What is the Difference between Term Insurance and Whole Life Insurance?

There are so many different insurance products that can be taken advantage of to financially plan for your future and for the future of your children. The type of policy that you choose will differ depending on the stage you are at in life as well as your future financial goals. There are many different types of insurance; from life insurance to critical illness insurance and more. Many companies offer both whole life insurance and term insurance, but what is the real difference between these products?

Life insurance protects your family in the event that you pass. With that said, there are some life insurance policies that can serve as an investment vehicle and provide other benefits while you are alive.

Where life insurance is concerned, whole life insurance is a life insurance policy that remains in force for the insured's whole life whereas term life insurance is provided for a specified term which is usually 10 or 20 years. The advantages to whole life insurance coverage carry many benefits that include a level death benefit and level premium for life, the ability to add riders to cover additional needs, the policy never loses value, the ability to borrow against them if you need funds as well as a tax free benefit to the beneficiary. Term life insurance provides lower premiums than whole life insurance but does not carry a cash value and at the end of the term your premiums will increase if you wish to keep the coverage, or the policy expires usually around age 80 to 85.

Critical illness insurance protects you in the event that you suffer a critical illness like a heart attack and survive. Where critical illness insurance is concerned a term policy means the same thing as with life insurance. You are covered for the term of the policy. Permanent critical illness policies with a return of premiums rider present incredible value because if you don’t suffer a critical illness after a specified period of time you can receive 100% of your premiums returned to you. In this case, you can make a bet on having good health!

Determining the best insurance coverage will really depend on your age and goals. For example, an individual with no children may be better suited to a term life insurance policy. An individual who has young children will have different objectives and may be suited to a whole life insurance policy. This is because they will have a need to not only ensure that their children are protected in the event of death but also benefit from a policy that carries a cash value that they can leverage to plan for their children’s financial future.  Critical illness insurance has become very popular because advancements in medical treatments has resulted in higher survival rates amongst those who suffer a critical illness and if you are generally very healthy you may want to be eligible to get your premiums back if you don’t have a major health problem. A good insurance broker will be able to sit down with you to discuss all of your options and help you come up with the right plan for you.

If you would like more information about Term Insurance and Whole Insurance please contact Gary Mandel at 416-849-1653 or visit www.wecoveryou.ca

Life Insurance Enables You to Give Your Kids a Head Start

One of the most valuable gifts that you can give your children is a head start in life. Life insurance is an important vehicle that you can leverage to plan for your children’s future. Life insurance increases your children’s financial options when they grow older and life insurance planning should begin when your children are young. The reason that life insurance planning should start when your children are young is because that is when insurance premiums will be their lowest. 

When your children are older and starting out they will appreciate your foresight because they may have expenses that make it challenging for them to find the money to pay for their own life insurance premiums, premiums that will be higher once they’re older. Life insurance is not only used to protect people in the event of death. Whole life insurance policies offer tax benefits and can be used to establish savings that can be put towards education and other financial planning.

Arranging life insurance coverage for children provides guaranteed insurability. Many insurance companies offer options that guarantee an insured’s right to purchase additional insurance without having to submit to insurability testing like medical exams. We don’t know what the future holds so this can provide a massive sense of relief for someone who develops a medical condition as an adult that would make them uninsurable or make life insurance extremely costly. In addition, your children’s career and lifestyle choices can also impact their insurability later in life. Your foresight will mean that if they make choices that would have impacted their insurability that you have coverage in place for them.

As we mentioned whole life insurance policies offer the benefit of carrying a cash value. This means that as you contribute to the life insurance policy you are in fact building up a source of funds that your child can use in the future. This can even be looked upon when the time comes for your child to come up with a down payment on their first home. If your child doesn’t end up using the cash, the investment portion of the life insurance policy will continue to grow, tax advantaged for use later on in their life.

Finally, life insurance provides crucial support to families. In the unlikely event that something did happen to one of your children, their life insurance will prevent you from dealing with financial hardships while you are dealing with your emotional loss. You will be able to plan for not only funeral expenses and outstanding medical bills but will also be able to afford to take time off work beyond your employer’s bereavement leave. Tax free insurance funds will give you the financial flexibility to get through the incredibly tough time that comes with the death of a loved one.

There really is no better time than when your children are young to start planning for their financial future, and working with a life insurance advisor can ensure that you come up with an insurance strategy that deals with today and issues that could present themselves in the future.  

For more information about life insurance planning that enables you to give your children a head start in the future please contact Gary Mandel at 416-849-1653 or visit www.wecoveryou.ca

Impacts of Increase Life Expectancy Creates Serious Implications to Retirement Planning in Canada

Older workers have been increasingly delaying retirement since the mid-1990s, according to a recent Statistics Canada report. This is because of increases in Canadian life expectancy and even the Canadian Government has plans to raise the retirement age in Canada from 65 to 67 years old. 

This will have serious implications to Canadians because they will have to be even more financially prepared if they plan to retire comfortably and maintain their standard of life.  

Your choice of when to retire will impact your retirement planning in Canada and needs to be considered long before retirement occurs. According to Statistics Canada in 2008, an employed 50-year-old could expect to work an additional 16 years, about 3.5 years longer than workers of the same age in the mid-1990s. But working longer doesn’t necessarily mean a shorter retirement because of longer life expectancies. In 1977, men could expect to spend 11.2 years in retirement. In 2008, the expected length of retirement was 15 years.  

In 2010, the Canadian Health Institute for Health Information reported that while Canadians older than age 65 account for less than 14% of the Canadian population, they consume nearly 44% of all health care dollars spent by provincial and territorial governments. In 2008, the latest available year for data broken down by age group, provincial and territorial governments spent an average of $10,742 per Canadian age 65 and older, compared to $2,097 on those between age 1 and 64. Within the senior population, spending varies widely by age group, with health care expenditure on seniors age 80 and older, at an average of $18,160 per capita, more than three times higher than for seniors younger than age 70 ($5,828 per person on average).  

These statistics only consider health care spending with respect to health care services covered by government health care. These statistics do not consider other expenses like prescription drugs that are not covered by the government, cost of long term care facilities, costs of in-home health care and more. 

In addition to life insurance, your insurance coverage should include critical illness coverage and long term care coverage. This combined coverage will ensure that when the time comes to retire that your long term care is covered as well as critical illness. Critical illness insurance particularly is a great investment because it is so inexpensive when we are young. If you buy a critical illness policy and do not suffer a critical illness you can receive 100% of your premiums back.  If you happen to suffer a heart attack or are diagnosed with cancer, Alzheimer's or another critical illness that many seniors end up confronting with old age, you will receive a lump sum pay out which will go a long way when it comes to paying for treatments and care.

It is no secret that the later years in life are the ones where people experience increased medical problems requiring more support. The cost of retirement planning later in life becomes much more expensive so it is important, just like when RRSP planning, that you consider the insurance coverage you will need once you retire, well ahead of retirement.

For more information about retirement planning in Canada please call Gary Mandel at 416-849-1653 or visit www.wecoveryou.ca.

The Importance of Choosing the Right MGA

Choosing the right MGA is one of the most important decisions that an insurance broker has to make in their career. This is a decision that will have long term implications to your earning potential, career growth and overall competitiveness.  When an insurance agent is already licensed with an MGA this decision can at times be overwhelming because of the need to transfer over contracting and also the learning curve to about the new MGA’s procedures and services, but is a decision worth making if you are not getting what you deserve from your current MGA.

When determining if your current MGA is offering you all that they could be, consider some of the following important points.

Are they providing you with fast turnaround on your applications? This is a major challenge for insurance brokers and agents. Many MGA’s process applications very slowly and it is a process that the insurance agent or broker may have very little control over. While the average processing time for insurance applications with an attending physician statement add 19 days to the application process , an aggressive MGA can get this done in half the time.

Do they offer you a guaranteed turnaround time for responding to your inquiries? Another challenge that insurance agents and brokers face are when MGA’s are slow returning calls. Often when they do they cannot answer all questions and this can make your ability to service your client extremely challenging.

What compensation structure does the MGA offer? MGA’s who do not offer compensation based on individual production and/or performance can result in lower producers earning higher bonuses than higher producing insurance agents or brokers. An insurance agent or broker is best suited to work with an MGA that compensates them based on their individual needs and performance.

What is the MGA’s policy about changing MGA’s? Some MGA’s will make it very difficult for you to switch MGA’s if you are not happy. This is career limiting and should be avoided.

Will you have direct access to insurance underwriters and insurance companies? Some MGA’s will not allow this. In addition, they also won’t speak to underwriters on your behalf. There may be instances where you will need to call an underwriter to negotiate the best deal for your client. Some MGA’s will be more concerned about potentially annoying an insurer than helping you fight for the best deal for your client.

Which insurance companies do they deal with? Some MGA’s will only deal with one or two insurance companies and will be exclusive to them. You will be in a position to provide your clients with the widest range of products and will be more competitive if you choose an MGA that deals with all of the major insurance companies.

Most MGA’s are set up primarily as a processing centre and do not have the resources to provide on-going professional development and education --- for both technical knowledge and the important soft-skills to succeed in the business. The world has changed and consumers are more sophisticated and as a result the cost of obtaining an appointment using traditional methods has tripled. Successful advisors today need to DIFFERENTIATE themselves to be MEMORABLE.  Most advisors are also so bogged down with paperwork and compliance that they are stagnating. Most MGAs do not provide regular, ongoing coaching and mentoring.  Or business development training on a regular basis, or even the professional marketing and website support needed in the new ultra-competitive, 21st century consumer-savvy environment.

The ideal MGA would be one that also provided you help with value-added services for FREE including:

• Pre-approach and prospecting systems 
• Client presentation tools
• Proven referral systems
• How to generate referrals from C.A.s & other professional advisors as centers of influence
• Regular Weekly Sales Concept and/or Product Training
• Convenience of CE credit qualifying hours at your own office
• Marketing, sales & advertising assistance
• Daily activity accountability
• Practice management
• Business planning and goal setting tips 
• Case consultation / case packaging / joint field calls without commission splitting
• Competition analysis – researching the best product solution for your client’s needs
• Custom spreadsheets, reports, presentations
• Retail client seminar assistance
• Elite & MDRT advisor mentoring and coaching
• Help with Time management & work / life balance
• Mining your Book of Business: Maximizing Revenue from your Existing Client Base
• A personalized website complete with video client testimonials, e-commerce functionality and corporate branding
• Social media activity and expertise
• A structured, built-in succession strategy

If you were to consider switching MGAs, it should be to one that could provide you all the benefits of full independence along with complete, ongoing support, training, professional development and even corporate branding.  In essence, being in business for yourself, but not by yourself.   

Whether you have just obtained your insurance license and are looking for the right MGA or you are working with an MGA already, are experienced in the industry and want to see what else is out there, research will be key.

If you would like more information about how to choose the right MGA please contact Gary Mandel at IFCG by calling 416-849-1653 or by visiting www.ifcg.com.

Canadian Couples Not Discussing Life Insurance Planning

A recent poll from a major Canadian insurer reveals that many Canadian couples are leaving an important topic out of their conversations: life insurance planning. In fact, the poll found that almost a third (31%) of couples — many of them with children — had never discussed life insurance. And those under 35 were the least likely to have talked about it. 

This oversight has potentially serious implications. Not discussing insurance could mean not having any coverage, having insufficient coverage, or even having the wrong type of insurance.

Why don’t couples talk about insurance? Of those who were reluctant, 59% said they had never thought about it while 35% attributed it to a lack of seriousness in their relationship.

If you’ve never thought about it, now’s the time. Life insurance planning is essential to your family’s financial well-being. It ensures that your surviving partner — and children if you have them — will be financially secure. If you should both pass away, it ensures that your children’s guardians will have the financial resources needed to provide your children with the lifestyle you want them to have.

And the sooner you have the conversation, the better. Life insurance premiums are based on age and life expectancy, so the younger and healthier you are, the less you’ll pay. In addition, if you purchase permanent insurance or term insurance that’s guaranteed renewable, you can ensure you’ll have coverage even if you later develop health issues that would otherwise make you uninsurable.

Whole life insurance can also be leveraged to plan for your children’s education and provide you with a tax efficient way to save. Some whole life insurance policies will even allow you to borrow against them if an unforeseen financial problem arises during the course of your life.

Even if you already have insurance, it’s important to revisit it at least every few years. Your needs will change over time as your life changes.

For example, we should definitely review your coverage if you undergo a significant life event, such as the birth or adoption of a child, a change in marital status, or the purchase of a home or vacation property.

We may need to increase your coverage, decrease it, or select new beneficiaries based on your new circumstances.

We understand how difficult it is to talk about life insurance planning. After all, it means considering the consequences if you or your partner were to pass away. But the death of a family member is difficult enough to manage without having to face the prospect of financial hardship or a major change in lifestyle.

Sitting down with an objective, knowledgeable third party can often make the discussion easier. Meeting with a licensed insurance broker is your first step to starting the discussion. That will give you a chance to learn about some of your other common goals, and help ensure that your overall financial strategy is a joint effort that suits both your needs, as well as those of your children.

Then you’ll have the peace of mind knowing that, in the case of a negative life event, there’s better financial security in your family’s future. For more information about life insurance planning please call IFCG at 416-849-1653 or visit www.wecoveryou.ca.

Sandwich Generation Financial Considerations

There is a growing population of people who have found themselves caring for their aging parents while supporting their own children. They are called the "sandwich generation". Caught between the often conflicting demands of raising children and caring for aging parents or other relatives causes life for this generation to become increasingly stressful and hectic. 

This is a phenomenon that the Canadian Government began to report on as far back as 2002 when Statistics Canada reported that almost 3 in 10 Canadians of those aged 45 to 64 had unmarried children under the age of 25 in the home, or some 712,000 individuals were also caring for a senior. More than 8 in 10 of these sandwiched individuals worked, causing some to reduce or shift their hours or to lose income. 

Caring for an elderly person in many cases led to a change in work hours, refusal of a job offer, or a reduction in income. Some 15% of sandwiched workers had to reduce their hours, 20% had to change their schedules and 10% lost income. Also, 4 in 10 sandwiched workers incurred extra expenses such as renting medical equipment or purchasing cell phones.

The effects of providing care increased with time spent. For example, one-half of those spending more than eight hours per month, or the so-called "high-intensity caregivers" had to change their social activities. Over one-third had to change their work schedule. Sandwiched workers were more likely to feel generally stressed. About 70% of them reported stress, compared with about 61% of workers with no childcare or eldercare responsibilities.

In 2002, the Canadian Government estimated that the sandwich generation was likely to grow because of the aging of the baby boomers, lower fertility rates and the delay in family formation. These factors will result in older family members requiring care when children are still part of the household. This is exactly what has happened and TD bank recently reported in fact that our parents are staying alive longer than ever with the average life expectancy in Canada reaching 80 years old.

In addition to supporting their parents, TD reported that more parents are financially supporting adult children. High youth unemployment (currently at 14.7%, almost double the national rate) and increasing post-secondary education costs means many young people are relying financially on their parents until their late 20s. This can translate into higher than expected household expenses, including additional life insurance coverage to mitigate the loss of, or a disruption in, household income, and even an increase in home insurance coverage that may be needed for the extra valuables in the home.

If you are in the sandwich generation strong financial and insurance planning will be key to pulling through with your finances and personal mental health intact. Insurance has come a long way and there are more types of insurance coverage available than ever to help those with aging parents plan for their care. In addition, many of these insurance coverage’s will also support your children in the event you suffer a major illness. Long term care insurance, disability insurance, critical illness insurance and life insurance can all be leveraged to plan and prepare for the future. Term insurance is often inexpensive. A good insurance broker can walk you through what is available through all of the insurers, the different rates and coverage’s so that you have the right combination of insurance to support your parents and your children.

For more information about the sandwich generation and insurance planning for your parents and children please call IFCG at 416-849-1653 or visit www.wecoveryou.ca.

70 is the New 50 – How Changing Life Cycles Are Affecting Insurance Needs and Have Increased the Need for Critical Illness Insurance

The life cycle of Canadians is changing which is impacting everything from personal finances, to retirement and insurance planning. Many Canadians are now working into retirement, are having children later in life and are living longer overall. 

TD Bank recently issued a report confirming that the average age that Canadians expect to retire is 61 years old, while the average life expectancy of Canadians is 80 years old. This means many Canadians will have to save at least 20 years worth of income in order to support themselves during retirement. This is where insurance is extremely important.

Dave Minor, Vice President of TD Insurance says insurance can play an integral role in mitigating the risks associated with this shifting life cycle.

"People are living longer, supporting adult children and aging parents, and are more active later in life than previous generations - and that means they need more money to sustain their quality of life," says Minor. "That's why it's so important for Canadians to speak with their insurance provider and develop a financial plan that includes the right insurance to safeguard their income and assets."

Medical advancements resulting in more people surviving critical illnesses is one major reason that men and women are living longer. This has led to an increased demand for critical illness insurance coverage which protects people in the event that they suffer a critical illness and if they don’t, they can receive up to 100% of their premiums back. Critical illness insurance is playing a vital role in protecting families against the increasing risk of a critical illness disrupting a family's ability to earn income and save for the future, especially during prime income earning years.

For once people can bank their money and leverage insurance on living a long life, versus planning for death.

In addition, according to Statistics Canada many Canadian families are choosing to start their families later in life. The number of women who are giving birth in their 40’s has more than doubled in the past few decades. Many families put off insurance planning until they start a family, however, doing so results in higher insurance premiums. Individuals’ who invest in their insurance at a younger age when they are in good health benefit from lower premiums and reduce the risks of being denied coverage because of health issues.

Canadians are also carrying more debt. The debt load of the average Canadian is approx. 150% of their personal disposable income. A report by TD Economics found that over the past ten years while the average debt load in Canada increased at twice the pace of income, the debt loads of those 65 years and older grew at three times the rate and contributed to as much as half of the overall debt growth. Life insurance is frequently used to cover debts and protect the estate assets in the event of a death so that loved ones are able to manage the debt of the insured and are not left with the burden of dealing with their accumulated debt.

The great news about this report is that Canadians are enjoying a longer life more than ever and can now plan to live a long life. The key to prosperity however will be effective financial and insurance planning.

For more information about how changing lifecycles are affecting insurance needs or to find out more about life or critical illness insurance coverage please call IFCG at 416-849-1653 or visit www.wecoveryou.ca