Archive for the ‘Canada Life’ Category

How to Get Non-Smoker Premiums if you’re A Cigar Smoker?

Lite to Moderate Cigar Smoking can Qualify for Non-Smoker Rates

 

If you’ve ever looked at buying life insurance and you smoke, you know there is a large difference between smoker and non-smoker premiums. If all you smoke are large cigars (not cigarillos, which are the size of a cigarrette but use cigar tobacco) you can very easily qualify for non-smoker premiums and save a lot of money.

 

Almost all life insurance companies in Canada offer some leniency when it comes to smoking large cigars. The typical allowable amount is an average of 12 cigars per year or less (that’s one per month). If you are an occasional cigar smoker – like you’ve done it while on vacation in Cuba or go to a cigar bar a few times a year with friends, then you can easily qualify for non-smoker premiums without much trouble. Once you smoke more than 12 vigars per year, all insurance companies except one will rate you as a smoker, and you cost for life insurance will more than double.

 

There is one life insurance company that has more favourable treatment for cigar smoking – Canada Life. They allow up to an average of 52 cigars per year (that’s one per week). So if you like to indulge in cigars on a somewhat more regular basis, then Canada Life is your best choice for life insurance because their non-smoker premiums are still very competitive and you can get it even if you are a moderate cigar smoker.

 

One thing you can’t qualify for is preferred rates, or discounted premiums for a non-smoker in good health. Even if you are an outstanding athlete, a few cigars per year means you can only get standard non-smoker premiums. No discounts.

 

Hope you enjoy the video above and leave us a comment below about other useful life and health insurance videos you wish to see. If you need help getting lower premiums for your life insurance, please contact us to speak with a life insurance broker in your area.

 

 

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this video about getting non-smoker premiums as a cigar smoker would be very much appreciated.

Long Term Disability Insurance is Complex to Design

The many moving parts of long term disability insurance

Long term disability insurance is one of the more complex insurance products to design for people. It has many moving parts and various riders and options that can be added to it. In this article we will cover the fundamental plan design elements to setting up a proper disability insurance plan. Also, we will discuss the three elements of underwriting that take place to get qualified for disability insurance.

 

This is different from group long term disability insurance, which usually has a static plan design and cannot be customized by the policy holder. When you purchase a personal disability insurance policy you can adjust many of these features to make the plan fit your unique needs.

Plan design elements of long term disability insurance

Elimination Period

The elimination period is also called the waiting period for a long term disability insurance plan. In fact, with most disability insurance policies, this elimination period can be as short as 30 days, but that is the most expensive option. The real premium sweet spot is a 90 day elimination period. This means you would be covered for all major illnesses and injuries that would keep you from work after waiting 90 days, and the insurance company is not likely to pay claims for short term events, like sprains, strains, break and cuts.

 

If you have enough money in the bank to afford to wait 3 months before your benefits start, then your long term disability insurance plan will be priced very competitively for your most financially impactful risks. Insurance industry statistics show that if your disability lasts more than 90 days, the average time off work is 2.9 years.

Benefit Period

This is how long you would like your insurance payments to go for if you were disabled. The shortest timeframe is for 2 years, or 24 months of benefit. You can also choose from a 5 year benefit, 10 year benefit or until age 65 benefit. For most people, even though the coverage to age 65 is the most expensive, it provides the best level of protection they are looking for.

 

Even though about 95% of all disability cases are back to work within 5 years, the 5% who don’t go back probably will never return to the workforce. For these people, knowing their disability insurance payments will never end throughout their working career is very valuable. Also, the price difference between a 5 year benefit and a “to age 65” benefit is not that steep, and can usually be managed by the budget.

Coverage Amount

When determining the amount of coverage you can buy for long term disability insurance, you have to look at your actively earned income. Passive income, like collecting rent cheques or interest payments from an investment, is not included in calculating your coverage amount. This is because passive income would continue even after you become disabled. Only a percentage of your actively earned income is insurable. The insurance company doesn’t want to over insure its clients so as to give people a financial incentive to remain on a disability insurance claim. They want to provide enough income for paying day-to-day expenses but give you incentive to go back to work.

 

So, there is a maximum you can qualify for. It is usually about 60 – 65% of your gross income before taxes. If you are a high income earner in Canada, this percentage will decrease. Disability insurance companies do allow for high income earners to get a much larger benefit but it is a much small total percentage of their take home income. For instance, if you earned $75,000 per year you could get a month benefit of $4,125 per month tax free benefit (or 66% of gross earnings). If you earned $250,000 per year from all sources of active income, like salary plus bonus, you could get $9,500 per month tax free benefit (or 46% of gross earnings).

 

If you feel you don’t need the maximum amount of monthly benefit, you can always reduce your coverage and thereby reduce your monthly premium. You cannot, however, get more monthly long term disability insurance coverage than your earnings qualify you for.

Regular Occupation vs. Any Occupation

A very common difference between personal long term disability insurance group coverage is the definition of regular occupation vs. own occupation. Regular occupation is defined as the job duties needed to perform the regular occupation under which you were insured. For example, if you are an oilfield consultant, you need to drive to sites, be able to walk around the job site, be able to use a computer, have strong cognitive abilities to write reports and analyze data, etc. And these job duties would be related to the job of oil field consulting, not supervising a manufacturing facility for instance. An inability to do these duties because of injury or sickness would trigger your long term disability insurance claim.

 

Any occupation definition, on the other hand, is defined as being able to perform normal job duties that would qualify you to re-enter the workforce in ANY occupation for which you are suitable trained and/or have experience in. A disability insurance company would also have the right to demand that you engage in retraining so you would become qualified to re-enter the workforce, and thereby get you off a long term claim.

 

With a personally owned long term disability insurance policy you can have the regular occupation benefit through to age 65. With group insurance you have regular occupation definition for 24 months, and then it switches to any occupation definition.

Total, Partial and Residual Disability Definitions

With group benefits disability coverage your only definition of coverage is total disability. This means you must be incapable of returning to work in any capacity and staying home 100% of the time. Even if you return to work part-time you would lose all your disability insurance payments under the total disability definition.

 

With a personally owned long term disability insurance policy you always get the total disability definition, but you also could get partial and/or residual disability definitions. A partially disability definition is if you are away from work about 50% of the time and/or you cannot perform one or more of the major duties of your job. Qualifying for a partial disability benefit would give you 50% of your monthly benefit. Residual disability coverage is defined as percentage of income loss while you are injured or sick and under the supervision of a doctor. If you are losing more than 20% or your prior income you would get that percentage of you monthly benefit. For example, if your benefit is $5,000 per month and you are losing 60% of prior earnings, you would get $3,000 per month and still be able to work part-time.

 

Having total, partial and residual disability definitions gives you a lot more choice and flexibility when on claim. Being bored at home and feeling trapped by a long term disability insurance policy is the last thing you need when trying to re-enter the workforce.

Three underwriting factors to qualify for personal long term disability insurance

Health Underwriting

As with life insurance or critical illness insurance, the insurance company will need to evaluate your health risks. What they are looking at is very different from a life insurance policy though. The insurance company needs to evaluate your likelihood of going on a long term disability insurance claim in the future based on your health today. Things like having prior mental or nervous disorders, like depression or anxiety, would make it hard to get disability insurance (since over 20% of all claims today are related to mental/nervous disorders). Having a prior injury to certain part of your body, like a torn ACL, would usually mean exclusion for that particular body part for any future claims.

 

If you are healthy and without prior injuries or illnesses it is very easy to get disability insurance (or any insurance for that matter). Unfortunately, as we age, it is more and more likely we have at least one thing wrong with us that makes getting a disability insurance policy a problem. Be prepared for certain exclusions and limitations to your long term disability insurance policy if you have any prior conditions.

Income Underwriting

This was referred to above, in that you can only qualify for a certain percentage of your actively earned income. When going through underwriting you need to provide proof of income. This is usually in the form of a T1 income tax statements for the last two years of earnings. If you are on contract, a copy of your contract agreement would also be needed. The insurance company will average your earnings over the last two years and offer maximum coverage based on the aggregate amount. To get more disability insurance coverage, be sure to provide additional evidence of other earnings that might qualify for coverage.

Occupational Risk Underwriting

Occupational risk is a big factor when getting long term disability insurance coverage. Disability insurance companies have many years experience with workers from different industries, and they have a long term history of claims. For instance people in the nursing profession have a higher rate of claims vs. accountants, so the accountant would pay less for the same monthly disability insurance benefit. Be sure to shop around with a broker, as some companies have had poor experience with certain groups and charge them more, while the other company would be able to offer a more competitive premium.

 

Just be prepared that if you are in a more physically intensive job or a blue collar trade you will pay more for disability insurance coverage than someone who works in a white collar professional career like a doctor or lawyer.

Get a Long Term Disability Insurance Quote Now

Designing a quote for long term disability insurance coverage is not quick and easy, and that is why there are no online tools to get a quote instantly. You can either use our Disability Insurance Request a Quote form or feel free to contact Life Guard Insurance directly to be put in touch with a qualified insurance broker who can design you a personalized long term disability insurance plan.

 

 

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about long term disability insurance would be very much appreciated.

Hedge Against Stock Market Risk with Whole Life Insurance

Protect against violent stock market swings with whole life insurance

With another bloodletting day on world stock markets I have begun to wonder why the average Canadian doesn’t own and invest more into traditional whole life insurance. Wait stop! What did I say? Invest into whole life insurance? Don’t laugh. You can actually use life insurance as an excellent investment tool. It’s true – I swear!

How, you might wonder, does “investing” into a whole life insurance policy give investors protection from the carnage that is the world stock markets? It is all a matter of diversification into alternative asset classes. Whole life insurance is a solution to many an investors’ economic woes:

• Moving money out of risky assets into more secure long term investments
• Avoid violent market swings
• Bear more fruit than traditional interest rate linked accounts, like GICs

Long term stable returns from whole life insurance

Whole life insurance is one of Canada’s oldest and best performing financial products. This type of life insurance has been in existence in Canada for over 140 years in some form or another. Canadian life insurance companies pride themselves of NEVER missing a dividend payment on their whole life insurance products. Some of the oldest and best performing whole life insurance plans in Canada boast paying out an annualized dividend payment of over 7.5% annually (averaged) for the last 50 years!

So why isn’t whole life insurance more popular in Canada? Well, it actually is. Whole life insurance tends to sell more when stock markets drop and there is economic uncertainty. Since 2008, when the economic crisis started, whole life insurance sales have grown by an average of 11% per year. People are getting the message – this is a great plan!

When the economy is in full growth mode, and everyone is making well over 10% annual growth rates in the stock markets, sales of universal life insurance go up. Universal life has investment accounts linked to market performance (equities). So, universal life policy holders are seeing their life insurance cash values drop, prompting many to move to whole life insurance.

Whole life insurance is not exciting. It is stable with guaranteed cash values. It pays a dividend which takes many years to grow as the dividend is linked to the maturity of the policy. Cash values are small in the early years and take decades to grow to something sizable. And, there are limits on how much you can invest based on the size of the life insurance’s death benefit. But, maybe, investors are looking for something that is a little more boring, slow, steady and stable. I don’t know about you, but I’ve had enough excitement in the stock markets recently to make me think twice about investing more money in that pit.

Tax advantaged status of whole life insurance

In case you were not aware, life insurance policies in Canada have specialized tax status. Whole life insurance has both a cash value and the original death benefit. Upon death, the entire death benefit PLUS all additional insurance added from growth are paid out to beneficiaries tax-free!

There are very few tax exempt products left in Canada. Your home (primary residence) is one of them. Life insurance is another. RRSPs are tax delay, as they are fully taxed as income when drawn out in retirement or at death. You can’t tax deduct the initial premiums for your life insurance, but the death benefit and all cash accumulations and dividends which grow your policy, non-taxable when paid out as a death claim. Only if you cancelled the policy and took out all your cash would you ever experience a taxable gain (and why cancel the policy and lose all the premiums that went towards buying the ultimate death benefit?).

Creating a growing life insurance policy

All whole life insurance policies pay out dividends. These dividends represent the good management of the life insurance company of their whole life insurance fund, as they make more gains than originally expected when the policies were sold to Canadians. Gains come from many sources – wise investment choices, increased longevity of policy holders, the reducing costs of doing business, etc.

One of the most popular ways to use these dividends as they pay out is to buy additional chunks of permanent life insurance, added onto the original whole life insurance policy. The cash value of your policy also goes up as each of these chunks represents a certain cash value too. So, your life insurance grows as your dividends increase, and so does your cash value.

Leveraging whole life insurance for income

One of the most common questions about whole life insurance is how can someone use the cash values of the policy while still alive. Everyone thinks the policy is only for the beneficiaries, and has no value for the owner while alive.

Well, every life insurance company has a loans department where they can grant tax free loans, typically at prime +1%, on the existing whole life insurance policy. It is like a secured loan, as the life insurance company is guaranteed to have the loan repaid ultimately at death when the loan and all accrued interest is paid back to the life insurance company, and the remaining death benefit goes to the beneficiaries.

If planned correctly, this is an excellent way to get tax free income into the hands of policy owners. They don’t have to pay back the loan while alive as the final death benefit will take care of this. The whole life policy is still intact and growing, keeping ahead of the loan and interest accrued (planning prevents over-leveraging the policy).

Leaving a legacy through life insurance

Now, after saving, earning dividends, building cash values, and loaning against your policy for income needs, you can still leave a sizable inheritance to the next generation. Even after repaying the loan and interest to the life insurance company, there is usually a very large death benefit paid out. Remember, the death benefits from life insurance policies in Canada are paid out tax free, and can go directly to named beneficiaries, thus avoiding probate and legal fees.

So, your whole life insurance policy can play the role of estate planning and leave a legacy to the next generation. You should need the ultimate death benefit from the whole life insurance, so the premium going into the policy over time is not lost on a useless death claim being paid out. Luckily most people can benefit from owning life insurance, even later in life. Final expenses, estate taxes and gifts to loved ones are something most aging Canadians would like to take care of.

Lower your risk with whole life insurance – ask us how

At Life Guard Insurance we have many professional life insurance brokers across Canada who are skilled in setting up whole life insurance policies. Please contact us to see how a whole life insurance policy might hedge your risks from the stock market and give you peace of mind.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about using whole life insurance to hedge stock market risks would be very much appreciated.

Adding a Child Term Rider to Parent’s Policy is a Basic Life Insurance Plan for Children

A Child Term Rider provides risk protection today and converts to personal insurance tomorrow

Starting a life insurance plan for your children has never been as easy or as cheap as adding a child term rider to your personal life insurance policy. If you are shopping for your own life insurance plan or even if you already have one, you can add a child term rider (CTR) to the policy to cover all your children for one low price.

The most impressive feature of a child term rider is the conversion option when your child becomes an adult. This allows your child to pull the child term rider out of your policy and convert it into a much larger amount of personal life insurance without qualifying medically for the insurance. So, if effect, you are giving your kids the gift of “insurability” for their future – a gift that becomes very valuable if your child developed a health condition that made him/her uninsurable in the future.

How does a child term rider work?

A child term rider is an add-on to a regular adult life insurance policy. By adding the child term rider to their policy, parents can insure ALL their children with a level amount of benefit for one low monthly cost. Most child term riders offered by different insurance companies will allow parents to buy between $5,000 and $30,000 of life insurance coverage for each of their children.

As I said, the policy has one low cost and all children are covered. You need at least one child to be born in order to add the child term rider to your policy. Your children must be between the 15 days old and age 18 to get a child term rider. You must complete a simplified medical questionnaire for each of your children who are already born. The good news is that all NEW children you have will automatically be added to the child term rider without completing the medical questionnaire.

The child term rider doesn’t last forever. After a period of time the rider will terminate. This is different for each company. Most will only insure children until age 25. Some policies automatically cancel the child term rider after 20 years on the parent policy, while others will cancel when the child reaches age 25 or the parent reaches age 65, whichever comes first.

Let’s look at cost (maximum child term rider across a few different insurance companies):

• Sun Life – max benefit of $20,000: $8.10 per month
• Equitable Life – max benefit of $30,000: $13.50 per month
• RBC Insurance – max benefit of $30,000: $16.20 per month
• Canada Life – max benefit of $25,000: $13.50 per month
• BMO Insurance – max benefit $20,000: $16.85 per month

The conversion feature of a child term rider

The most important feature of a child term rider is your child’s ability to take over the rider as a personally owned life insurance policy when they become an adult. The child is allowed to take over the life insurance between the ages of 21 and 25 and convert it into any permanent life insurance policy available from the insurance company at the time.

The amount of life insurance that can be converted varies between companies. Most companies allow five times (5X) the base amount of life insurance to be converted without evidence of insurability. Some, like Canada Life, allow 10 times the child term rider amount to be converted. So, in the case of most companies, you could convert a $30,000 child term rider into $150,000 of personal life insurance. Canada Life would allow you to convert a $25,000 child term rider into $250,000 of personal life insurance that your child owns.

The conversion feature can be one of the most valuable financial plans you could ever give your child. If your child’s health was not good, and they developed a childhood disease like juvenile diabetes of cystic fibrosis, they would be uninsurable for a regular life insurance policy when they became an adult. The child term rider conversion option would allow them to get a large amount of personal life insurance without having to qualify for it medically.

Manulife Financial’s unique child term rider

Manulife has a unique child term rider that is different from all others in Canada. They have a small premium PER child of $2.50 per month. This can make the rider a much cheaper option if you have only one or two children. The child term rider has only one death benefit of $10,000 for each child. This is lower than the competition but the conversion feature is much better.

For each of your children you can convert their $10,000 child term rider into $250,000 of personal life AND critical illness insurance at age 25. The critical illness insurance conversion amount is limited to $100,000, but that would still leave $150,000 available for conversion into life insurance. All these conversions are done without evidence of insurability, even the critical illness insurance! The only stipulation is that your child does not have an illness that would immediately trigger a critical illness insurance claim at the time of conversion – like if he or she was currently dealing with cancer they could not get the critical illness conversion. The life insurance conversion for the full $250,000 would still be available, however.

Life Guard Insurance can set up your life insurance with a child term rider for your kids

If you are shopping for your own life insurance and would like to include your kids, or you would like to add a child term rider to an existing life insurance policy, we can help. Feel free to contact Life Guard Insurance to find out more about how to protect your children with a child term rider.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about a child term rider would also be very much appreciated.

Is It Worth Spending The High Cost For Whole Life Insurance?

Whole life insurance is the most expensive type of life insurance. Is it worth the investment?

If you have ever looked into the costs for life insurance, you will immediately see that a whole life insurance policy is much more expensive than a term 10 or term 20 life insurance policy. The basic reason for this is that whole life insurance is “buying” the life insurance dollars both now and into the future. Term life insurance is more like “renting” your risk protection for a set period of time.

In this article I would like to analyze the cost of investing into a permanent life insurance policy vs. putting the money into a savings plan, like an RRSP or a non-registered investment account. Whenever anyone is buying life insurance, either a permanent plan or a term insurance plan, they should have a need for financial risk protection. The major difference between term and whole life is that people looking to protect themselves from short-term needs, like paying off a mortgage or the time to raise children, would be better served to buy term life insurance. Those who need the insurance money to payout in the future for things like death taxes, creating a legacy, charitable giving, etc. should be looking to buy a permanent plan like whole life insurance.

So, if you can qualify for permanent life insurance, is the investment into a whole life insurance policy a better option than saving money in a registered or non-registered investment?

The costs and benefits of whole life insurance

We will firstly look at the costs and benefits of buying a whole life insurance policy to meet the need for permanent life insurance coverage. A few assumptions on a given scenario need to be made:

• Male, non-smoker, age 45, regular health
• Currently needs $200,000 of life insurance
• Life insurance need will grow as his estate taxes grow
• He will live to age 85 (life expectancy of a health 45 year old man)

For this man we will be looking at Canada Life’s Wealth Achiever product. I have found Canada Life’s whole life insurance to be one of the best in the Canadian life insurance marketplace. Even though their premiums are higher than the competition, the cash values and dividend payments are also higher. to showcase how strong their dividends have been over time, please see the Canada Life 2011 Dividend Scale report.

The Canada Life Wealth Achiever whole life insurance plan offers multiple dividend options. This is what you would like the company to do with your growing level of dividend payments on your whole life policy. Because our fictitious client above needs a growing level of life insurance coverage, we will chose the Paid Up Additions dividend option. This will instruct Canada Life to buy small, lump sum paid up chucks of life insurance each year as the dividend is paid out. Therefore the amount of life insurance our client has will continue to grow over time.

Finally, we will give this client 2 options – either pay the premiums for the rest of his life or pay for only 20 years and then be guaranteed to be finished paying and own the policy for how ever long he lives. The 20 pay option for whole life insurance is very popular as people can budget and know they won’t have to be paying premiums into retirement or if they lived too long.

Life time premiums for whole life insurance policy

If our client chose to have lifetime premiums, here is how his investment into whole life insurance would break down:

Annual premium	$5897
	Total Investment
Age 65	$117,940
Age 75	$176,910
Age 85	$235,800
	Cash Value	Death Benefit
Age 65	$157,296	$377,209
Age 75	$312,170	$526,107
Age 85	$544,442	$725,369
	Rate of Return
Age 65	10.1%
Age 75	6.3%
Age 85	4.9%

The internal rate of return is what you would have to get as an annual compound interest rate to generate that much money over time. The longer you live the higher the cost of the insurance, as you are continuing to pay annually on this policy, and therefore the lowewr your rate of return. In the early years the lump sum $200,000 death benefit creates the majority of the return on investment, and later on its the growth of invested money which gives you your returns.

20 Pay premiums for whole life insurance

If our client choses to pay iup his insurance in 20 short years, here is how his scenario would look:

Annual premium	$7,509
Total Investment	$150,180
	Cash Value	Death Benefit
Age 65	$198,121	$378,470
Age 75	$349,593	$541,527
Age 85	$576,468	$743,377
	Rate of Return
Age 65	8.2%
Age 75	6.2%
Age 85	5.2%

Since the initial investment for the 20 pay whole life insurance plan is higher, the rate of return is lower in the first 20 years, but higher over time as the payments stop but the policy and dividends keep growing.

Alternative 1: Invest into an RRSP

If our client decided to invest the same amount of money into an RRSP and not spend the money through retirement, how much would he have to leave to his heirs? Lets make a few assumptions again:

• Invests the higher amount of $7,509 for 20 years
• Annual rate of return of 6%, compounded annually
• Tax rate at death of 40%

Here is how the the RRSP investment would play out if he died at age 85, leaving the savings to his heirs

Total Investment	$150,180
Total tax sheltered savings	$835,770
Amount owing to CRA	$334,308
Net inheritance for heirs	$501,462

Alternative 2: Invest into a non-registered plan

If our client has maximized his RRSPs and can invest into non-registered funds, with the same annual growth rate, the taxation of the plan will be very different. Let’s assume that the investment doesn’t attract annual taxation (to keep the math simple) but gains above the initial investment amount will be taxed as capital gains (50% inclusion rate) at death. Here is how this scenario would play out (with the same assumptions as above):

Total Investment	$150,180
Account Value at Death	$835,770
Capital Gains Tax	$137,118
Net inheritance for heirs	$698,652

At least alternative #2 is closer to the whole life insurance payout, but for the same dollars invested you would be short $44,725. This is also assuming you can guarantee a compound annual 6% growth rate. The whole life insurance policy does have guaranteed cash values plus a historically stable dividend payment stream.

Conclusion – Whole Life Insurance is Worth It

As a safe investment option with immediate risk protection options, whole life insurance performs very well. You would have to guarantee high long-term returns in order to get a better after tax return than a whole life policy. Unfortunately, a guaranteed rate of return above 3 or 4% in Canada is not possible. Stock Markets are risky and there is a chance you will lose money, not make a profitable return. Whole life insurance still offers a long term, stable and attractive growth rate for people looking to invest into a plan for their estate and their heirs.

Here are the two Canada Life Wealth Achiever product illustrations for the above analysis:

Canada Life Wealth Achiever Whole Life – Pay for life – 45 year old man

Canada Life Wealth Achiever Whole Life – 20 Pay – 45 year old man

Life Guard Insurance can help you find a whole life policy to meet your needs

If you are interested in getting a whole life insurance policy for long term investment growth and tax sheltered payouts, please feel free to contact Life Guard Insurance. We can help you find a qualified life insurance broker who specializes in whole life insurance.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about whole life insurance costs would also be very much appreciated.

10 Reasons to Buy Disability Insurance

Good Reasons Why Canadians Should Buy Disability Insurance

1. Becoming disabled is your biggest risk

2. Group disability insurance is limited.

3. Your health is your wealth.

4. Your lifestyle depends on your ability to earn an income.

5. You don’t want to do a job you hate.

6. Self employed or without group benefits leaves you totally exposed.

7. You might not always be insurable.

8. You can design a plan to meet your needs.

9. You’re worth more than you think.

10. It’s one of the smartest bets you could ever make.

1. Becoming disabled is your biggest risk.

There is a very high chance you might suffer from a long-term disability in your life: about 50%. With one in two Canadians experiencing a long-term disability during their lifetime, it is risk you should not ignore. Even though it seems unlikely, the younger you are the greater your risk of becoming disabled. It’s because you have many more years of work ahead of you, and the risks of injury or illness for those many years of work in the future increases your likelihood of suffering a long-term disability. If your period of disability lasts more than 90 days, the average time off work is 2.9 years!

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2. Group disability insurance is limited.

If you are lucky enough to have a group disability insurance policy, you are probably not as fully covered as you might think. Here is a short list of�reasons�why your group disability insurance policy might not cover you fully: if you earn bonuses or incentive pay which is not considered regular salary it is not covered; many group disability insurance plans have limits or a cap on monthly disability benefits, so top earners like managers and executives have very little coverage�compared�to total compensation; disability income benefits are payable for only 24 months for your regular occupation, and then you would be forced to do ANY occupation if you are fit to work outside your specialized field and would no longer be covered; your group disability policy insures only TOTAL disability, so if you return to work part time your disability income benefit would stop. Group disability insurance is limited, and if you do have a higher income to protect, you should look at a disability insurance top-up.

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3. Your health is your wealth.

We all need to be healthy to go to work each day and make a valuable contribution. We’ve heard it all before, but we really don’t value our health enough until we’ve lost it. If you were suffering from an injury or illness, going to work each day becomes a struggle, and it can affect your income, which could be reduce or stop altogether. How long would your bank be understanding if you couldn’t make the mortgage payment because of a disability? Will your monthly bills for heat, water, electricity, etc. be forgiven because you are disabled? In short, NO – and it is unlikely a bank would lend to a disabled person out of work. Remember, you must buy disability insurance when you are healthy, before suffering from a serious illness, injury or a mental/nervous disorder. Once you become sick or hurt, you might become uninsurable.

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4. Your lifestyle depends on your ability to earn an income.

Your lifestyle is based on your income, and your future plans/dreams all depend on your ability to earn income today. You need to feed money into your savings each month to reach your retirement goals. Paying down a mortgage, buying a family cottage boat, RV, etc. all require you to keep earning an income. If you suddenly couldn’t work, and your income stopped, your future dreams, retirement plans and everything could disappear as you struggle to find money to make it through each month.

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5. You don’t want to do a job you hate.

Would you want to be forced to change jobs because of a disability? What if you could do another type of work that was somehow easier than your current occupation, but it might pay significantly less money. You might be forced into a job that is beneath your current level of skills and abilities because of a sickness or injury. Without proper disability insurance, this becomes a reality for many Canadians. After 24 months on a group disability insurance claim your definition of�REGULAR occupation�will be changed to ANY occupation and you will be reassessed to see if there is any form of work you can do even with your current level of physical or mental�impairment. If so you will be forced to re-enter the workforce in a new kind of career or immediately lose your disability income benefits. This is a terrible situation to be in.

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6. Self employed or without group benefits leaves you totally exposed.

If you are self employed or working for a company without any group�disability insurance, you would suffer a total income loss from a disability. Most people in this situation have disability insurance as “something I should get around to”, but often it doesn’t get done. We all procrastinate, especially with things that will cost us money and time. Just imagine becoming disabled while you were thinking you should buy disability insurance. Many people find the cost to buy disability insurance very high, and wish they had the cheap stuff offered through an employer group disability plan. Actually,�cheap group disability insurance only seems inexpensive to the employees because the employer is paying the bulk of the premiums as an added benefit of their employment. There is no cheap disability insurance. You should look for disability insurance that is a fair price and provides value.

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7. You might not always be insurable.

As said above, you must buy disability insurance while you are still healthy. Once your health changes, due to a serious illness or an injury to a part of your body or some form of mental or nervous disorder, you suddenly become high risk. Even though you might think you’re fine, you might be a high risk of claim in the eyes of an insurance company. Once you ar “high risk”� to an insurance companies, there is one of two outcomes. You might be rated, and asked to pay much higher premiums than a health person for your coverage, or you could be declined – meaning the insurance company doesn’t want to take on your risk. If you leave the doctor’s office feeling uncertain about your health and your future, an insurance company will feel exactly the same way, and not be very lenient. Get insurance NOW, while you’re still healthy.

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8. You can design a plan to meet your needs.

There are many different types of disability insurance plans. You can customize disability insurance to fit your unique needs and budget. There is a lot of complexity to designing the right disability insurance policy, so be sure to seek out a disability insurance specialist before you buy. Keep in mind that you can’t insure more than you earn. A very high level of disability insurance benefit would give you incentive to stay home on claim. Therefore insurance companies typically offer about two thirds of your earned income as a disability insurance benefits. This should meet your monthly bills, but not provide for any extras. There would be an incentive to go back to work so you can earn more money and fulfill your dreams! If your budget does not allow you to buy disability insurance covering your full income, you can always buy less. It’s better to have some coverage than none at all.

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9. You’re worth more than you think.

How much do you think you’re worth? Can you put a dollar figure on yourself? Think of yourself as an econominc engine, able to work and make money/income for many years to come. If you think of yourself this way you might see how valuable you are. As an example,a 35 years old, making $75,000 and planning to work another 30 years would earn over $3 Million (assuming a 2% annual increase). You’re definitely worth a lot more than your house or your car, and you wouldn’t think twice about insuring those assets. Insure YOURSELF – you’re definitely worth it.

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10. It’s one of the smartest bets you could ever make.

Do you like to gamble? Let’s make a wager on either becoming or avoiding a disability. Here is how it works. If you bet you will have a disability and buy disability insurance one of two things can happen (50/50 chance): either you become disabled and get a HUGE financial benefit from your plan, or you don’t get disabled and lose the smaller amount of money via your monthly premiums. If you bet you will �not have a disability and don’t buy disability insurance, one of two things can happen (50/50 chance): you don’t get a disability and have saved or spent the extra dollars you would have used for disability insurance premiums, or you do have a long-term disability, lose your income, your savings and possibly your house if you can’t pay for it. Weighing up the risks and potential outcomes, and you will see the smaller price of disability insurance premiums is the wiser choice.

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Life Guard Insurance can help you buy disability insurance that is right for you

Feel free to get a quote for disability insurance now, or just contact Life Guard Insurance to be put in contact with a local life insurance broker in your area. They will help you design and buy disability insurance that meets your needs.

 

 

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about 10 reasons to buy disability insurance�would be very much appreciated.