Life Insurance and Living Benefits

Buying life insurance is not a one stop event in your life. It is more of a process rather than an event. As with life itself, everything financial in your life is constantly moving and changing, albeit slowly. The amount of life insurance you need is also a moving target that increases or decreases as you move into or out of debt, as your income increases or plateaus or in some cases decreases. While there are many types of coverage including permanent coverage (whole life) and temporary coverage (term) among others, this blog is about the laddering of term. Let’s say you need $1,000,000 of insurance today to eliminate a mortgage and replace income for your family at your death. There are several ways to accomplish this; but at what cost? Let’s assume you are a 30 year old male, a non-smoker and in average health.* A 10 year term will provide the $1,000,000 with a premium for 10 years of $45.00** per month. Because the premium for 10 year term increases every 10 years, ...

Business owners have long been a different breed when being compared to their employees. A business owner generally takes more risk, works harder and has more stress than the average worker. It’s something in the business owners DNA that makes them unique. If we were all like that, we would all own our own company and there would be no more workers, so we need a balance. Yet business owners still face the risk of disability. In fact, the chance of suffering a disability for 90 days or longer in Canada is about 50%. Furthermore if the disability last longer than 90 days, a business owner is likely to be out of work for between 2-3 years. It’s hard enough to find time to take a 2 week vacation, so imagine what the business will look like after a disability.  A great business owner can look at the big sky ideas and the minor problems all at once; it has been said that a great business owner can look through a telescope and a microscope at the same time. The problem is that most o...

My Grandfather bought a life insurance policy for me when I was a baby. At the time, he didn’t know what my future would hold. He didn’t know if I was going to be a success in business, happy in life, or even a good guy or a bad guy. My grandfather simply wanted to do something that would help me in any way he knew how. People don’t buy life insurance on children in case they die; people buy life insurance on children, in case they live. Of course, should the unthinkable happen; a death benefit would help offset the associated costs so parents are not left with the loss of a child, and a debt. Parents look to their child’s future and once the basics are taken care of, they set money aside for all sorts of things. Short, medium and long term savings become a part of most people’s lives. Saving for a rainy day and saving for an education are far apart in the scope of the mechanics; however, every type of savings plan is important- including starting an insurance plan. When i...

When I chose the topic of beneficiaries for this blog, I thought it was going to roll off the tip of my tongue, as with most other topics.  Surprisingly, I’ve had to go back to the beginning several times in order to rewrite my ideas; as the topic keeps taking tangents into all the technical and legal issues, which only complicate things. So for our purpose, let’s just look at “ Preferred Beneficiaries ”. People want to name a beneficiary so that the person who is the beneficiary actually receives the money quickly and without any trouble. First off, you should understand the definition of a “ preferred beneficiary .” If the beneficiary is your spouse, parent, child or grandchild, they are considered to be the " preferred beneficiary ".  Naming a beneficiary who is   not   “ preferred ” opens the door for others to grab the money, which is what we try to avoid. In an average family, the “ preferred beneficiary ” status does several things. First, after ...

First of all, if you are reading this blog you have some interest in protecting your income in the event you become disabled. Disability insurance  (DI) is often referred to as Income Replacement Insurance, but in reality it’s not the income people want to protect; it’s their life style and assets they wish to protect. While many business owners and employees are covered through Group Insurance at work, many self-employed business owners and professionals are either not covered or fail to keep their policy in pace with their growing income year after year. The amount of coverage one owns with Group Insurance is often predetermined by a formula or a set amount in the group contract, set by your employer. If this is the case, you often don’t have a choice or voice to change the amount- even if the monthly benefit is not enough. People without “Group” Insurance can determine the actual amount of coverage they want to purchase up to an “issue limit” based on their insuranc...