your specific needs and protect your ability to earn an incomesomething that could be jeopardized the second a disability strikes.
This disability needs calculator can help you see how much money you may need to meet your expenses if youre disabled and cant work.
As a business owner, you want to protect both your independence and profitability. Great-West Life offers several types of insurance for business owners to reimburse certain business expenses help facilitate a buy-sell agreement or help hire a replacement for a disabled employee. Each of these plans includes standard features and optional benefits. Great-West Lifes business expense calculator can help you determine your business expenses.
Private Health Care Spending Plans
A private health care spending plan is a Canadian tax-free vehicle for financing health care costs of employees. There are various plans to choose from in Canada and the fees vary depending on who set's up the plan, etc... This is a good consideration for business owners to control the costs of employee benefits as the rates rise in traditional group benefit plans annually (depending on claim's experience, etc..)
How it works: Each employee is entitled to a pre-determined amount of money each year to use toward expenses incurred that are not covered by their group health and dental benefit plan.
Advantages for employer: It allows them to manage their costs as they know ahead of time what their maximum annual cost will be because they decide how many dollars are given to their employees each year. Plus, all reimbursements and administration fees are tax deductible to the company.
Advantages for employee: It allows employees to use their dollars toward expenses not covered in their group benefit plan such as deductible's, co-insurance payments, and other larger benefits that their plan may not offer due to the costs to have these benefits such as orthotics.
Critical illness insurance
No one plans to get sick, but when something unexpected happens, you can help yourself and your family by being financially prepared.
Critical illness insurance is a 'living benefit' designed to alleviate the financial strain that can accompany a critical illness. It helps allow you to focus on what really matters recovery. Critical illness insurance is designed to help financially support patients before, during and after treatment by providing a lump-sum benefit when a critical illness is diagnosed as defined in the policy and the waiting period is met.
Considering critical illness insurance? Consider this
More and more Canadians are discovering the value of critical illness insurance how it can protect their hard-earned financial resources if theyre diagnosed with a critical illness and allow them to focus on whats most important getting better.
While critical illness insurance is fairly new to the marketplace, a variety of products are available. Here are some things to consider when choosing a plan:
- Make sure you choose a reputable company. Since critical illness insurance is relatively new, youll want to deal with a company with a solid foundation.
- One plan does not fit all. Most plans provide coverage for the "big four" conditions: heart attack, cancer, coronary artery bypass requiring surgery and stroke. While this is often a less expensive alternative than a plan that covers more conditions, think ahead and assess your financial plan in its entirety perhaps youd feel more comfortable with a plan that covers more conditions and treatments.
- The plan you choose today may not provide the coverage youll want tomorrow. Is there flexibility to change your coverage after purchase?
- Does the plan provide the option to purchase coverage for your children?
- Many plans are designed to provide a benefit for conditions that are not considered to be life-threatening, such as early prostate cancer (stage T1a or T1b), ductal carcinoma in situ of the breast, or coronary angioplasty. The benefit is a percentage of the critical condition benefit up to a maximum amount).
- Will the product deliver when you need it? What are the survival periods (thats the period of time from the date of the diagnosis to when the benefit is payable)? Are advance payments available for any of the critical conditions?
- Does the plan provide a premium refund if you die and have never claimed the benefit?
When investigating critical illness insurance plans, consider your current financial plan, the products flexibility, the strength of the coverage offered for the conditions that matter most to you, its range of features and options, and the companys reputation. Developing a personal checklist will go a long way to ensure you purchase a product that will provide the best value and security.
Long-term care insurance
Living for today and caring for tomorrow is a philosophy most people relate to. Clients spend a lifetime working to acquire the better things in life - for now and in the future. It has been said that the fear of dying too soon has been replaced by the consequences of living too long. Have you planned for the potential risk of long-term care?
Long-term care insurance provides families with the financial assistance to enable them to maintain their quality of life. Benefits can be used for the service and support required to maintain their day-to-day activities should a chronic illness or cognitive impairment keep them from being able to take care of themselves.