Life Insurance Basics: How Life Insurance Works

Whether you have a family, a business, or others who depend on you, you already know how important it is to have some financial protection for them. Life insurance is a smart choice – but that doesn’t mean that it is simple. If you want to understand how life insurance works, the first thing you need to learn about are the many different types of life insurance. This blog is going back to the basics – giving you the information you need to make the right decision regarding that financial protection for your loved ones. 

There are three basic types of life insurance – term life insurance, whole life insurance and universal life insurance. 

Term life insurance is the most affordable life insurance product available. It is based on your wants and future goals. The length of the policy is chosen by you, usually from 10-30 years, and over the course of your policy your premiums remain the same. The amount of the policy is also determined by you, based on your budget and what you can afford each month. When the policy ends, you can choose to renew it or let it end.

Whole life insurance is more expensive than term life insurance but this is because it covers you for your entire life, rather than a pre-determined period of time – you are always protected. That doesn’t mean however that you are locked in – whole life insurance is flexible, and you can change the policy if needed as time passes. Your premiums do not change over the course of the policy, and as you pay into the policy, that money gains value which you can cash out or borrow against in the future.

Universal life insurance is a type of life insurance that many individuals use as an investment tool as it carries tax incentives. As you contribute to your policy through monthly premiums, that money grows and gains in value, while also keeping you protected. Additionally, universal life insurance is protected from creditors and probate, meaning no stress for your loved ones in the future.

The type of life insurance you choose will depend on your personal circumstances and both short and long term personal and financial goals. Once you determine the type of life insurance you need, next you will have to consider the type and length of the policy.

Now that you know how life insurance works, your next step is to look at getting some quotes. When it comes to getting quotes on life insurance it is important to strike the right balance between cost and benefits. The best thing to do is to speak with an insurance advisor – speaking with an insurance agent who works for an MGA and not for a specific insurance company will enable you to learn what all insurance companies are able to offer. 

Once you have decided on and purchased a policy, as long as you pay your monthly premiums, you are protected for the length of the policy. If necessary, you will need to renew the policy or depending on the policy, change it as your needs change. In the event of your death, your loved ones (those listed as beneficiaries) will receive the money held within the policy.

To get started on protection for the future, to find out about the different types of insurance or to learn more about how life insurance works, please contact Independent Financial Concepts Group at 416-849-1653.

Personal Insurance Focus: Is Whole Life Insurance the Way to Go?

When it comes to personal insurance, many Torontonians are unsure about what to look for in an insurance policy. Many people are not exactly sure what to expect when searching out policies, or what the difference between policies are. For most people, term life insurance is the type of insurance that most comes to mind – but there are many others that are important to consider as well. One type which is highly advantageous is whole life insurance.

There are many benefits to whole life insurance. If you are thinking about going this route, here are some important things to consider:

Whole life insurance is permanent. When you pay your premiums, your policy continues on, guaranteed – it does not expire. This means that you are protected for your entire life. Unlike term life insurance, which protects you for a term decided upon at the time that the policy is put in place, you don’t need to renegotiate or alter your plan once that agreed upon period comes to an end. You also don’t need to worry about the policy ending and you not being covered.

Whole life insurance premiums won’t increase. When you decide on a policy that meets your needs and the policies are set, these are the same premiums that exist for the entire policy, unlike with a term life policy where premiums increase as you age or if your health deteriorates. When an initial term life insurance policy ends, and you renegotiate, those premiums will be higher because the risks to the insurance company are higher. In a way, this means that you are actually saving money as the whole life insurance policy doesn’t increase even with inflation.

Whole life insurance forces you to save. When you choose whole life insurance and pay the premiums, those policies build up a savings account (also called a cash value) which grows over the years and can be cashed out at retirement or borrowed against if you need to.

Whole life insurance is flexible. Although a whole life insurance policy is permanent, that doesn’t mean that the options you decided upon when you first built the policy are set in stone. Rather, whole life insurance is flexible and can be altered to suit your needs as they change, whether that means increasing your dividends or depositing more premiums.

If you are considering personal insurance for yourself, whole lifeinsurance has a lot to offer. That being said, it is often a bigger premium commitment than term life insurance, primarily because of the additional benefits that do not accompany a term life insurance policy. It is important to speak with an insurance advisor to discuss all of your options and goals to best determine which policy suits your individual needs.

For more information about personal insurance and whether a whole life insurance policy is the way to go for your unique needs, please contact Independent Financial Concepts Group by calling 416-849-1653 or visit www.wecoveryou.ca.

 

 

 

 

 

 

Big City Living: Why Torontonians Really Need Critical Illness Insurance

For some people, the lure of the big city with its hustle and bustle is undeniable and unavoidable. Access to the countless amenities and excitement makes it easy to forget the downsides - and with all of the great things that come with living in Toronto, there are a few major downsides, one of the most important being the stress of fast paced work environments, traffic and the “go, go, go” way of life.

For many Torontonians, stress is a common factor that contributes to overall health. For many individuals living in the ‘Big Smoke,’ stress at work, stress over finances, or stress at home is a given. For many, handling stress is just a normal everyday occurrence – but what about those unforeseen mental and physical consequences that accompany stress?

Well, a recent Toronto Star article says that it is a big deal. New research found that too much stress in your life can increase the risk of heart problems by up to 27%. The article revealed “chronic tension is as dangerous as smoking about two packs of cigarettes a week or having a 50-point spike in your LDL (lousy) cholesterol level.” Clearly most of us who live in the city just take stress as a part of life and don’t even realize the health implications – until they start to experience symptoms.

Knowing that managing your stress probably isn’t going to involve a move out of the big city, learning how to manage stress and also protect yourself in the future should be a key consideration. A critical illness insurance plan is something that you really should consider especially if you are the breadwinner in your household.

And stress isn’t the only reason to consider critical illness insurance. The numbers speak for themselves. Almost 65% of Canadians with kids at home don’t have critical illness insurance, but almost 50% of Canadians will develop cancer in their lifetime and 1.6 million Canadians who currently have heart disease have suffered a stroke in the past. With all of the advances in health care, survival rates after suffering a critical illness are high in many cases. Term life insurance for example will only financially protect loved ones in the event of death but what if the more likely scenario is surviving and recovering from a critical health event?

So what is critical illness insurance? Critical illness insurance is a type of insurance coverage that covers illnesses such as heart attack, cancer, multiple sclerosis, Alzheimer’s, blindness and stroke, and critical illness coverage can help support you financially with a lump sum payment. You can use it to pay your mortgage, keep a personal business going, or for medical treatment or child care.

Critical illness insurance can be purchased as a term or permanent or level premium policy and many whole policies provide a 100% rebate of your premiums after a pre-determined number of years if you don’t suffer a critical illness which is a real “win-win” because you can essentially bet on having good health. Level premiums, the cost to protect yourself and your family is very minimal as it’s just the after tax return of what you could have made with the same premium, which is very little in this low rate environment.

If you live in Toronto and have yet to consider the importance of critical illness insurance it is probably a good time to start. Planning ahead for yourself and your family is an essential step in ensuring financial protection no matter what happens in the future.

For more information about critical illness insurance, and why Torontonians really do need it, please contact Independent Financial Concepts Group by calling 416-849-1653 or visit www.wecoveryou.ca.

 

Term Life Insurance is a Good Choice for Young Families

Starting out with a new family is an exciting time, but it is also a time when many different financial decisions need to be made. Securing life insurance for your young family is very important. 

Life insurance at any stage of the life cycle is important, but how do you know which type of policy to purchase that will best meet your needs? Depending on your own unique situation, this will vary. However, if you have a young family, term life insurance can be best choice.  

Firstly, what is term life insurance? Term life insurance is a life insurance policy that is set for a specific range of time, be that 5 years, 10 years, or up to 30 years. This means that the policy and premiums are set for the term that you choose, and the insurance covers that time frame. For example, if you are just starting out with a new family, and know that your situation is not likely to change in the near future, a longer policy, 20 years for example, would work best.

Term life insurance is a good choice for young families for 2 major reasons. The first reason that choosing a term life insurance policy is a good choice is that it gives you the flexibility to decide what year term will fit you current and future needs.

Because term life insurance policies can be purchased for terms starting from just 5 years, and ranging upwards, you are not locked in for an unending, permanent period of time. This is useful and convenient, as once children leave home or become financially independent, financial responsibilities often lessen, and you can easily choose a new insurance policy to fit your changing needs.

The second reason that term life insurance is a good choice for young families is that it is affordable. Young families often have many different monthly expenses, which can range from mortgage payments to child care costs, and so affordability is crucial. By choosing a term life insurance policy, you can determine what plan best suits your current financial situation. Moreover, because it is a term life insurance policy, you know that when your financial situation has changed (kids moved out, going to college, job advancement, etc.), you will be able to change the policy so that it fits those changing needs.

By choosing a term life insurance policy, you can guarantee that your family is protected in the case of your untimely death, while also ensuring that your policy is financially manageable. Fixed monthly payments, set at the beginning of the policy, do not change over the course of the chosen term. This means that a term life insurance policy financially safeguards your family while remaining within your means.

Life insurance is essential for new families, and term life insurance is the best choice. Because of its flexibility and affordability, it offers both financial security and peace of mind, and allows you to relax knowing that your family’s future is protected.

For more information about how term life insurance is a good choice for young families, or to discuss other policy options, please contact Gary Mandel at Independent Financial Concepts Group at 416-849-1653 or visit www.wecoveryou.ca.

What is Term Life Insurance and Whole Life Insurance in Ontario and What is the Difference?

Life insurance in Ontario can be complicated but it doesn’t have to be. Life Insurance in Ontario is a contract with the insurance policy holder (you) and the insurer (an insurance company). In the event that the insurance policy holder passes away, the insurance company then has to pay an agreed sum of money to the beneficiary. The beneficiary is designated by the insurance policy holder at the time the insurance policy is arranged.  

This can be dicey where a bank is arranging a mortgage protection policy or life insurance coverage to protect a mortgage in the event of the death of the mortgagee because in most cases the bank will want to name themselves’ as the beneficiary. For this reason you are better off to arrange your own mortgage life insurance coverage through an Insurance Broker if you are taking out a mortgage, because you will have more authority as it relates to naming a beneficiary.                       

Life insurance is typically arranged for 2 reasons; protection or investment. Life insurance contracts tend to fall into two major categories:

1.       Protection policies – designed to protect loved ones in the event of a death.

2.       Investment policies – designed facilitate the growth of capital.  

The two most common types of life insurance are: term life insurance and whole life insurance. What is term life insurance and whole life insurance in Ontario and what are the differences between the two? 

Term life insurance coverage in Ontario carries a specified term. The policy does not accumulate cash value. The term life insurance premium will buy life insurance protection in the event of death and nothing else. Another common type of term life insurance is mortgage life insurance, which if arranged by the mortgage holder (bank) will generally only cover the amount of the mortgage and names the bank as the beneficiary in the event of death. Individuals often purchase term life insurance to “protect” their loved ones in the event of death.

What is whole life insurance and how is it different from term life insurance? Whole life insurance provides lifetime life insurance coverage. When purchasing a whole life insurance policy there is no term. Part of the insurance contract mandates that the life insurance policy holder is entitled to a cash value reserve. This cash value can be accessed at any time through a loan against the life insurance policy and are issued income tax free.

There are many advantages of whole life insurance that include: guaranteed death benefits, guaranteed cash values, fixed, predictable annual premiums and mortality and expense charges that will not reduce the cash value of the policy.  

Term life insurance and whole life insurance both carry their respective benefits but the right life insurance coverage for you will depend on your age, the size of your family (do you have dependants), the life stage of your family and your long term financial goals. Your best bet when trying to figure out what life insurance coverage is best for you is to deal with a local Insurance Broker who works with all of the different insurance companies because they cannot only help you determine which product is the best for your personal circumstances but also who is offering the best deal.

For more information about term life insurance coverage and/or whole life insurance coverage in Ontario, please visit www.wecoveryou.ca or contact Gary Mandel at l Independent Financial Concepts Group by calling 416-849-1653.