Life Insurance in Canada

You many believe that Canadian Tire is company that deals with furniture, tools and outdoor living, but it is life insurance. After making improvements their term life insurance scheme the home hardware firm rolled out their new plan. A marketing strategy was created by this firm whose underwriters are Canada Life. So now we will go through some of the small print of this kind of scheme. Applying for this policy is very simple. You have the choice of applying online, by phone or mail. You will be queried about your health. There are seven of these inquires. Answering ‘yes’ to any of the questions need more medical details and the possibility of a medical visit. The schemes face value is $250,000 with premium increases after the first five years. What’s the trouble? This all looks fine to me. Let’s consider this type of policy against Canada Life’s individual term life policy. If we examine a 40 year old male smoker. On the Canada Life policy the fees are $40 cheaper. The Canada Life plans are greatly less expensive. The versatility and customization of these types of schemes are not available on the Canadian Tire policies.The disadvantages to the Canadian Tire plan include curbed benefits of only $250,000 and a term of no greater than 5 years. A Canadian Tire Scheme also charges you PST. Joining plans or affixing a rider for additional benefits is an bonus of individual life plans. Exclusive advise from your broker which leads to a policy worked on your individual requirements are another advantage rather than a standard group policy which is offered by the Canadian Tire Term Life Insurance plans. So taking the contrast in cost, the benefits proposed, the fees charged and the inflexibility of the Tire Term policy, you will be better off with an Individual Life policy from your broker. To find out more about the Canadian Term Life Insurance, please refer to our more detailed article.

Photo source: Mikey G Ottawa

Regarding the commission payment for the insurance brokers, it doesn’t make a difference whether they are captive (working for only one company) or independent (for more companies), as all of them get their commission when an insurance policy is activated. Two advantages of working with a broker are that they can advise you on the best type and amount of coverage and they can search the market for the best premium. Of course, the agent receives his/her commission paid from the insurance company. Nevertheless, the media and consumer scepticism has done a lot to create misunderstanding. The main points regarding the payment process that are most commonly misunderstood will be described in the following paragraph.

“Life insurance commissions drive up the price of the policy.” Life insurance policies, whether sold by salaried employees or self-employed advisors, have distribution costs. The insurance company includes the price of distribution inside the price of their products. It usually doesn’t make any difference how the consumer buys the product. Some companies, for instance RBC Insurance or Manulife, charge the same premiums for the same life insurance sold via multiple distribution models. If you buy a $200,000 Term 10 policy from Manulife, you will always pay the same price - whether you get it via their call centre, website or use the services of an independent broker. “It is possible to negotiate the life insurance commissions.” That is not true, they are not. The situation is different from when you are buying a car or a house. Once again, the commissions are built into the distribution costs of the policy and cannot be changed.

“The commissions for Whole Life or Universal Life insurance are higher than for Term Life insurance.” In reality, the price of a life insurance policy influences the height of the commission for the agent - the higher the premium, the higher the commission. Whole and Universal policies have higher initial premiums than Term policies, but the Whole and Universal policies are bought once. Term policies increase in cost as the insured gets older, so they will buy multiple term policies over their lifetime. A commission is paid for each new policy, but what is crucial for the consumer is that each time he/she purchases a new policy, he/she is also older, so the policy price is therefore higher. The insurance rate also depends on the health status of the applicant - in case it has changed, the insurance rate will increase or the coverage won’t be available. For the applicants it is really crucial that they understand the difference between all the life insurance policies and that they know which one is the optimum choice for them. “The commissions paid by some insurance providers is better than from others.” It is true that one carrier might pay a slightly higher commission than another one, but the differences are only small. And the customer doesn’t need to care about this anyway, since the commissions are a fixed cost within the policy. It is however very important that your adviser has access to insurance from multiple carriers, as some of them, while independent, work only with two or three. Our advisors have access to 15 different life insurance carriers, ensuring you get the a best possible price.

Photo source: Tim Dorr

Life insurance forms the foundation of the majority of financial plans, yet so many continue to put it off and, for the past two decades, we have been dueling with that million dollar question, “Why?”

Canadians consider themselves too old. Many don’t notice that most Canadian insurance carriers~companies insure individuals Really, there is no need to hesitate because of your age.

They consider own health too weak. However, many life insurance Canada policies are accessible without a medical test and many other policies only require a handful of basic medical questions. Moreover, many clients who have a history cancer, heart attack or stroke in the family can still obtain life insurance in Canada. You can visit our Non-Medical Life Insurance Page for for more questions.

It’s too expensive. Wrong, life insurance premiums don’t have to extend $15 a month

What’s the point of life insurance?. Believe me, even in situations where you have no debt burden with no dependents, Life insurance can have a meaning for you to deal with final expenses. When you do havewith no dependents and/or debt, life insurance is a great way how to create instant cash when you and your dependents need it crucially.

I can’t understand all those terms and conditions. I completely understand this problem. Life insurance can be pretty confusing, but with my team of professional brokers we will help simplify it for you. You can also visit LSM Instant Life Insurance Needs Calculator to find out exactly what amount of life insurance you need.

Buying a life insurance policy is important step in your life. Everybody should be careful, on the other hand all information should be considered.

After last year collapse, American International Group (AIG) shares are on the bottom (value decline from $55 to $1.2 in one year). What does it mean for clients of AIG Life of Canada? Are there serious reasons to concern about their policy safety?

Nothing special, for three reasons:

1. AIG Life of Canada was recently bought by Bank of Montreal for $375 million in cash. This bank with its $416 billion in assets represent solid and respectable partner, who guarantees you security.

2. AIG Life of Canada wasn’t financially connected to AIG. Both companies were doing independent business, with own assets, on different markets. AIG suffered large loss related to housing market collapse in the US. AIG Life of Canada hasn’t experienced such problems, due to different investment structure.

3.Insurance policies in Canada are backed by Assuris, which protects Canadian policyholders (100% up to $200000, then 85% of the original face amount or $200,000). This protection covers not only life insurance policies, but also disability insurance policies and other. Assuris proved its function three times in Canadian history.

Everybody should be careful and protective, when talking about personal finance. On the other hand, cancelling your existing AIG life insurance policy may cause you lot of expenses, which should be deeply considered!

If you are not sure to decide whether leave your AIG policy or not, ask independent broker, who is not bounded to any company and has the best motivation to help YOU!

I don’t have to remind you, how dangerous times for investment we are living in these months. Stock markets collapsed and buried eight years of growth. Real estate prices are falling down.

More, interest rate after the recent cut by Bank of Canada down to 50-years low value of 1.5% means your money in banks are making less than the inflation rate takes, because inflation in Canada is around 2%.

And we can expect $4 billion spending soon, due to government’s commitment to participate on the North America car industry bailout. This can get the inflation rate even higher, due to bigger government spending. Interest rate can hardly go higher in upcoming months, because FED cut the interest rate even lower - near the 0% value and the Bank of Canada is usually following FED’s steps.

So is there any risk free solution with guaranteed growth over the inflation rate? Yes, there is. Some Canada life insurance universal policies offer 4% guaranteed growth. How is this possible? Easily, these products offer festure you can find anywhere else. It’s name is tax shelter, which is not influenced by the financial market!

Primerica Financial Services is financial company, based in the USA, with subsidiaries in Canada (from 1986) and Spain (2000). Its “problematic” Multi Level Marketing structure is the main topic of many articles, blogs and discussions.

Their efforts to have a quantity of advisers for any price creates a lot of negative responses. But I want to write now about something different. I don’t want to write about their employees. I want to write about their products.

I has been in life insurance Canada business for 15 years and I think I have enough skills to point out 5 importante remarks about Primerica’ policies and their disadvantages.

1. It’s expensive. If you check prices of  competitors and prices of Primerica policies, you will recognize most of their products are overpriced - simply because there are too many people involved.
2. Stuck to the term life. I have nothing against term life of course, it’s very important part of my business, but it doesn’t fit everybody
3. Captive sales force - do you believe some company’s products can fit ANYBODY? Range of clients’ needs is much wider than any offer of one company. But Primerica advisers can/t offer you anything else…
4. Part-time advisers. Do you think it’s a good choice? Do they know more than you know about finance? go and read some articles about their “seminars” on the web!
5. Non convertible policies. don’t you want to think on the back door? Primerica doesn’t offer permanent policies, so if you are unlucky with health - you have problem!