Life Insurance - Where is the best deals

[Kamloops]

Looking to buy Life Insurance. I am 45 and my Wife is 41 both in excellent health.

Looking for about 200,000 on a first to die type policy.

Anyone know of the best deals for this?

[Audiogenic]

Seems like you are looking for term insurance.

Check www.kanetix.ca for a quote.

If you are both non smokers, the top two choices you are looking at in the $700 per annum range for a 20 year term are:

AIG (they require a medical)
Equitable Life (they don't require a medical)
Empire Life (they don't require a medical)

One thing the insurance agents DON'T tell you is that legally you can backdate the policy 6 months so that the savings in the annual premuims actually work to your advantage over the 20 years (even if you pay more up front for the extra months).

[lasallejai]

Assuming you are both non-smokers, and the ages you have given are closest to your nearest birthday here are the best deals out there for you:


5 Year Term: Unity Life at $43.38 a month

10 Year Term: AXA Assurances at $42.80 a month

15 Year Term: Unity Life at $60.48 a month

20 Year Term: AIG Life: $65.79 a month

[Kamloops]

Assuming you are both non-smokers, and the ages you have given are closest to your nearest birthday here are the best deals out there for you:


5 Year Term: Unity Life at $43.38 a month

10 Year Term: AXA Assurances at $42.80 a month

15 Year Term: Unity Life at $60.48 a month

20 Year Term: AIG Life: $65.79 a month

Is that per person?

[lasallejai]

No, you mentioned you wanted a Joint First To Die policy, right? So all the rates are based on first to die with sum assured of $200,000 so either one of you disappears from the picture the insurer will pay out the proceeds. There will only be one policy insuring both lives.

[wheel]

Check out www.insurecan.com - more companies compared for life insurance than the kanetix link mentioned above.

As for the backdating of the policy - it's not a 'legal' thing. It's an insurance company thing. Sometimes the companies will do it, sometimes they don't but they're certainly not required to backdate a policy if they don't want to. Backdating sometimes makes sense if you're just past your birthday, or just past 6 months past your birthday. Other than that, it's not something I would be concerned about - it's not the tip of the week by any stretch :).

I would also suggest you look for a spousal insured discount rather than a joint 1st to die policy. That's basically two seperate insurance policies through one company rather than one policy covering first to die. There's a variety of reasons I prefer this (it's the way I've structured my life insurance rather than joint 1st to die) but basically the very small savings in costs do not outweigh the loss of benefits or the additional risk you're taking on. You're trying to save less money than you might thing by doing this. And if you're relatively young - like me - then I figure I'm likely to die in an accident. (edited to add - I noticed you and your spouses ages are the same as mine and my spouse, except reversed :) ).And if that's the case, chances are good that my spouse is with me. And in that case, I want both death benefits paid, not just one. That scenario is entirely 'imo' but it's a big part of why I've got insurance that way.

[fireguy9]

I took out term for $250 001 2 yrs ago at age 37, non smoker,, excellent health and my prem is $16 month

[atm2000]

Assuming you are both non-smokers, and the ages you have given are closest to your nearest birthday here are the best deals out there for you:


5 Year Term: Unity Life at $43.38 a month

10 Year Term: AXA Assurances at $42.80 a month

15 Year Term: Unity Life at $60.48 a month

20 Year Term: AIG Life: $65.79 a month


stupid question - what happens when the terms end? what happens to the money paid out...

[wheel]

stupid question - what happens when the terms end? what happens to the money paid out...
Term insurance is like car insurance. You're paying for coverage, when the policy expires, there's no money coming back.

Three things about the term on term insurance:
1) the premiums go up at the end of the term. Very basically, for a 10 year term policy the premiums are level for 10 years then they increase and remain level for another 10 years. There are some variations on this theme that are product specific. Ask your broker what happens for any given policy.
Term policies tend to be 'renewable and convertible'.
2) Check the 'renewable' to date. This is how long you can keep purchasing insurance in those 10 year jumps. After that age, no more insurance is available on that policy - the policy basically expires. 'Renewable to 75' is common, which means you can keep buying in 10 year jumps until you hit 75 after which you're out of insurance. Be aware that term insurance in your later years gets expensive.
3) 'Convertible' means you can swap your term policy for a permanent life insurance policy without taking another medical exam - just by asking and paying the new, higher premiums for the permanent policy.

'renewable to 75, convertible to 65' means you can buy the insurance to 75. Or up to age 65 you can swap the term policy for a permanent policy. So if you decide at 59 you have a permanent need it's a quick (though expensive) swap.

If you're really analytical, you can run a present value analysis of 10 year term against permanent against 20 year term (etc.) over a time period to find out what's cheaper. You may find for someone who's younger that over the long haul, a term to 100 policy is actually cheaper - even if you're only planning on keeping it to age 65.

i.e. 10 year term premiums are 100 for the first 10 years, then 200, then 400. Maybe a term to 100 is $210 per year for life. (completely made up numbers here). Over 30 years the T100 might be cheaper particularly taking into account interest. But you have to pay the higher premiums now - something most folks who are looking at term insurance are not willing to do. Of course if you are that long sighted, then at age 65 you'll have the added bonus of owning a permanent insurance policy with relatively dirt cheap premiums.

[atm2000]

Term insurance is like car insurance. You're paying for coverage, when the policy expires, there's no money coming back.

Three things about the term on term insurance:
1) the premiums go up at the end of the term. Very basically, for a 10 year term policy the premiums are level for 10 years then they increase and remain level for another 10 years. There are some variations on this theme that are product specific. Ask your broker what happens for any given policy.
Term policies tend to be 'renewable and convertible'.
2) Check the 'renewable' to date. This is how long you can keep purchasing insurance in those 10 year jumps. After that age, no more insurance is available on that policy - the policy basically expires. 'Renewable to 75' is common, which means you can keep buying in 10 year jumps until you hit 75 after which you're out of insurance. Be aware that term insurance in your later years gets expensive.
3) 'Convertible' means you can swap your term policy for a permanent life insurance policy without taking another medical exam - just by asking and paying the new, higher premiums for the permanent policy.

'renewable to 75, convertible to 65' means you can buy the insurance to 75. Or up to age 65 you can swap the term policy for a permanent policy. So if you decide at 59 you have a permanent need it's a quick (though expensive) swap.

If you're really analytical, you can run a present value analysis of 10 year term against permanent against 20 year term (etc.) over a time period to find out what's cheaper. You may find for someone who's younger that over the long haul, a term to 100 policy is actually cheaper - even if you're only planning on keeping it to age 65.

i.e. 10 year term premiums are 100 for the first 10 years, then 200, then 400. Maybe a term to 100 is $210 per year for life. (completely made up numbers here). Over 30 years the T100 might be cheaper particularly taking into account interest. But you have to pay the higher premiums now - something most folks who are looking at term insurance are not willing to do. Of course if you are that long sighted, then at age 65 you'll have the added bonus of owning a permanent insurance policy with relatively dirt cheap premiums.


this is very good information. i wasn't aware of this... so, can i ask you what type of insurance is available if i were just to contribute and contribute to say a period where I don't want and have the monies "contributed" too available for me? is this a different type of insurance?

[wheel]

this is very good information. i wasn't aware of this... so, can i ask you what type of insurance is available if i were just to contribute and contribute to say a period where I don't want and have the monies "contributed" too available for me? is this a different type of insurance?
Why in heck would you want to do that?

[wheel]

Looking to buy Life Insurance. I am 45 and my Wife is 41 both in excellent health.

Looking for about 200,000 on a first to die type policy.

Anyone know of the best deals for this?
Here's another thread on joint 1st, see post #4 and #5:
http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=87075
Note that these posts are from actuaries - the people that numbercrunch insurance policies :).

[atm2000]

Why in heck would you want to do that?


seeing a term life insurance is a for a fixed period, and i suspect, if you do have the chance to renew - it'll be at higher premiums, since our health declines as we age. after the period has ended, you have nothing to show for the years put in.

[pipodayo]

Check http://www.getterm.cc/

[wheel]

seeing a term life insurance is a for a fixed period, and i suspect, if you do have the chance to renew - it'll be at higher premiums, since our health declines as we age. after the period has ended, you have nothing to show for the years put in.
Read my post. You get coverage for your premiums, not 'nothing'. People don't expect money back after paying car insurance for 10 years do they? THis is a very poor concept promoted by the insurance industry. If you're getting money back, it's only because you've cancelled your life insurance after overpaying premiums, and they are returning an overpayment of those premiums. You didn't 'get' anything back other than your own money.

[tigger03]

I have a Universal Life policy. I got it when I'm young, and have to pay $100/mth for 20 years, and then I'm covered for life. And it also build up a cash value fund ... but I guess it depends on your needs.

[wheel]

20 years, and then I'm covered for life.
Please change your quote to 'and then *maybe* I'm covered for life'. The investment portion of UL is either not guaranteed, or are guaranteed at really low interest rates.

You might also consider contrasting what would happen if you instead bought a policy that was strictly coverage (term, term to 100) and put the difference in premiums into an RRSP. Chances are reasonable you'd be better off - AND you'd get a tax refund every year for your RRSP contributions; something you're not getting with your universal life policy.

In short, 'covered for life' is a fine sales technique but most people that follow with the questions 'yeah, but how much is that going to cost me' don't proceed with a universal life purchase.

As I've noted before, universal life is a great financial solution - if you have financial problems.

[tigger03]

Please change your quote to 'and then *maybe* I'm covered for life'. The investment portion of UL is either not guaranteed, or are guaranteed at really low interest rates.

You might also consider contrasting what would happen if you instead bought a policy that was strictly coverage (term, term to 100) and put the difference in premiums into an RRSP. Chances are reasonable you'd be better off - AND you'd get a tax refund every year for your RRSP contributions; something you're not getting with your universal life policy.

In short, 'covered for life' is a fine sales technique but most people that follow with the questions 'yeah, but how much is that going to cost me' don't proceed with a universal life purchase.

As I've noted before, universal life is a great financial solution - if you have financial problems.

Not necessarily. It depends on how that cash value fund is invested. If it is invested too high, it's unstable ... if it's low, it's more stable. I have it so that I can take out loans against it and such .. and especially now that I can afford the monthly payments, I'd rather pay now for 20 years, and never have to worry about it again.

I prefer this to Term Insurance. Although term is cheaper, there's not really a financial value to it.

[eelfliw]

Unfortunately, the only time life insurance policies are "best deals" is if you die within the first few years of the policy. Otherwise, it's "best deal" only for the insurance company.

[fireguy9]

Not necessarily. It depends on how that cash value fund is invested. If it is invested too high, it's unstable ... if it's low, it's more stable. I have it so that I can take out loans against it and such .. and especially now that I can afford the monthly payments, I'd rather pay now for 20 years, and never have to worry about it again.

I prefer this to Term Insurance. Although term is cheaper, there's not really a financial value to it.


universal life is a poor investment decision!!! its cash value is invested at horrible rates,,,,, better off investing the $$ yourself and taking out a term policy for what it is,,, insurance on your life and the difference in cost you invest yourself or whatever. If you want to borrow $$ ,,,, take out a secured line of credit,,,, cant beat that compared to insurance borrowing. I had a universal policy when I was 22 for about 8yrs,,, and after researching more,, I found it was a total waste and cancelled it and took out a $250001 term policy and pay $16 a month for that and have a work policy that covers for almost $200000. Insurance really is for the working yrs of your life to cover off everything for your family and children in the event of your death,,,, when your older you should be completely debt free and on paper,,, no need for insurance other then tax reasons if you want to go that route,,, but that is another topic.

[wheel]

Not necessarily. It depends on how that cash value fund is invested. If it is invested too high, it's unstable ... if it's low, it's more stable. I have it so that I can take out loans against it and such .. and especially now that I can afford the monthly payments, I'd rather pay now for 20 years, and never have to worry about it again.

I prefer this to Term Insurance. Although term is cheaper, there's not really a financial value to it.
Either run the numbers or don't :). However every single reputable consumer advocate I've ever read says exactly what I've noted here. Dave Chilton, Susan Orman, etc. etc. etc. They'll all tell you UL is fine - but only for high end financial planning needs.

There isn't supposed to be a financial benefit to term. It's insurance. This is the typical loop promoted by some agents. You're looking for insurance. Here's term. OK, but UL has a better financial aspect to it. Sure. It's better than term. But they then conveniently neglect to compare it against other investment alternatives. So, you're looking to buy insurance, they sell you insurance, then top it up with the 'extended warranty' without comparing it to other investments (where for most of us, there are far better alternatives).

Compare UL to term from a protection standpoint and UL will almost always lose. Compare UL to other actual investment alternatives and UL will almost always lose.

Investment earnings inside a UL plan are tax deferred. Investment earnings inside an RRSP are also tax deferred - plus your contributions are tax deductible. In many cases, that means you can invest $100 into an RRSP for the same cost as investing $50 into a UL plan. Add in the fact that many UL investment options are very comparable to those available in RRSP's and other investment vehicles and you start to see why consumer advocates don't tend to like UL. Compare $50 to $50 invetment and maybe - compare $50 invested to $100 and all of a sudden UL doesn't make any financial sense. Sure, max out your RRSP's and you are a smaller part of the way there to UL looking a bit better. But it's still not the end of a proper analysis.

[Kevinck]

I'll just mention that quite often companies have discounts if you're part of registered society or group. For example Manulife Financial has much better term insurance rates for Alumni of certain universities. And even better rates if you're part of the PEO (Professional Engineers of Ontario).

[wheel]

Good idea. But shop around - compare the group pricing with that available individually. Given the nature of the forum, here's the way I approach it when looking at prices for life insurance (much more complex than shopping for car insurance).

- Buy the right type of insurance. For a lot of us that's bare-bones term insurance. It provides life insurance at low prices. No bells and whistles to pay extra for. One of the greatest variances in prices in life insurance is between product types.
- shop around. I've previously mentioned www.insurecan.com, you can get prices online there from about 25 companies. Prices vary though not nearly as widely as they did years ago. Easy comparisons by consumers have forced companies to get more inline with each other and compete. Online comparisons arm you with a range of prices.
- If you're insuring both you and your spouse you need three price comparisons. One for you, one for the spouse, and one that shows discounts if you both buy from the same company (called a spousal discount). Some companies provide like a $50 discount if you both buy from the same company. Other times it's cheaper to buy two seperate policies from seperate companies. Depends on the amount of insurance, your ages, stuff like that. (this is not joint first to die insurance, but is instead two seperate policies).
- Most consumer advocates don't recommend buying insurance on children. I agree, but most polices will have a 'children's protection rider' you can add to your life insurance policy. Dirt cheap - like $20 or $50 a year, it'll cover *all* kids for one low price whether it be 1 or 20 kids until a certain age for a small amount like $10K. And once they're older they can generally carve off the 10K of insurance into their own seperate policy even if they're not insurable at that time. (Features vary, these are things that I would normally expect to see, but companies are different). So while I wouldn't insure my kids from a financial perspective, this rider tends to be cheap enough that I have it on my policy.
- stay away from bank mortgage insurance. There are far better and less expensive ways to insure your mortgage than what you get placed in front of you when you sign your mortgage.
- don't buy accidental death and dismemberment. AD&D only pays 'sometimes'. Either you need the insurance or you don't. So either buy it or don't. Buying insurance based on a need, when that insurance may not actually pay off the need isn't really proper insurance protection IMO.
- same with waiver of premium; I don't buy it. If you become disabled and can't pay your life insurance premiums,you've got bigger problems. What you should have is a proper disability insurance plan to replace your paycheque. That'll make sure you can pay your life insurance premiums AND your mortgage. I've got a top notch disability plan myself - it's something I pay a lot for and it's worth every penny.
- I don't buy Critical Illness insurance. Some in the industry disagree with me, I personally think it's overblown and insuring something that's not really a 'need'. I personally think it's pushed by the insurance industry and sold based upon fear.
- there are different types of term life insurance. 10 year term tends to be the most sold and is also the most competitively priced (again, generally speaking).
- if you leave a company that has a group life insurance policy, you've got a limited amount of time when you can convert the group insurance policy to an individual policy without any medical stuff. Depending on your circumstances (ill, or going somewhere without group insurance) this can be a good way to go. But you've got to act quick.

[Hula]

Please change your quote to 'and then *maybe* I'm covered for life'. The investment portion of UL is either not guaranteed, or are guaranteed at really low interest rates.

You might also consider contrasting what would happen if you instead bought a policy that was strictly coverage (term, term to 100) and put the difference in premiums into an RRSP. Chances are reasonable you'd be better off - AND you'd get a tax refund every year for your RRSP contributions; something you're not getting with your universal life policy.

In short, 'covered for life' is a fine sales technique but most people that follow with the questions 'yeah, but how much is that going to cost me' don't proceed with a universal life purchase.

As I've noted before, universal life is a great financial solution - if you have financial problems.

Now that's good advise just having gone through this myself. I went 20 year term, and am putting the difference between a "term" and a "true life" policy into my RRSP's. Life insurance interest rates are typically very low (how do you think they make their money!!!), and if you convert to cash at the end, you're typically not seeing what you may be told you'll see at policy end by your insurer.

Just be careful. There's a sh_tload of misinformation on the internet about life insurance, and much of it also comes from the insurance industry. Some companies only sell Term because they know the life portion is a "mugs game".

Go term...and invest the diff yourself. Just one man's opinion.

[Neil]

Not necessarily. It depends on how that cash value fund is invested. If it is invested too high, it's unstable ... if it's low, it's more stable. I have it so that I can take out loans against it and such .. and especially now that I can afford the monthly payments, I'd rather pay now for 20 years, and never have to worry about it again.

I prefer this to Term Insurance. Although term is cheaper, there's not really a financial value to it.

Tigger: You've fallen for one of the oldest tricks. Universal life insurance is not a "financial value", it's a waste of your money.

The idea of paying 'for 20 years then never worry again' appeals to you? Then you would be much smarter doing term insurance and taking the difference in premiums and putting them into solid non-insurance linked investments. Guaranteed, you will be better off.

You could run the numbers if you like. Or you can just think about it from a common sense angle:

If the insurance company is comfortable taking your money for 20 years and confident that what they collect from you will grow large enough to pay your insurance costs forever, then why can't you just do the same? You doing it yourself means you won't be subject to all kinds of huge overhead costs, risk, advertising, sales commissions, etc. With the insurance company holding your money, there's a very real prospect that they will just find other uses and leave you paying well beyond the 20 years. Or that they will fold or merge or get sued, and they dip into your money to help with those costs.

That 20 years is a sales promise by the way, not a guarantee of any sort. The chance of you succeeding on your own are much better than if you leave the money with the insurance company. They can do all sorts of things to shrink your savings or take it entirely.

And the idea of 'borrowing' against your universal life is another insurance seller's myth. Just think about it for a second. The money in the universal life account supposedly belongs to you. So why should you have to pay to borrow your own money? And isn't it just a little fishy why the borrowing cost would be undisclosed and at the discretion of the insurance company to set?

The better alternative is if you would just save the difference in an investment plan, you wouldn't have to borrow money from your own savings.

Imagine it's 10 years into this thing and you have a sudden need for $10,000. What's better:

(a) using your universal life cash account as collateral, taking a loan that decreases your life insurance protection and costs you higher than market interest rates?

(b) taking $10,000 out of your investment account

It's not a trick question. Option (b) is obviously the much better choice. It's zero interest rate for starters, and it has no negative impact on your insurance either.

I would urge you to get a real financial expert to look your stuff over and see how much this universal life is going to cost you to get out of. The insurance companies know that when customers figure out what's happening with universal life, they are eager to cancel. So it's no coincidence they put crazy huge penalties into them called "surrender" charges. There's a good chance you'll lose everything you've put into it so far. Nice investment eh?

But still, a bad plan is a bad plan, and the sooner you get out of it and into something decent, the better you'll be in the long run.

Also read everything you can and ask questions. The best thing is for you to learn and be in charge of your finances, and keep the salespeople out of the decision making.

[st7860]

since you're into 'insurance'

you may want to consider Critical Illness Insurance. several companies offer it.

just like life insurance, you pay a monthly fee, and have a pay out of between $50,000 to $200,000 and up.

the payout comes as a cash lump sum when you get any of around 20 'top' illnesses. You can use the money for your family, or to get yourself treated in the USA(no 12 month waiting lists there), or put it in the bank.

if you're the healthiest person and pass away without getting an illness, your heirs get the premiums back.

if you're the person that will have a long life, after age(75 i think) you also get the premiums back.

[wheel]

since you're into 'insurance'

you may want to consider Critical Illness Insurance. several companies offer it.

just like life insurance, you pay a monthly fee, and have a pay out of between $50,000 to $200,000 and up.

the payout comes as a cash lump sum when you get any of around 20 'top' illnesses. You can use the money for your family, or to get yourself treated in the USA(no 12 month waiting lists there), or put it in the bank.

if you're the healthiest person and pass away without getting an illness, your heirs get the premiums back.

if you're the person that will have a long life, after age(75 i think) you also get the premiums back.
Criticial illness is a good example of a product being pushed by the insurance companies. IMO it's a waste of premium.


the payout comes as a cash lump sum when you get any of around 20 'top' illnesses. You can use the money for your family, or to get yourself treated in the USA(no 12 month waiting lists there), or put it in the bank.
That statement right there proves it's not true insurance and that there's no financial need for the product. If you're putting the money 'in the bank', you didn't suffer a financial loss that needed to be insured.

This product is being sold through fear tactics and people who want to 'win the cancer lottery' if they get sick. I never buy insurance because I want money, I buy insurance to pay back a loss.

[poorwingman]

I'll just mention that quite often companies have discounts if you're part of registered society or group. For example Manulife Financial has much better term insurance rates for Alumni of certain universities. And even better rates if you're part of the PEO (Professional Engineers of Ontario).


link
http://www1.manulife.com/can/affinity/affinity.nsf/public/mb

It even lists Air miles collectors as an association!

[st7860]

Criticial illness is a good example of a product being pushed by the insurance companies. IMO it's a waste of premium.


That statement right there proves it's not true insurance and that there's no financial need for the product. If you're putting the money 'in the bank', you didn't suffer a financial loss that needed to be insured.

This product is being sold through fear tactics and people who want to 'win the cancer lottery' if they get sick. I never buy insurance because I want money, I buy insurance to pay back a loss.

it might be a waste of premium but then if you never get sick you get the premiums back at old age or if you pass away for other reasons your heirs get the money I think.

[wheel]

it might be a waste of premium but then if you never get sick you get the premiums back at old age or if you pass away for other reasons your heirs get the money I think.
Another feel good sales technique that doesn't bear up under scrutiny of the numbers. You think the companies do this for free? There's a cost that's buried in the time value of money that many people don't see immediately because it's long term - and thus discount. Over 10-20 years the interest earned on your premiums is likely worth more than the premiums themselves.

Put the money in the bank earning interest. That way you'll have both the premiums and the interest available any time you want. Wait 20 years and spend the interest on strippers and you'll have the same financial solution - plus a really really good time with strippers at age 70.

Do you really need $25k or 50K if you get cancer in Canada (if you have good DI and life insurance already in place)? I don't think so in most cases. Where's the financial loss? If there's no financial loss, then there's no insurable need. Sales people throw on the 'take a vacation if you get cancer' and 'get all your premiums back' which are all predicated on the fact that you have an insurable need. Without that, the rest of the arguments fall flat - but are still touted as a stand alone feature. Buy something because 20 years later you get your money back? Why would I buy that? (A: I wouldn't).

RFD insurance tip of the day :) : save your money by making insurance a financial decision not an emotional one. It's sold based on emotion, if you allow that to run rampant you'll be sold all manner of interesting products.

[wheel]

False. Offering $25K then saying 'take it to the states to get treated' is extremely misleading - it makes people think they could actually go to the states and get treated for cancer on that. You can't. I've seen the bills. You walk in the door looking for emergency heart surgery and you'd better add a zero and start multiplying. So why do people sell this as a feature when it's something that will never happen? Because they're preying on the fear of cancer, and the joy of winning the lottery if you get cancer.

If they were offering 'if you get cancer, we'll send you to the states and cover 100% of your treatment' you'd have an insurable need (assuming you can't get treated in Canada, which I disagree with) you might have an insurance product. But they don't offer that - they *sell* that and lead people to believe that's what they can do.

Proper steps:
1) What is your financial loss?
2) What is the event that triggers the financial loss
3) Is the financial loss devasting?
3a) if it's not devasting, self insure.
3b) if it's devasting, buy insurance to cover the specific loss for the specific amount of the loss.

Critical illness falls down in step 1.

[st7860]

If they were offering 'if you get cancer, we'll send you to the states and cover 100% of your treatment' you'd have an insurable need (assuming you can't get treated in Canada, which I disagree with) you might have an 1.

You mean you can get treated in Canada at a world class facility with no delay?

[wheel]

You mean you can get treated in Canada at a world class facility with no delay?
You mean $25K will get you emergency open heart surgery in the states? What about cancer treatment at the mayo clinic? (I've seen the numbers. You're missing a zero).

This is typical insurance sales tactics. Don't refute my points, point to something else.

1) Critical illness does not cover a financial loss, the basis of insurance products.
2) Critical illness could provide a vacation. Who would buy insurance for that?
3) You might get your premiums back. We've already agreed that this is slippery logic at best.
4) Critical illness will not cover emergency treatment in the U.S. at a world class facility.

[ramoose]

here is one I read about in the newspaper. I know nothing about them. If someone does I would be interested to know.

http://www.cpp.ca/

[st7860]

http://www.sunlife.ca/pfs2/pfs2_tpl_genericpage/1,2947,bGFuZy1lbmdsaXNoX3NpdGUtcGZzMl9lbnYtbGl2ZV9 wem4tZ2VuZXJpY19zZWMtNl9zdGF0LV9lZC1fbmF2LTc0MTQxM l9uYXYtNzQxNDEyX25hdi03NDE0MTI=,00.html
Your benefit could allow you to:
avoid withdrawing money from an RRSP or other savings or investments
pay down debts such as your mortgage or loans
choose medicine and treatments not covered by group, personal or government plans
replace lost income so you have choices – for instance, your partner can take time off work to help you
maintain your business by hiring a person to run it until you return to work

http://www.canadalife.ca/x/Library.nsf/page?openform&lang=E&LOB=Insurance&cat=Critical%20Illness%20Insurance&content=Critical%20Illness%20Insurance
Critical illness insurance is a relatively new form of protection that provides money while you are still alive. It has tremendous flexibility if you become critically ill because there are no requirements for how you spend the lump-sum benefit that you receive. You don't have to get approval for expenditures, provide any receipts, or even use the lump-sum benefit to pay for medical expenses.

Critical illness insurance provides you with a lump-sum payment to be used however you see fit. If you want to try alternative therapies, be treated outside of the country, hire someone to take care of you, or hire a nanny to take care of your children ... you choose how to spend your money.

Critical illness insurance covers specific illnesses only.

Canada Life's critical illness plan, LifeAdvance, provides a way of helping to protect yourself against the high cost of rebuilding your lifestyle following a critical illness. It offers a lump-sum payment while you are living which usually becomes payable 30 days after the diagnosis of one of the critical illness insured conditions as defined in the policy. How you use it is up to you.

[tigger03]

hmm .. that's interesting.

Now, in a UL, I'm told that all the money is tax free. I.e. the cash value fund money is tax free if and when I take it out. And the payout in the end (the face value of the policy) is also tax free to the benefactors.

Now, with the RRSP, sure, it's tax free and all, but when you take it out, you're taxed. I understand that you MAY be in a lower income bracket when you take the money out (i.e. retirement) or say in 20 years (when I'm 42), I want to take it out, I'm going to be taxed.

In this light, I see the UL as a better way.

I'm always open to ppl's advice, as I'm a newbie at investing and life insurance. If someone could draw me an illustration of investing with a UL compared to another better option, it would be GREATLY appreciated! :)

[wheel]

Rule #1. You ALWAYS pay the tax man. :)

Now, in a UL, I'm told that all the money is tax free. I.e. the cash value fund money is tax free if and when I take it out. And the payout in the end (the face value of the policy) is also tax free to the benefactors.

Nope, you can't just pull the money out like that - you'll be taxed on it based on a reasonably complex calculation. Do a google on NCPI (net cost of pure insurance) or ACB(adjusted cost basis) and you'll likely find details. Or just ask your insurer; they can run the calculation.

There are ways to do this that all are kind of sticky. If you have a bunch of cash built up you can (I'm speaking simply here) use the policy as collateral at a bank for a loan. Of course the loan is not taxable income. The bank then gets the loan paid back when you die. That's one example.

You are correct that the death benefit to your beneficiaries is not taxed in just about any case. This is in fact something that's pretty unique to life insurance and is definitely a special tax treatment. It's what the bank is taking advantage of in the above scenario - you're getting around pulling the money out of the policy and paying taxes by using the tax free nature of life insurance death benefits. As a result I think it's something that would make me very nervous. Nevertheless, it's something in common practice today. Banks have agreements with insurers about this, all kinds of stuff going on. But if the gov't ever decides that this type of use should be taxed (because clearly it's nothing other than a scheme to get around paying tax on withdrawals from your policy) then the whole thing will get ugly fast. Though again, I've not ever heard a whiff that the gov't would do this - I'm just naturally conservative when it comes to this stuff.

In short:
RRSP - contributions not taxed, growth not taxed, withdrawals taxed.
UL - contributions taxed, growth not taxed, withdrawals taxed.

The 'contributions not taxed' is why RRSP's tend to be a better investment than UL. If you've maxed your RRSP's, all of a sudden UL starts looking much more attractive as an investment. Because then while you've got all the great tax deferred growth, you've also got the ability to pass that growth tax free to your beneficiaries on your death - something tough to do. And at that point there's something else that starts to make sense - you can pay the insurance costs inside your policy with money from the investment side - money that never got taxed if it's growth money. in other words, if you're insurance costs are $100, you've got $1000 in the cash side of the UL earning 10%, then you can take the interest earned of $100 and pay the insurance costs - without paying tax on that $100! otherwise you're paying the insurance costs with after tax money. Again, UL can be great for astute investors with high end needs. But that's not most of us.

(*)a while ago - and I think there still is - people were recommending that people borrow on their mortgage to invest. Lots of tax reasons to do this too. Unfortunately the risk wasn't well explained and numerous people lost their houses. I see much of these UL schemes to be similiar in intent and risk. Unfortunately the risks aren't being well presented in the rush to provide clients with new and better ways to make money.

[HouseTrained]

Some interesting discussion here. I have never posted before... anywhere, but found this discussion so interesting that I thought I would try it.

Here are a few suggestions:

-Determine the amount of coverage you want/need first.
-Establish a managable budget to pay for the coverage you want/need. Any program that you cannot afford is not a good program....the type of policy is irrelevant.
-Consider product ONLY after these first 2 areas have been determined.
-Look at the way premiums increase from ages 25 to 40, and over 40...consider the mortality curve and it's impact on cost of coverage...and how that correlates to your persoanl circumstances of income, responsibilities, wants/needs.

Every person's situation is different. The young 30's couple with 2 kids, average earnings, a mortgage, no savings and paying idiotic levels of taxation in Canada likely would not have any use even looking at UL or other forms of permanent protection in their current state.

Everyone here has an opinion on product it seems and we could all argue until we are blue in the face about what is best, what works, how reality should play out, and best practises....but at the end of the day, it comes down to the realities of life and how best to deal with those realities from a fiscally responsible and individual needs/wants perspective...accepting the simple fact that security and needs mean different things to different people.
I have heard reference to the time-value of money as well. With absolutely no disrespect intended, if that theory was the best tactical approach to "all-things-financial" then I would expect that we would all be driving the cheapest vehicles, living in the cheapest accomodations, wearing the least expensive clothes, eating only the foods we need to sustain our health and well-being, and renting a cottage for 2 weeks a year instead of owning. We can emphasize "time-value of money" all we want, but in reality what matters most to people is simply "value". And for each of us, that is different.

I can assure you that David Chilton does not drive a Yugo, does not live in a basement apartment in a poor section of the town he lives in, and probably eats well rather than sustaining himself off of the garden in his backyard.

Though consumer advocates offer excellent advice and are a valuable source of information and direction using numbers and stats to support their positions, I don't think it's a stretch to believe the same things apply to them as what I stated regarding Mr. Chilton. Nonetheless, they are great sources of advice...but like all advice, I would encourage everyone to take it in doses you can swallow.

Wheel has offered up outstanding facts in this discussion....his reasoning and logic are excellent. With no disrespect intended to those of you who are preaching product and the merits of what you believe in, bias should not govern sound financial managment or the decisions individuals make based on their wants/needs. I am not an advocate for CI coverage, for many of the reasons Wheel has suggested...and for those of you who maybe slid by some of Wheel's discussion, I would suggest you go back and re-read his comments. Specifically his comments about the need for adequate disability protection. Most of what we accumulate in life....how we live our lives day-to-day...depends on cashflow. If you don't have it, that flushing sound you will here in the background will be your lifestyle and your assets.

Hope I didn't offend anyone, but I felt rather compelled to make comment here. Thank you for the opportunity to "speak". :)

[loufer]

London Life's Universal Life product is competitively priced. For you & your wife, on a joint first to die UL policy would be $194/mth for life. I'm a London Life rep, so if you find a local LL rep, i'll give you my rep code to split the commission. ;)
Obviously it depends on your budget first.

[wheel]

A london life universal life policy for a young couple looking for family protection and likely on a budget?
You're suggesting improper coverage for the need both from a UL and a joint first to die perspective. As for the competitive part, anyone can verify whether this is true just by using any of the numerous online shopping sites already mentioned in this thread.

You'll last longer in the insurance business if you take your company's marketing material they're feeding you with a grain of salt. Try looking at it from the consumer's perspective instead of 'selling a product'. Seriously. You know the rep Primarica has in the industry? Remove the tiered marketing they use, substitute 'universal life' for 'term' and you'd be hard pressed to tell the difference between primerica and what you're promoting. And rather than a knee jerk reaction to that statement - give it some thought. Term doesn't fit every need, and UL certainly doesn't either.

[HouseTrained]

You're right, Wheel...and appreciating the needs of the consumer and consideration of the financiaL position they may be in at that stage of their lives is of primary importance.

I mean no disrespect to the individual who stated they were a London Life rep....in all likelihood you have only ever worked there in financial services, and are simply following the doctrines of the organization who trained you. My guess is that you have been there for some time given that they now are called Freedom 55 Financial and have been for some time. (unless they have shifted back of course... :) ....) Once bred in those old names don't convert very easily... :)

To even suggest product and encourage product as a first line of approach with a customer is to do a disservice to the circumstances of the consumer and the needs they may...or may not....have. It would be like going to your doctor, and before they examine you, having them hand you a prescription.

If you are an insurance rep I would encourage you to actually ask your customers relevant questions when you meet rather than pushing what you know at them. Likely they are very interesting people with very real wants/needs who first need someone to understand what makes them unique and how they can best be assisted.

Call me crazy....but listening is a pretty good skill to develop. :)

[HouseTrained]

LOL.....of course Loufer may just be pulling everyone's chain and not be the LL rep they say....I had to bust a gut l,aughing in re-reading his post to see them pushing product AND putting a squeeze out for commissions in a couple of lines.... :-0

Talk about perpetuating the image the industry has tried for so long to change....

Guess there really are differences out there in who you deal with, huh?

LOL :cheesygri

[John_In_Vancouver]

[QUOTE=wheel;3700324]Rule #1. You ALWAYS pay the tax man. :)

In short:
RRSP - contributions not taxed, growth not taxed, withdrawals taxed.

Correction to RRSP - your contributions provide a tax deduction on your income, growth is tax deferred, withdrawals are fullty taxed

UL - contributions taxed, growth not taxed, withdrawals taxed.

Correction to UL - your earn income and pay tax on income, what you do with your money afterwards is up to you, there is no tax on the contributions you make to UL because you already paid tax on them, growth of funds in UL is not taxes, withdrawals of UL are only taxed when your withdrawal is in excess of your adjusted cost base (ACB)

For instance, you have $30,000 in fund value and a $20,000 ACB. You withdraw $30,000, the tax payable is $10,000 x your personal marginal tax rate.

[John_In_Vancouver]

Some interesting discussion here. I have never posted before... anywhere, but found this discussion so interesting that I thought I would try it.

Here are a few suggestions:

-Determine the amount of coverage you want/need first.
-Establish a managable budget to pay for the coverage you want/need. Any program that you cannot afford is not a good program....the type of policy is irrelevant.
-Consider product ONLY after these first 2 areas have been determined.
-Look at the way premiums increase from ages 25 to 40, and over 40...consider the mortality curve and it's impact on cost of coverage...and how that correlates to your persoanl circumstances of income, responsibilities, wants/needs.

Every person's situation is different. The young 30's couple with 2 kids, average earnings, a mortgage, no savings and paying idiotic levels of taxation in Canada likely would not have any use even looking at UL or other forms of permanent protection in their current state.

Everyone here has an opinion on product it seems and we could all argue until we are blue in the face about what is best, what works, how reality should play out, and best practises....but at the end of the day, it comes down to the realities of life and how best to deal with those realities from a fiscally responsible and individual needs/wants perspective...accepting the simple fact that security and needs mean different things to different people.
I have heard reference to the time-value of money as well. With absolutely no disrespect intended, if that theory was the best tactical approach to "all-things-financial" then I would expect that we would all be driving the cheapest vehicles, living in the cheapest accomodations, wearing the least expensive clothes, eating only the foods we need to sustain our health and well-being, and renting a cottage for 2 weeks a year instead of owning. We can emphasize "time-value of money" all we want, but in reality what matters most to people is simply "value". And for each of us, that is different.

I can assure you that David Chilton does not drive a Yugo, does not live in a basement apartment in a poor section of the town he lives in, and probably eats well rather than sustaining himself off of the garden in his backyard.

Though consumer advocates offer excellent advice and are a valuable source of information and direction using numbers and stats to support their positions, I don't think it's a stretch to believe the same things apply to them as what I stated regarding Mr. Chilton. Nonetheless, they are great sources of advice...but like all advice, I would encourage everyone to take it in doses you can swallow.

Wheel has offered up outstanding facts in this discussion....his reasoning and logic are excellent. With no disrespect intended to those of you who are preaching product and the merits of what you believe in, bias should not govern sound financial managment or the decisions individuals make based on their wants/needs. I am not an advocate for CI coverage, for many of the reasons Wheel has suggested...and for those of you who maybe slid by some of Wheel's discussion, I would suggest you go back and re-read his comments. Specifically his comments about the need for adequate disability protection. Most of what we accumulate in life....how we live our lives day-to-day...depends on cashflow. If you don't have it, that flushing sound you will here in the background will be your lifestyle and your assets.

Hope I didn't offend anyone, but I felt rather compelled to make comment here. Thank you for the opportunity to "speak". :)

Really good post there!

A few comments though, people that are:

self-employed
have no income
homemakers
students
seniors

will find value in having a critical illness plan as they likely do not qualify for disability insurance.

Critical illness provides a timely benefit at a time when it is most needed. Obviously what you do with this benefit, is up to you. The return of premium option is unique. Canada is about the only country in the world where return of premium is available.

In addition, people with disability plans may not be able to claim their benefits until the waiting period has been met (3, 4, 6 months). Generally one must be continously disabled to receive disability benefits. I think having a critical illness benefit paid out after a 1 month waiting period is a godsend.

Everyone will have a different need for insurance protection. Meeting with a qualified advisor that understands your needs is the first step

[dealguy2]

False. Offering $25K then saying 'take it to the states to get treated' is extremely misleading - it makes people think they could actually go to the states and get treated for cancer on that. You can't. I've seen the bills. You walk in the door looking for emergency heart surgery and you'd better add a zero and start multiplying. So why do people sell this as a feature when it's something that will never happen? Because they're preying on the fear of cancer, and the joy of winning the lottery if you get cancer.

If they were offering 'if you get cancer, we'll send you to the states and cover 100% of your treatment' you'd have an insurable need (assuming you can't get treated in Canada, which I disagree with) you might have an insurance product. But they don't offer that - they *sell* that and lead people to believe that's what they can do.

Proper steps:
1) What is your financial loss?
2) What is the event that triggers the financial loss
3) Is the financial loss devasting?
3a) if it's not devasting, self insure.
3b) if it's devasting, buy insurance to cover the specific loss for the specific amount of the loss.

Critical illness falls down in step 1.

If you get critically ill often times you cannot work. That's a pretty devasting financial loss.

[Neil]

Proper steps:
1) What is your financial loss?
2) What is the event that triggers the financial loss
3) Is the financial loss devasting?
3a) if it's not devasting, self insure.
3b) if it's devasting, buy insurance to cover the specific loss for the specific amount of the loss.

Critical illness falls down in step 1.

I see it differently. A critical illness could easily be a financial loss. Say you sell your house to go to Mayo clinic, or you get treated and receive a bill for $150,000. Those are both financial losses a mere half step removed from getting ill.

[Neil]

London Life's Universal Life product is competitively priced. For you & your wife, on a joint first to die UL policy would be $194/mth for life. I'm a London Life rep, so if you find a local LL rep, i'll give you my rep code to split the commission. ;)

Not sure if this is real or fake, but giving you the benefit of the doubt, wow this is bad advice! UL is only appropriate for a miniscule percentage of people, in fact there may be approaching zero possibility its the best for this guy. And yet you advocate it? And try to wheel a commission too? This is consistent with my experience dealing with insurance salesmen, but if this isn't a joke, it's fairly blatant on your part.



Obviously it depends on your budget first.

Spoken like an insurance salesman! To everyone else please know that the need for insurance, the type of insurance, and the appropriate price are not dependent on one's budget. Rather they should be indepedent of your budget.

[controlyar]

Spoken like an insurance salesman! To everyone else please know that the need for insurance, the type of insurance, and the appropriate price are not dependent on one's budget. Rather they should be indepedent of your budget.

Hi Neil. Its been awhile. :lol:
While I agree with what you are stating with respect to what the other guy said about "depending on budget" since he is referring to a basic situation...I disagree with the points you mentioned with respect to the big picture.

need for insurance - I agree

type of insurance - I disagree....because it CAN depend on income (budget). May be best to pick a UL policy if the client is maxed on RRSPS.

appropriate price - I disagree...because, the client may WISH to leave more for their loved ones because they can afford it. You are just referring to a typical capital needs analysis "what if" scenario. If that is the case, then yes it is independent. However, a client may decide a larger term policy above what they require for their dependents may be best because their income allows it.

And for the record (once again), I have nothing to do with the insurance industry...just an expert on the topic. :)

[gheart008]

I good place to look for life insurance is the post secondary institute you attended. As an alumni, you get certain benefits that you may not know of.

Example: My co-worker told me that he was getting his life insurance as an alumni through BCIT, paying even less than half of what he would be paying somewhere else for the same coverage. I did some research from that info, and found out UBC had their own alumni life insurance. Cancelled my existing policy and signed up for the alumni one.

Monthly costs went from $35 -> $12 per month for the exact same coverage.

[gheart008]

Not sure if this is real or fake, but giving you the benefit of the doubt, wow this is bad advice! UL is only appropriate for a miniscule percentage of people, in fact there may be approaching zero possibility its the best for this guy. And yet you advocate it? And try to wheel a commission too? This is consistent with my experience dealing with insurance salesmen, but if this isn't a joke, it's fairly blatant on your part.

I agree with Neil. Universal life is a cash based policy. NEVER get a cash based policy, especially a participating one.

[HouseTrained]

Happy New Year everyone.

I liked this thread and have been away for months. It has been an interesting read catching up.

Good comments on the Critical Illness thoughts from the standpoint of who it can benefit.

Many of these posts confirm one thing....everyone has an opinion...lol.....:)

I cannot say I agree with all the comments regarding UL or on what has been called "cash-based" policies. With all due respect...and truly I mean no offense.....I sense that many of these comments are based on limited understanding or perceptual bias. That's not necessarily a bad thing, but I would encourage anyone with the belief that any one "product" or "approach" is "the only way it should be done" or that these products are no good because....." or "no one should ever...."...these folks should pursue a more thorough understanding of what these products/methods/applications of product to needs really represent.

Interestingly the life insurance industry itself argues about these same sentiments and beliefs. They permeate both operational and distribution areas of insurers and within the greater scope of the marketplace it's even more pronounced. It's good...and it's healthy....and with a little luck it will hopefully encourage people to seek out information, learn for themselves and cultivate opinions based on knowledge and accurate information.

Hats off to all of you in this post for sharing and expressing your thoughts....and just like you....mine is simply an opinion.

:)