Archive for the ‘Sun Life Financial’ Category

The Best Time to Buy Long Term Care Insurance

Planning ahead and buying LTCI when you’re younger can save you money

The common sense wisdom about buying insurance when you’re young and healthy has never been more true than with Long Term Care Insurance. In this article I will show you some price breakdown comparisons of the increasing cost of buying long term care insurance as you age.

There is another complication to overcome with long term care insurance (LTCI), and that is the ability to qualify for the insurance. The insurance companies offering LTCI are not concerned about things like smoking, as smokers are more likely to get cancer or a heart disease and die early, making them less likely to claim on a long term care need. Actually, the healthier you are today, and keeping yourself in good shape, the greater the likelihood you will live into old age, needing some form of care as you age. Insurance companies are looking for early warning signs that a person might need care as they age. Things like early signs of dementia, osteoporosis (brittle bones), unexplained falls, and other signs of potential care needs.

If your younger, like under age 65, many of these things are absolutely foreign to you. But as you age, these conditions can creep up. A long term care insurance policy is either fully accepted or totally declined. There is no middle ground. So, once you have symptoms of early care related conditions, you will be declined coverage. That is why between the ages of 70 – 80 the decline rate for LTCI is over 50%.

Besides being able to qualify for coverage, let’s consider the cost. When does it make sense to spend the money for the benefit you will get out of the plan?

Age and Price Comparisons for Long Term Care Insurance

Before giving you the cost comparisons base on age, we have to lay out the basic assumptions. Just to help you understand how I compared the following prices, here are the assumptions I made.

All plans quoted are Comprehensive Benefit plans – including both home care and facility care coverage. All have just a 30 day waiting period from onset of need to receiving your first claim check. All are for $1,000 per week in benefits, or $52,000 per year in tax free income for long term care expenses. There are no additional riders or benefits attached to these base policies. I have also researched only one company, Sun Life Financial, for price quotes since they sell about three quarters of all long term care insurance in Canada.

What is different between the plans is that for the ages of 35, 45 and 50, both male and female, I have assumed the client wants to take the 20-pay option. This means their premiums are fully guaranteed to be paid up in 20 years, and then no further premiums are due. For the age 60 and 70 comparisons I took the Lifetime payment option, but assumed the 60 year old would pay for 20 years and then claim benefits at age 80. The 70 year old I assumed would pay for 15 years and claim benefits at age 85 (being healthy enough to qualify for LTCI at age 70 probably means they will live longer and claim at a later age).

Male LTCI price comparison

• Age 35 – $112.50 per month. Total of $27,000 paid up at age 55.
• Age 45 – $154.89 per month. Total of $37,174 paid up at age 65.
• Age 50 – $181.44 per month. Total of $43,546 paid up at age 70.
• Age 60 – $245.97 per month. Total of $59,033 paid when benefits claimed at age 80.
• Age 70 – $617.04 per month. Total of $111,067 paid when benefits claimed at age 85.

Female LTCI price comparison

• Age 35 – $153.36 per month. Total of $36,806 paid up at age 55.
• Age 45 – $255.27 per month. Total of $61,265 paid up at age 65.
• Age 50 – $274.41 per month. Total of $65,858 paid up at age 70.
• Age 60 – $372.15 per month. Total of $91,716 paid when benefits claimed at age 80.
• Age 70 – $892.08 per month. Total of $160,574 paid when benefits claimed at age 85.

The first thing you will notice is that the price for long term care insurance for women is much higher than for men. This is true because women outlive men by over 3 years on average, and their need for long term care assistance is much higher than for men. Women need care more often and spend longer in home care or facility care. Some would say that wives take care of their husbands first and then are so worn out that they need someone to take care of them.

The best age to buy Long Term Care Insurance

Looking at the numbers, I would have to say that about age 45 looks like the best time to buy LTCI. Yes, if you buy it younger it would cost less. However there are a couple factors playing against a very early age purchase of the product. 1) Inflation will erode the purchasing power of the benefits you buy, so the earlier you buy them, the less they will be worth at claim time. 2) Most young people in their 30’s are financially challenged, with a mortgage, kids, a career that is still growing, etc. A person is typically in a more stable financial position into their 40’s and 50’s and can more easily afford the premiums.

Even the 5 years between age 45 and 50 there is about a 10% increase in premiums (17% for men). Assuming there would be no claim by age 70, the 50 year old just paid more premium for simply acting late. With a Lifetime payment option, which is more affordable at later ages, what happens if you live and live and live, into your 90’s without claiming? This is called longevity risk, and it’s the risk of living too long and having to keep paying on your insurance when you thought you would be done years before.

So, getting a 20-pay plan about 20 years before retirement makes the most sense financially. It is still very affordable. The benefit has less time to erode due to inflation. You can afford the premiums. The cost for the insurance will be finished when you enter retirement on a fixed income. It all makes good sense to look at long term care insurance earlier in life, in your mid-forties would be best.

Life Guard Insurance can get you LTCI quotes and solutions

If you would like help getting a long term care insurance quote and take a look at buying the insurance, please contact us. We will have a broker who is experienced with long term care insurance contact you and offer assistance.

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 the best time to buy log term care insurance would be very much appreciated.

Sun Life Financial Shocks Market With Announcement To Pull Out Of The US

Sun Life will stop selling Life Insurance and Variable Annuities in the US

Sun Life will no longer offer individual life insurance or Variable Annuities in the US.

Another shocking announcement from one of Canada’s major life insurance companies, Sun Life Financial. The big announcement came yesterday, December 12, 2011, that Sun Life will no longer be offering new individual life insurance products or variable annuities (akin to Canada’s GMWBs) as of December 30, 2011. This annoucement came shortly after the company’s sharp financial losses last quarter.

Continued instability in the world stock markets is making it harder for all insurance companies to manage their long-term investments and accurately forecast interest rates, investment returns and expenses. This makes investments with guaranteed income streams in the future, like variable annuities, very hard to account for and leads to balance sheet losses when stock markets move sharply lower.

The Canadian life insurance industry has been handed a series of powerful blows in the last few weeks. Over the last month, life insurance companies across Canada have been announcing and implementing price increases to many of their permanent life insurance products, like universal life and term 100 policies. Then, on November 29, 2011 Standard Life of Canada announced it was exiting the Canadian life and critical illness insurance markets to focus on its investment products.

Many would argue that the future of things like Level Cost of Insurance for universal life insurance and Term 100 policies could be in jeopardy. The guarantees from GMWBs and GLWBs could disappear if the world markets don’t stabilize and interest rates increase. Even the guaranteed cost of insurance on Critical Illness Insurance could go the way of the UK, where premiums are not guaranteed and could be increased even after you buy a policy.

This article below was posted on Advisor.ca, and is worth a read regarding the changes that Sun Life is making, and the implications for the Canadian life insurance industry. I think we are seeing the beginning of a major shift in how companies do business and the financial planning options that clients will have.

SUN LIFE TO STOP SELLING VA, INDIVIDUAL LIFE IN U.S.

Sun Life Financial has announced that it will stop selling variable annuities and individual life products in the U.S., as the products were the primary causes of the company’s deep financial loss last quarter.

 

The Sun Life’s new CEO Dean Connor says the insurer will discontinue sales starting Dec. 30. The move will not affect existing policyholders.

 

The move to exit the variable annuity and individual life business in the U.S. comes after Sun Life faced massive charges in the third quarter as it hedged against future liabilities related to the insurance products.

 

One of the attractions of variable annuity products is that they offer a minimum rate of return guaranteed to investors, which can cost the insurer when markets are underperforming. Last month, Sun Life reported its first quarterly loss in two years, mostly as a result of U.S. operations which took a more than half-billion-dollar hit due to stock market chaos.

 

“Today begins a new chapter in the history of Sun Life Financial,” Connor said in a release.  “We are charting a new course with a new strategy that leverages what we do best today, and positions us for success as we pursue the many opportunities in our business around the world.”

 

Sun Life said about $200 million of its third-quarter loss was related to an annual update of its actuarial methods and estimates–used to calculate the company’s obligations under various products sold.

 

However, the insurer didn’t specify how much of the hit would be from equities and how much from interest rates.

 

The company will focus on what it calls its four key pillars:

• Continuing to build on its leadership position in Canada in insurance, wealth management and employee benefits;
• Becoming a leader in group insurance and voluntary benefits in the U.S.;
• Supporting continued growth in MFS Investment Management, and broadening Sun Life’s other asset management businesses around the world; and
• Strengthening Sun Life’s competitive position in Asia.

“To achieve growth in the U.S., we will focus on increasing sales in our employee benefits business, which is already a top ten player, and will expand our presence in the growing voluntary benefits segment,” said Connor. “We are confident that with the focused investment announced earlier this year we can build leading positions in these two sustainable, less capital-intensive businesses.

 

“We will also continue to support growth in MFS, our highly successful investment manager that has a large U.S. presence and over US$250 billion of assets under management globally.”

 

Filed by Steven Lamb, with files from wire services, editor@Advisor.ca

Originally published on Advisor.ca

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 Sun Life Financial exiting the US life insurance market would also be very much appreciated.

Split-Dollar Critical Illness Insurance for Business Owner/Operators

No Lose – All Win strategy for risk management and income/tax planning

Did you know there is a way to protect your business from financial loss if you became critically ill and create a tax efficient way to get money out of your business at the same time. Imagine being insured from financial loss if you had a heart attack, stroke, got diagnosed with cancer, etc. and at the same time you are building up a savings account that allows you to extract money from your business – TAX FREE!

If you are an owner of a private Canadian Controlled Private Corporation (CCPC), this article is for you!

There is a way that you can have your cake and eat it too. This win-win strategy works best for owner/operators of their business who would suffer financial loss (or ruin) if they were to have a critical illness that kept them away from work. The insurance allows you to protect your business (which in effect is you).

This critical illness strategy (called split-dollar or shared ownership) also allows you to have a 100% return of ALL premiums paid in – TAX FREE – to the business owner after 15 years if there was no diagnosis of a critical illness. So, if you stay healthy you get back all the premiums tax free. This is an excellent way to extract a large amount of capital from your business into your hands without paying taxes, and represents a very health internal rate of return (IRR).

How a Split-Dollar Critical Illness Insurance Strategy Works

The term “split dollar” refers to dividing up ownership and the premium payments of an insurance policy. There are two sides to the critical illness insurance plan: the actual insurance protection and the return of premium.

The company pays for the insurance

The corporation will pay for the insurance portion of the critical illness policy, and will thereby be the beneficiary of the policy if you were to have a critical illness. Only the cost of the insurance is paid by the company and they are only entitled to an insurance claim for a critical illness.

The owner pays personally for the return of premium

The business owner (you) pays for the return of premium rider that is attached to the policy. Since they are not paying for the insurance protection, they will not be entitled to a claim for a critical illness – that belongs to the company. They will be 100% entitled to the return of premium portion of the policy. After 15 years the owner is fully vested in the return of premium and will be paid out ALL premiums that have gone into the policy – both their own return of premium portion and the company’s insurance cost portion – TAX FREE!

Only one benefit can be paid out – not both

Either the critical illness benefit OR the return of premium benefit will be paid out on this policy – not both. This is why the split-dollar critical illness insurance strategy works so well for owner/operators of Canadian Controlled Private Corporations (CCPCs). The owner(s) is(are) the company and the insurance claim will directly benefit them by protecting the company. If they don’t have a critical illness claim then they get paid out personally and tax free.

Example of Split-Dollar Critical Illness Insurance at work

Life Guard Insurance has a client, Joe Owner, and he owns a Canadian Controlled Private Corporation (CCPC) called Your Company. Joe is 45 years old and decides to buy a split-dollar critical illness insurance policy for $250,000 of coverage.

The company pays for the cost of insurance – $3,185 per year.

Joe pays for the Return of Premium benefit – $2,400 per year.

If Joe is diagnosed with a critical illness then the company will be paid $250,000 tax free as an insurance benefit.

If nothing happens to Joe, he will personally be able to cash in his Return of Premium benefit after 15 years. This will give him $83,775 of tax free cash for a personal investment of $36,000 (his portion of the premium over 15 years). This represents a guaranteed rate of return of 9.99%.

Setting up a Split-Dollar Critical Illness Insurance plan

The first thing you will need is a legal agreement between the business and the employee/owner. This is an agreement to share ownership in the policy and is fundamental to the plan working. Without the legal agreement in place the life insurance company will probably not even issue the policy.

Here is an example of a Critical Illness Shared Ownership Agreement

Secondly, you must have two separate premium withdrawals – one from the business account and the other from the personal account of the owner. Sun Life Financial is able to set up this kind of dual payment system, either as an annual payment or as a monthly pre-authorized chequing plan.

Thirdly, you cannot tax deduct any of the premiums – either the business’s portion or the owner’s portion. In order for the benefits to be paid out tax free the premiums must come from after tax dollars.

Fourthly, there are a few tax considerations you need to be aware of to make sure the return of premium benefit is paid out tax free to the owner. Most importantly the return or premium cannot exceed the total premiums paid, the cancellation of the policy must be mutually agreed upon by both parties (easy to do if you own the company), and cancellation of the policy cannot be deemed to impoverish the company under the Canada Revenue Agency’s guidelines. Here are two reference documents that speak to the tax implications of this strategy:

• Help your business owner clients keep their best people: Share ownership with Sun Life Critical Illness Insurance
• Critical Illness Insurance: Health and welfare trusts and other concepts by Sun Life Financial

Split-Dollar Critical Illness can be used for multiple owners and/or key employees

This strategy can be shared with a multiple ownership team of a company where all owners are key employees and the insurance is valuable for the company. It can also be used to provide additional benefits to key employees and retain them with a windfall benefit payable after 15 years. So long as the critical illness insurance benefit for the company is legitimate (the company would suffer a financial loss if the owner or employee became critically ill) and the owner/employee agrees to share ownership and costs of the policy, the strategy will work.

Life Guard Insurance recommends using Sun Life Financial for this strategy

Sun Life Financial has the best track record in setting up these shared ownership or split-dollar critical illness insurance policies. They have a critical illness policy with a guaranteed return of premium after only 15 years, which works very well for this strategy. Sun Life is also the only company we know of that can properly set up a monthly shared pre-authorized chequing plan (PAC) between a company and an employee/owner.

We are confident in recommending Sun Life Financial for this strategy as they have the administrative expertise to help make the tax free return of premium payment work for owners/employees.

Other useful reference material

• Share ownership of Critical Illness Insurance reference paper
• Shared ownership of critical illness insurance strategy brochure from Sun Life Financial
• Sun Life Share Ownership Critical Illness Insurance example illustration (for example above of Joe Owner and Your Company)

Life Guard Insurance can design Split-Dollar Critical Illness Insurance

At Life Guard Insurance we have experienced and knowledgeable life insurance brokers across Canada who can help you design and implement a split-dollar critical illness insurance plan. Contact us today to find out if this insurance strategy is right for you.

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 split-dollar critical illness insurance would also be very much appreciated.

The following is a news release from Sun Life Financial, November 16, 2011.

Download the full report Sun Life Canadian Health Index ^TM now.

Ninety per cent of Canadians expect financial impact from major illnesses but remain frozen when it comes to preventive measures

Sun Life Canadian Health Index ™ reveals majority of Canadians aren’t prepared for future health costs

TORONTO, ON (November 16, 2011) – How financially prepared are you for a serious illness? Nine out of 10 Canadians anticipate a financial impact if they were to experience a major or chronic illness, with more than half (53 per cent) saying that impact would be significant or perhaps permanent, according to the second annual Sun Life Canadian Health Index ^TM compiled by Ipsos Reid.

Despite these high awareness levels, only 58 per cent of Canadians are either preparing, or are currently prepared financially in case they get sick. And only eight per cent of Canadians have a written financial plan that includes insurance and risk management – two elements that address the economic impact that could come with a major health issue.

“Canadians’ understanding of the connections between health and personal finances are hard-earned,” said Kevin Strain, Senior Vice-President, Individual Insurance and Investments, Sun Life Financial Canada. “We found the majority of Canadians have either personally experienced or have had someone close to them suffer a serious health issue. However, fewer than one in five said they had evaluated or re-visited their finances following the experience.”

Overall, many Canadians expect a long life. The average respondent anticipates living 81.5 years, almost a year more than the Statistics Canada reported average of 80.7 years1 . Eighty-six per cent of Canadians agree that they will need to purchase health insurance to help fund their health care needs, as the public system will not be able to maintain current funding levels as the population ages and costs rise. Seven out of 10 respondents (72 per cent) think they will probably need some form of long-term care as they age.

“We want Canadians to feel empowered about their finances, especially when it comes to planning for long-term care or the financial impact of a major illness,” said Strain. “The last thing anyone wants to worry about is money when making important decisions about their health. Working with an advisor to create a financial plan that includes protection will ease the tension during an already stressful time.”

Tips for Canadians to take control of their finances:

• Meet with a trusted advisor or financial planner to discuss your needs and goals.
• Create a long-term financial plan covering investing and protection of assets as well as retirement planning.
• Review the plan regularly and make adjustments based on changes to your life and health situation.

For additional practical tips on ways to take control of your health and finances, visit www.brighterlife.ca.

More key findings of the study included:

Many Canadians anticipate needing long-term care as they age.

Almost one in five adults expects to pay the entire cost of long-term care themselves with no government subsidies (17 per cent), while 21 per cent expect government to pay the entire cost and 63 per cent expect government subsidies. When it comes to illnesses like cancer, half of Canadians think they will have to share some of the cost of medical treatments and drug regimes.

Eighty-six per cent of Canadians agree they will need to purchase health insurance to help fund their healthcare needs as the public system will not be able to maintain current funding levels as the population ages and cost rise.

Measuring Canadians’ attitudes, perceptions and behaviours about their health

The 2011 Sun Life Canadian Health Index™ measures the attitudes, perceptions and behaviours of Canadians relating to their personal health. This second wave in a series of studies yielded an overall index score of 68.1 on a scale of 0 to 100. A person who scored high on the overall Sun Life Canadian Health Index™ also scored high on each of the individual attitudinal, behavioural and perceived health components.

The overall index is a blend of scores in three sub-indices: Perceived Health Index (score = 71.2), Attitudinal Health Index (score = 65.7) and Behavioural Health Index (score = 67.5).

For more information about the study, visit www.sunlife.ca/CanadianHealthIndex.

Methodology

These are some of the findings of an Ipsos Reid poll conducted between July 27 and September 12, 2011 on behalf of Sun Life Financial. For this survey, a sample of 3,233 Canadians aged 18 to 80 years old from Ipsos’ Canadian online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of +/- 2 percentage points, 19 times out of 20, of what the results would have been had the entire population of adults in Canada been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. The Sun Life Canadian Health Index™ is composed of a series of sub-indices composed of attitudinal, behavioural and perceived measures, each benchmarked to 100. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

¹ Statistics Canada: Deaths, 2007 http://www.statcan.gc.ca/daily-quotidien/100223/dq100223a-eng.htm

About Sun Life Financial

Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of September 30, 2011, the Sun Life Financial group of companies had total assets under management of $459 billion. For more information please visit www.sunlife.com.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.

Note to Editors: All figures in Canadian dollars.

Permanent Life Insurance Fits the Definition of an Asset Class

Traditional Whole Life Insurance can be added to your investment portfolio as a high performing asset class

Most Canadians don’t think of life insurance as an asset class in their investment or retirement portfolio. Permanent life insurance does meet all the criteria of an asset class and offers strong, stable returns over time with very low risk or volatility.

Wouldn’t you love to have an investment that offers stable, healthy returns, that is not subject to the volatility of the stock markets, is well diversified, tax efficient – and provides liquidity so you can spend some of the money while you are still alive. Sounds like the perfect investment plan! But how, you might ask, can a person use a life insurance policy to provide income in retirement years? This article will explain how permanent life insurance meets the definition of an asset class for investing, and how it is a very efficient asset to have in your retirement portfolio.

Modern Portfolio Theory defines an Asset Class

Modern Portfolio Theory is one of the most influential ideas that have shaped investment management in our lifetime. Developed by Harry Markowitz in 1982, the theory shows how all investment options in the marketplace that you can choose from sit either on or below the efficient frontier. The efficient frontier is the “optimal” balance of investment return for the amount of risk you are willing to take. There is a direct correlation between risk and return – the more risk you are willing to take on, the higher the potential return.

All the common recognized asset classes sit along the efficient frontier. That is to say, the best investments options within each asset class will give you the highest rate of return for the amount of risk they incur – and thus be the “optimal” investment sitting along the curve. Here are some common asset classes that make up a common Canadian investment portfolio:

• Equities (stocks of a company)
• Fixed income (bonds and mortgage backed investments)
• Money Market (cash funds)
• Guaranteed payouts (i.e. annuities)
• Real Estate

How permanent life insurance fits in as an asset class

When we speak about permanent life insurance there are two main types of life insurance that have cash value accounts – Whole Life and Universal Life.

Universal Life has lost its lustre

Universal life insurance is about 30 years old in Canada. It was originally developed as a way to “buy term and invest the difference.” For a long time universal life insurance was the darling of the Canadian life insurance industry. It offered Canadians permanent life insurance coverage, affordable and guaranteed level cost of insurance for life, and a tax sheltered investment account where policy-owners could self-direct their investment portfolio.

The problem is the complexity of the investment account and the inherent risk of market base investments (mainly equities). The very nature of a life insurance contract is to provide security and stability, so when death occurs the life insurance is guaranteed to pay out. Universal life falls short of offering this iron-clad guarantee. Because market returns can be so volatile, the cash value of a universal life insurance policy can fluctuate significantly. Yet, the underlying cost of insurance remains constant, and premiums are drawn from the cash value monthly. When the underlying investments have gone down, the premium being drawn on off the cash value fund undermines the long-term performance of the fund.

When selling universal life insurance, the illustration could show 5 – 6% annual rate of return, but you might need to get a much higher average rate of return going forward to offset the capital depletion from a string of negative investment years like we have recently seen. For example, if you suffered a 10% loss this year, you would need an 11.1% gain in the next year to just recoup your loss.

Recent volatility in the world stock markets has wreaked havoc on the performance of existing universal life insurance contracts. Life insurance companies are also losing money on their universal life insurance policies because the underlying pricing assumption for the cost of insurance were based on a much higher interest rate environment. With continued low interest rates, Canadian life insurers are forced to increase the cost of insurance on their universal life insurance products.

Whole Life Insurance continues to perform well

Whole life insurance has been the strong and stable long term performer during the world economic crisis. Investing in whole life insurance as an asset class will give you much more secure long-term performance than universal life based on what we know now about market volatility.

It’s hard for people to accept 7-8% constant rate of return on an investment when everyone else is making over 20% in the stock markets. That is why Canadians flocked to universal life insurance during the first half of the last decade. Then, in 2008, the world chance with the collapse of Lehman Brothers. Stock markets crashed, market volatility has become the norm, and the world economic crisis seems to go on and on.

Sun Par Whole Life Accumulator Account Investment Mix

Now, all of a sudden, a stable 7-8% rate of return through the last four years and beyond would sound like a very wise investment. In fact, over the last 25 years, participating (par) whole life insurance policies in Canada have returned an average of 9.2% return to policyholders. Couple this with a standard deviation (risk) of only 1.3% annually*, which is one of the lowest risk products on the market.

* A standard deviation of 1.3% means that in any given year the maximum the rate of return has moved either up or down has been 1.3% or less.

Whole life insurance has a very well balanced investment portfolio. Even though you don’t get to control the investments, the fund is managed by a team of professionals at your life insurance company who look for investment opportunities that give healthy returns and minimize risk.

Let’s look at why Participation Whole Life is a low risk, high return asset class

• Good rate of return on money
• Predictable returns with low volatility (risk)
• No market timing as assets are invested for the long-term
• An asset that is NOT correlated with the stock market
• Tax efficient growth of funds and tax free death benefit
• Liquidity of the cash value as tax free loans
• Industry stability – life insurers vs. banks and mutual fund companies

Even if you intend on using the cash value of your whole life insurance policy as retirement income, the after tax rate of return on a series of loans from your policy will far surpass what you will ever get from GICs or tradition Bond Funds.

When you factor in the ultimate death benefit the policy will pay out, your rate of return on investment is very high. A whole life insurance policy can be used BOTH as an asset class for investing AND an estate plan to create a legacy for your heirs.

Resources supporting Whole Life Insurance as an Asset Class

Here are two resources you can read that support the idea of including whole life insurance into your overall investment portfolio as a secure asset class.

Modern Portfolio Theory, Asset Classes and Life Insurance by Guardian Life Insurance

Participating Whole Life Insurance As An Asset Class by Sun Life Assurance

Life Guard Insurance can Design Whole Life Insurance to Fit Your Portfolio

To find out more about whole life insurance as an asset class in your entire financial plan, please contact Life Guard Insurance. We can show you how life insurance can be a secure and high returning asset class amoung your investment.

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 permanent life insurance as an asset class would be very much appreciated.

Sun Life’s Critical Illness Insurance for Children Has Unique Return of Premium Option

Sun Life’s Critical Illness insurance for Children will return 75% of all premiums paid to parents, and coverage continues

This is by far the BEST deal a parent in Canada can get when buying critical illness insurance for children. No other company is offering 2 return of premium options on a child’s critical illness insurance policy in Canada. I’m not sure how they are doing it and if they will lose money on this deal, but it is something that you can hardly dare pass up.

I’ll explain to you how you can protect your children from life altering critical illnesses throughout their life and even protect them from early childhood onset diseases, like juvenile diabetes, with a critical illness insurance policy. And if your child remains healthy, Sun Life Financial will give you back 75% of all the premiums you invested into the plan when your child turns 25. Let’s take a look at why you would get critical illness insurance for children and how the Sun Life policy works.

Why buy critical illness insurance for children?

When we are making plans for our children’s future it should also include their financial planning. What if they suffered from a critical illness early on in life? The financial impact of it could affect the entire family. For the time when your child is young, a critical illness insurance policy can be used for:

• Taking time off work to be with your child
• Access the best medical advice possible
• Make the best decision about treatment options for your child without having to consider the financial implications of your decision
• Cover costs such as transportation, accommodation and food if you have to travel for treatment

Critical illness insurance for children will protect the family’s financial future and give you child the best care possible if they ever suffered from a critical illness.

How Sun Life Financials Critical Illness Insurance for Children works*

For this example, we will look at buying $100,000 of Term 75 critical illness insurance on a 5 year old girl. The policy will have the Return of Premium rider added to it so that premiums will be returned to the parents when she is 25. The cost for this policy is only $622 per year or $56 per month. This premium will remain level for the life of the policy and never increase.

When the daughter turns 25 the parents will receive 75% of all premiums paid into the plan back as an early return of premium (the 1^st return of premium on the plan).

15 years later, when the daughter is now 40 years old, she could elect to either continue the coverage or cancel it and receive back 100% or all premiums paid into the plan. If she elects to keep the insurance, the 100% return of premium continues to grow each year as she pays her premiums.

Example of how Sun Life’s Critical Illness Insurance for Children would work

• Parents buy $100,000 of critical illness insurance on their daughter at age 5.
• At age 18 they elect to add the Log-Term Care conversion option, allowing their daughter the ability to convert the critical illness insurance into long-term care insurance when she is older.
• At age 25 the parents receive a cheque for $9,330 from Sun Life Financial for 75% of all premiums they put into the plan. That means the coverage for 20 years only cost them $3,110, or $12.96 per month. They can use this money however they chose, and it is paid out tax free.
• The policy continues for their daughter, and premiums remain at $56 per month. The parents transfer ownership of the policy over to their daughter.
• At age 40, the now adult daughter can decide to cancel the policy and cash in another $12,440 of premium returned to her, or continue coverage. The 100% return of premium would grow each year in lock step with her premiums paid from this point on.
• Between age 60 and 65 the woman has some choices. She can either keep her critical illness insurance through to age 75 OR she could convert all of it or a portion of it into Long-Term Care Insurance.
• If she chooses to convert her critical illness insurance into long-term care insurance she would receive the return of premium at that time, and could use the money to fund her long-term care insurance premiums. A conversion at age 60 would mean $24,880 would be returned to her upon exercising the conversion option.

Remember the fundamental part of the plan. If the daughter/woman was ever to suffer a critical illness, like cancer, heart attack, stroke, MS, or a host of other life altering illnesses and injuries, she would receive $100,000 of critical illness insurance benefit, lump sum and tax free 30 days after diagnosis of her illness.

Find out more about getting your children critical illness insurance from Sun Life Financial

Feel free to contact Life Guard Insurance to speak with a qualified broker who can show you the benefits of using Sun Life Financial’s critical illness insurance for children.

* Based on the Sun Life Financial critical illness for children scenario in the attached client brochure.

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 Sun Life’s critical illness insurance for children would be very much appreciated.

Focus on Health Insurance #3: Planning for Retirement

Health insurance planning for older Canadian workers planning their retirement

This health insurance article is dedicate to those Canadians in their 40s and 50s looking towards retirement planning but still sandwiched between teenagers or early adult children and aging parents. This can be a very difficult time for many pre-retirees looking at their retirement nest egg and trying to plan for long-term success in their later years.

This article will look at some of the pressures on Canadians trying to plan for retirement. One of the main risks is their health. As we age we all know things are more likely to go wrong with us. The chances of cancer, heart disease, stroke, or long-term injury increase dramatically. The real risk is if something serious happened to you while you were still in the planning and accumulation phase of your life. Left with not enough in the bank (yet) and financial pressures all around, how would your retirement plan hold up? Would it survive even if you did?

Older children are still financially dependent and aging parents become a burden

For many of us in mid-life, we are trying to juggle many balls and put our retirement planning on the right foot. The good news is that very often our major debts have been paid off or seriously paid down. The cars might no longer have a loan on them and the mortgage could be gone, or getting close to being paid off. The financial pressures don’t go away, I’m sorry to report, they just migrate to new places.

Your children, now teenagers or in their early twenties, are probably looking at some form of post secondary education. They are likely to ask Mom and Dad for financial support to pay the cost of education. Even when they finish school there are many other costs that seem to spring up on parents:

• Helping young adult children with purchasing a new car for their first job
• Paying for their marriage.
• Helping out with a down payment on their first home.

These are all things that parents with means can and would do to help out their children.

But that is not all. As your children age, so do your parents. We know that the vast majority of Canadians growing older today do not have adequate savings for their retirement plans. This means they certainly don’t have enough saved for private or semi-private health care as they age. Home care or going into a long-term care facility is very costly, and the government looks to the next of kin to pay the bill if the seniors can’t. As an adult child of aging parents, you are financially responsible to help them pay for care or become a care provider yourself. This too can add a great deal of stress on the family, both financially and emotionally.

Disability insurance does not cover healthcare costs

Most Canadians in this demographic are securely employed with either employee group benefits or personal insurance plans. These benefits cover life insurance and disability insurance fairly well. The problem is that disability insurance alone will not keep a retirement plan on track. Your disability insurance from work will usually pay out two thirds of your prior earnings, tax free. This will help you maintain lifestyle and pay for monthly expenses, but it won’t pay for things like:

• high cost prescription drugs (i.e. new cancer medications)
• home care and cleaning if you need help
• extra meals out because no one is cooking
• continued RRSP contributions

Disability insurance alone will maintain the current lifestyle, but won’t help with unexpected healthcare costs or protecting your retirement plan from collapse.

Chances of surviving a critical illness

The chances of surviving a critical illness are only increasing. The latest statistics I received from a Sun Life Financial health insurance specialist were that 92% of Canadians survive their first heart attack and 85% survive a stroke. Survival rates for all types of cancer have also been going up. This means it is much more likely that you will survive a life altering critical illness than pass away from it. So, if you survive, what happens to your financial plans and your retirement? The same financial pressures outline above haven’t gone away, and your disability insurance does not meet all your needs. There are a few ways to access extra cash when a critical illness strikes and you need money:

• Remortgage the house – but who would lend a seriously ill person money?
• Liquidate RRSPs – but then your retirement plans will never be reached.
• Have a critical illness insurance policy that pays lump sum, tax free cash after diagnosis.

When looking at your options, the cost to benefit analysis of having a critical illness insurance policy is excellent. There is about a 35% chance that you will have one of the 24 covered critical illnesses or injuries before age 65. With this high probability, the cost of owning a critical illness insurance policy is very low for a tax free benefit of $50K, $100K or more. The other two options will be financially devastating to your future. Why take that risk?

Sun Life: Protect you Investments with Critical Illness Insurance

Sun Life: Protect your Savings with Critical Illness Insurance

Get Long Term Care Insurance in your 40s or 50s

Planning your retirement also means having a plan in place for your long term care. Half of all Canadians will require some form of long term care, either in their own home or in a facility. Serious long term care needs can last for years, where you need assistance with the basic activities of daily life, like dressing and feeding yourself, getting out of bed, and even going to the toilet. The cost of this kind of close personal care can be very expensive; often over $3,500 per month on top of your regular monthly expenses.

Planning for this kind of care means either having to beef up your nest egg to handle the cost of care, or owning a long term care insurance policy that will pay out tax free income to you when you are in need of care. For most middle aged Canadians saving for retirement, the cost of a long term care insurance plan would be 2-3% of their current retirement savings per year in order to protect those savings from being eaten away by long term care costs. Seems like a good plan – use a small amount of your savings in order to protect the entire nest egg.

Also, if you wait too long to buy long term care insurance the price really goes up. The best time to buy it would be in your 40s or 50s, as the price is very manageable. There are also 20 year payment options at these ages. Just think, at age 45 you could buy a long term care insurance plan and be done paying for it at 65, when you retire. No ongoing premiums into your retirement years.

Asset Protection with Sun Life Long Term Care Insurance

Protecting your nest egg against health risks

This whole article is about planning for health risks that can destroy your retirement plan. There are enough financial pressures from family, taxation, and trying to save for those later years. What you need to do now is put a health insurance plan in place to protect your retirement savings and boost your income when either a critical illness or long term care situation arises. Chances are you will face one or both of these situations in your life. Wouldn’t it be nice to have a life insurance company pay the bills instead of it coming out of your bank account?

Ask a Life Guard Insurance broker about your health insurance plan

At Life Guard Insurance we have qualified brokers across Canada who can help you plan for health insurance needs. Contact us today and we will match you up with an insurance broker who specializes in health insurance and retirement planning.

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 health insurance and retirement planning would be very much appreciated.

Patty Randall is our guest author about long term care insurance. She is the owner of www.longtermcarecanada.com and Canada’s foremost speaker and educator on long term care needs and aging successfully with passion and purpose. You can email her at pattr@telus.net. Please check out her website section on Long Term Care Insurance in Canada.

An Opinion on Long Term Care Insurance

Maybe this is a good time to remind everyone that long-term care truly is ‘a family affair’.

In our country, 90% of care is undertaken by family in one’s own home and 1 in 5 caregivers still provide care to their loved ones even when in a care facility. As well, 80% of Alzheimer’s-dementia persons are cared for at home, usually by a spouse.

“It upsets me!” “It upsets my family!” These are the two major barriers recently identified for not having a conversation about our future long-term care! Shockingly, the majority of couples have not talked with their spouses yet about the three key aspects pertaining to their future care:

• Their options when they need some care and related costs
• What they expect of their family members
• How their future care is to be paid for

Many people ask me about long-term care insurance (LTCI) as a method of financing some of the costs of our potential future care. I’m not a planner, insurance agent or broker, nor do I work for any insurance company, so I can only express my understandings as a consumer with years of care-related experience.

1 in 4 Canadians retire because of a health issue. 1 in 4 of us will have a long-term disability while 8 out of 10 of us when elderly will have a chronic health problem. So, I view my future long-term care like I do any other risk. I own house insurance (the chance being 1 in 1200 that my house might burn down) and I own car insurance (the chance, 1 in 240 that there might be a catastrophic crash). And I own LTC insurance (the chance is 1 in 2 that I will need some care in my future). Long Term Care is the single largest out-of-pocket cost for adults over 60 therefore it is a significant financial risk too.

Naturally I won’t be disappointed if I never get to claim against my house insurance after years and years of paying for it. And that’s my attitude toward my long-term care insurance too. (Great, I won’t have needed it!)

Long Term Care Insurance is an insurance program designed to help the insured, you/ me, provide for our own care in cases of chronic illness, disability, an accident or as a result of growing older. (Long Term Care Insurance is not just for seniors — care may be required at any age.)

It provides coverage for times when we can’t manage the essential physical activities of our daily living (ADLs) on our own, such as feeding, dressing, bathing, toileting and walking, as well as moving from a bed to a chair. However, mental incapacities can be covered as well. It is important to understand the importance of the ADLs since the inability to perform a certain number of these ADLs or to pass certain mental tests is how insurance companies decide if we are eligible to claim and receive the benefits of our policy.

The experts tell us that we should own a long-term care policy for the same reason we buy life insurance, because we love our family, and without it, our family could be seriously affected, in some cases devastated. We are going to be taken care of one way or another, but it is our loved ones’ lives that will be changed dramatically without some planning on our part — it’s all about consequences. It is often said that ‘LTCI doesn’t replace a family’s love, it complements it’.

We need to consider this type of insurance since many of us couldn’t afford to pay for all our care needs over a long period of time as that care, wherever it may be, could be costly. Because provincial government care-initiatives are limited and can change over time, it isn’t a good idea to put ourselves in a position of dependency on government programs and services.

Of course, none of us want to become a burden. We’ll want choices, as one gentleman said, ‘I would like to choose where I go rather than be taken there’. We may also consider Long Term Care Insurance to protect our estate. For me, peace of mind is extremely important since I want to ensure that I have all in place in my retirement and Long Term Care Insurance fits as a piece of that plan.

We should buy Long Term Care Insurance ‘sooner rather than later’ (as my best friend who is an insurance agent tells me, ‘better 5 years too early rather than 5 minutes too late’). One must be ‘health eligible’ to qualify, but, and this is an important but, even if you have a certain health problem now, it doesn’t mean you won’t qualify, so always ask.

We should buy a policy that allows both ‘home care‘ and ‘facility care‘ — trying to have our bases covered — and don’t forget to ask about spousal discounts and inflation coverage.

Long Term Care Insurance polices aren’t one type. Different companies sell policies that combine features and benefits such as benefit periods, 1-2-5 years or lifetime. Also, the amount of daily benefit you can purchase can range ($100-$300).

And insurance companies pay differently too. Some pay a lump sum monthly up to your limit; some pay the amount of the care-bills actually incurred monthly upon submission; and there are even income policies. It’s important to ask specifically about the policy’s payment methods as you’ll want the best for your situation.

A key question always asked is, ‘What does it cost’ . . . ‘That depends’ I usually respond . . . think of it like buying a house, what features do you want, your Long Term Care Insurance policy is ‘customized’ to fit your circumstance. Since I have been in situations where I’ve had to pay the care bills every month for years, I also discovered that a Long Term Care Insurance premium is less expensive than actual care costs. Of course, it is best to buy prior to age 65 as costs are age-based, the younger you buy the better!

Certainly cost is always an obstacle, but I would rather make do without some other big-ticket item in my life than this particular insurance plan given our demography, economy, health system budget concerns, marital status changes and our tendency toward long life.

Long Term Care Insurance is a complex product, but we shouldn’t be in denial that we’ll probably need some demanding care in our later years when ‘our biological warranty’ is running out. I recommend you investigate Long Term Care Insurance by calling a qualified insurance agent or financial planner. You may also go to my website and link to the reputable insurance companies that offer this product in order to learn more.

Wishing you good decision-making regarding Long Term Care Insurance, Patty

LifestageCare Is Included With Every Sun Life Long Term Care Insurance Policy

Help accessing long term care and family care services with LifestageCare

We hear news about long term care services in Canada every day. The news isn’t always good. Governments are short on beds in long term care facilities, there are limited in home services provided by government agencies, and private health care is so confusing to sort through. With all these choices, changing government programs, and a myriad of service options how do you know where to start looking?

This is where LifestageCare.ca comes in. It is a member’s only website that puts the healthcare resources of your provincial system at your fingertips. It is also an unbiased source of information about private health care service providers in your area. You can use LifestageCare.ca to estimate the costs of care, get in touch with local health care workers, access government programs you might never have know about, and much more.

Accessing LifestageCare via Sun Life Financial

With a Long Term Care Insurance policy from Sun Life Financial you are automatically enrolled into the LifestageCare.ca system. Just click here to log in using your Long Term Care Insurance policy number from Sun Life Financial.

Get the LifestageCare and Sun Life Financial Brochure Now!

LifestageCare.ca has expert advisors on the phone and online waiting to help you 24 hours a day, 7 days a week. They can assist you with care needs at any stage of life:

• Seniors – information on aging, retirement residences, nursing homes, home care and community care.
• Self care – personal advice and well being information, addiction treatment, budget and credit counselling and physical rehabilitation.
• Children and teens – for parenting, child care and special needs services.

LifestageCare can sort through the vast amounts of information to help you find the support and care you and your whole family need. The services allow you to quickly and easily:

• Find a complete range of qualified local professional care facilities and health care resources anywhere in Canada.
• Determine what home care, rehabilitation treatment, education and residential services will cost.
• Obtain professional advice on geriatric care and care for teens and children, including resources for special needs.
• Read simple explanations of treatment options, in language you’ll understand.
• Find the right questions to ask when choosing a professional caregiver.
• Stay informed about the multiple government financial assistance programs.

Sun Life Long Term Care Insurance has LifestageCare built-in

Remember, this is a free services that is included when you buy a Long Term Care Insurance policy with Sun Life Financial. If you would like more information on Long Term Care Insurance and Sun Life Financial, please feel free to contact us here at Life Guard Insurance.

Sun Life Financial’s Competitive Edge Newsletter featuring LifestageCare.

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 LifestageCare and Sun Life Long Term Care Insurance would be very much appreciated.

Health Insurance can Solve Canadian’s #1 Financial Worry – Health & Wellness

Vast majority of Canadians do not own proper health insurance

Health insurance is covers Canadians from a myriad of risks. Health insurance is not just one product, but covers Medical and Dental Insurance, Disability Insurance, Critical Illness Insurance and Long Term Care Insurance. Unfortunately, many, many Canadians a woefully under-insured for these health risks, even though research shows that the #1 financial planning concern for Canadians is health and wellness.

Here are some basic statistics for you:

• The chances of suffering a long term disability or critical illness before age 65 is well over 50%
• 1 in 2 Canadians will need long term care assistance in their lives
• Only 5% of adult Canadians own critical illness insurance
• Only 4% of adult Canadians over 45 own long term care insurance
• Less than 60% of working Canadians have income protection from disability insurance (personal or group coverage)

Health risks in the news daily

We’ve all heard the tragic headlines around the impacts of health care in Canada:

Family financially struggles in fight with cancer.

The need for long term care in Canada set to explode.

Life saving cancer drugs not covered by provincial health care.

Government warns of bed shortages in loing term care facilities.

We all know one of the biggest risks to our quality of life and our finances is our health. So why are so many Canadians complacent about preparing themselves for these risks? I think there is still an expectation that the government and our universal health care system will take care of us – from the cradle to the grave.

If that was the case, we wouldn’t hear on the news so often about friends and families trying to raise money for someone fighting a disease like cancer. The government can no longer afford to be the financial security blanket for every Canadian. The responsibility is yours – to plan for the health risks we all face. Don’t become a statistic or a sad news headline.

Changes economy, health care and social structure increases the need for health insurance

Our economy is changing and the government services we can expect are changing with them. When the Canada Health Act was passed in the 1950s, giving all Canadians universal health care, the average life expectancy was in the late 60s. Now, the avertage man lives to almost 80 and Canadian women live to 83. This is an additional 15 plus years of health care for each and every Canadian that the Canada Health Act never factored in when created.

The federal government passes the responsibility for health care onto the provinces. It has become more and more common in Canada for provincial health care systems to delist services that are not explicitly covered in the Canada Health Act. Also, providing long term care assistance has become a real challenge. Today there are beds only for the most severe cases and waiting lists over a year long to get a bed. And the baby boomers haven’t even hit the long term care system yet!

The financial responsibility for own health care has to shift to us personally. We can no longer expect the government to provide for our needs. If you do, I’m afraid you will be sorely disappointed and it will probably cost you or your family a lot of money.

Changes to Canadian Workplace create health insurance needs

Another major social change is the changing workplace in Canada. No longer can we expect to stay at the same company for many years and retire, collecting a pension. More Canadians are becoming self employed, working for small companies, or starting their own company. Stats-Canada says that each year about 145,000 companies are started in Canada.

There are now over 2 million Canadians who are self employed. Each of these people typically has no insurance benefits they would have from a group insurance plan from a large companies plan. People need to plan for their own income protection, critical illness risks and ongoing health and dental expenses.

Health insurance protection aligns with values of Canadians

If you think about it, the reasons to buy health insurance are very much aligned with the traditional values of Canadians.

• Freedom and self reliance
• Protecting and nurturing families
• Planning for our financial future
• Social security for those less fortunate

Health insurance is a financial planning tool available to many Canadians who are middle income families or the wealthy. Reasons to buy health insurance match up well with our common values above:

• Freedom to seek the care we need and want
• Insuring your family can move forward even in the face of serious illness of one of the family members
• Protecting the retirement savings and long term planning we are building
• Leaving resources in the health care system for the less fortunate who can’t afford health insurance premiums

Upcoming articles on health insurance

This is only the first article in a series of “Focus on Health Insurance” articles. Over the next few weeks keep your eyes open for upcoming articles on the following topics:

• Health insurance for growing families
• Health insurance as part of your retirement plan
• What health insurance do you need as you enter the retirement years
• Long Term Care Insurance: The Cost of Not Having Any in Canada
• Critical illness insurance for the business market
• Critical illness insurance is too big a risk to ignore

Contact Life Guard Insurance for your health insurance needs

Do you need a health insurance plan? We can help. Contact Life Guard Insurance to be put in contact with a health insurance broker in your area today.

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  Focus on Health Insurance would be very much appreciated.