Archive for 2011

What does it mean to live with illness? The Spoon Theory

Not everyone who deals with a chronic illness looks terribly ill

I know this website isn’t a resource for chronic illness, but having met so many people over the years who have been denied life and health insurance due to a chronic illness I decided to write this article. Not everyone who is dealing with illness looks sick – not from the outside.

After looking around the internet for information on living with a chronic illness I came across this amazing website, But You Don’t Look Sick. The website owner, Christine Miserandino, is a speaker, journalist, blogger and patient advocate in New York, NY. She also lives with Lupus.

In my work I talk to people everyday about their health. The reality is I, like all healthy people, can’t begin to relate to a person who lives each day with a chronic illness. Each day is spent planning every activity around medication, energy levels, contingency plans. Imagine living your life always being prepared for the worst case scenario – that day things go terribly wrong and you need to be rushed to the hospital.

I’m not going to make this short article about the need to buy insurance. Unfortunately, once a person is diagnosed with a chronic illness they can no longer by life or health insurance. But, besides financial planning I wanted to share this wonderful video of Christine Miserandino explaining “The Spoon Theory”. The video below is Christine’s Spoon Theory, written and spoken by her at the 2010 Annual NC Lupus Summit.

If you have someone in your life suffering from a chronic illness, or it has happened to you, The Spoon Theory is a beautiful and simple way to explain life with a chronic illness. Not everyone who lives life with a limited number of spoons each day looks like they have to make choices and sacrafices everyday. But if we can all understand that they are micro-managing their lives on a daily basis to make sure they don’t run out of spoons, or god forbid – waste a spoon, we can begin to understand what it must be like.

I encourage you to take the 13 minutes to watch this video – it’s fun and engaging. well worth your time.

The Spoon Theory written and spoken by Christine Miserandino

Have you quit smoking? Have you told your Life Insurance Company?

Many Canadians are paying smoker premiums after they have quit smoking

Have you quit smoking in the last couple of years? Do you own life insurance that you bought while you were still a smoker? If so, you are probably like so many ex-smokers in Canada that are paying too much for their life insurance.

In fact, life insurance companies are collecting millions of dollars each year in premiums they are not entitled to.

Smoker status can be changed to non-smoker status on insurance policies

It doesn’t matter if you are insured for life or health insurance, even disability insurance – all can be changed to non-smoker premiums once you have quit smoking. The rules differ between insurance companies, but you should be able to reduce your premiums to a non-smoker life insurance policy.

For some insurance companies you have to not only make a declaration that you are now a non-smoker, you also have to answer a series of medical questions to prove you are still in good health. This might include doing a urine or blood test to verify your non-smoker status and other common illnesses. This is definitely the stricter type of insurance company that only awards non-smoker premiums to their healthy ex-smokers, and keep their unhealthy ex-smokers paying the original smoker premiums when they bought the policy.

Other insurance companies are a lot less strict. They will allow you to change from a smoker to a non-smoker on your insurance policy with a simple declaration of now being a non-smoker. Your current health condition does not play a part in whether or not you can reduce your premiums. This is a much better company to deal with when you are buying your life insurance policy if you are a smoker (your life insurance broker can tell you which companies are more favourable for smokers switching to non-smoker status – I don’t want to negatively single out any particular insurance company in this article).

Does non-smoker vs. smoker premiums save a lot of money?

YES!!

You can save thousands of dollars once you’ve quit smoking by reducing your insurance premiums to non-smoker rates. Let’s look at three examples (all based on the most competitive Term 20 life insurance rates in Canada today):

Age 35 Man, $500,000 Term 20 Policy

Smoker premium = $87.75 per month (Assumption Life)

Non-smoker premium = $39.02 per month (RBC Insurance)

Total savings over 20 years = $11,695

Age 45 Woman, $500,000 Term 20 Policy

Smoker premium = $138.65 (RBC Insurance)

Non-smoker premium = $60.53 (RBC Insurance)

Total savings over 20 years = $18,749

Age 55 Man, $500,000 Term 20 Policy

Smoker premium = $718.20 (Assumption Life)

Non-smoker premium = $290.70 (Assumption Life)

Total savings over 20 years = $102,600

As you can see, the cost for life insurance certainly increases as we age, but smoker premiums go through the roof with age. A 55 year old person can save over $100,000 simply by being a non-smoker vs. a smoker.

How to qualify for non-smoker rates as an ex-smoker

I would recommend informing your insurance company as soon as you qualify as a non-smoker. A smoker can qualify as a non-smoker once they have gone 12 months without any form of tobacco or nicotine products. Smoking even one cigarette during this time will disqualify you from getting non-smoker rates. Also, smoking cessation products like The Patch or nicotine gum are considered nicotine products, so you will have to be 12 months without using these products also.

Once you have officially qualified as a non-smoker, contact your life insurance broker or agent or call the insurance company’s customer service department directly. Inform them of your new status as a non-smoker and ask to complete forms immediately to reduce your insurance premiums.

If you start smoking again your premiums will NOT go up again

If you have legitimately qualified as a non-smoker and had all your insurance policies reduced in premiums to non-smoker rates, those new premiums are fixed even if you took up smoking again.

Insurance companies try to limit the number of relapse smokers for getting non-smoker rates with the 12 month qualification period. But once they award non-smoker premiums to you, they cannot go back and change the contract. The new premiums are contractual and non-negotiable by the insurance company. This means if, for some reason, you took up smoking again years later your non-smoker life insurance premiums would stay low and not increase.

Stop overpaying on your life insurance if you’ve quit smoking

If you’re having difficulty getting the life insurance company or your insurance broker/agent to help you make the switch to non-smoker rates, maybe we can help. Our brokers at Life Guard Insurance can look after your insurance policies and process any necessary paperwork to reduce your smoker premiums to non-smoker rates. Just contact us today.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about saving money on insurance premiums once you have quit smoking would also be very much appreciated.

What Will You Buy This Holiday Season?

Is life insurance on your Christmas list? Should it be?

This beautiful infographic comes to use from LIFE: A Nonprofit Organization dedicated to helping Americans and Canadians make smart choices regarding their life insurance needs. Please take a minute to visit thie website (link above) as they too have wonderful online resources to help educate people about the need for adequate life insurance.

In this infographic They present a hypothetical example of maybe downgrading your Chirstmas gifts, just a bit, and adding some life insurance to your list to protect your family. In this example they are saying that a husband and wife could get Term 20 life insurance for about $300 per year. As a Canadian example, a non-smoking couple, bith aged 30, in average or standard health, could get $250,000 of Term 20 life insurance for as little as $387.60 per year (that’s for both). If they were in excellent health, they could get the same coverage for $304.92 (a savings of over 21%).

Anyway, we hope you enjoy this infographic – and Merry Christmas!

Think about adding life insurance to your holiday shopping list

Life Guard Insurance is here to help – even at Christmas

If you would like to seriously consider adding life insurance to your holiday shopping list, please contact us here at Life Guard Insurance. We will be sure to find a local life insurance broker who can help you find the life or health insurance you need, even over the holidays.

Thanks again for all your support, and have a Merry Christmas and a Happy New Year!

Christmas is time for family, celebration and financial planning…

Christmas maybe one of the best times to do insurance planning as a family

If someone told you that Christmas was a great time to buy life insurance, you might expect that person to be some greasy, lowlife insurance agent knocking door to door. Classic 1970s image of a life insurance agent that still persists today.

So, when I say Christmas might be a great time to review your life insurance, just take a breath and hear me out. There are a number of problems doing financial planning over the holidays, and I’ll give a brief list here:

• You’re travelling and can’t meet with your insurance broker
• You have guests visiting and are entertaining, too busy
• Christmas is a high stress time for you and you couldn’t possibly focus on insurance
• Your life insurance broker is on holidays and isn’t available

Well, these things are challenges that might make Christmas the wrong time to meet for some people. But for others who enjoy family time at home and relax over the holiday season this could be a perfect time to get that life or health insurance you’ve been meaning o buy.

Family is together, relaxed and talking nicely to each other

If you’re staying home this Christmas and the family is gathered around the Christmas table for the feast of turkey and ham (roast leg of lamb this year for us – just sick of turkey for once) I don’t expect the conversation to shift to who has life insurance and who doesn’t. What families really talk about is what has happened to them and other extended family members and friends over the last year. Some stories are good, other are bad. Some family or friends might be dealing with a critical illness, or people have died. This is real – and real life tends to be discussed around the dinner table.

The holiday time you have between Christmas and New Years is a good time to reflect on what’s important – your family, your health, close friendships, etc. The warmth of being with family and being relaxed, talking about what matters to you can help you focus on important issues – like planning for the family’s future and protecting the ones you love.

It’s also good that you have family around to ask questions of, get good council, to help you make good decisions about insurance and financial planning. Just think, you can talk to your parents or even grandparents about things like buying life insurance and see what they have to say and what they did in the past. Their experience might be beneficial in helping you make a good decision about your own life and health insurance needs.

You have time over the holidays to casually fit an appointment in to see your insurance broker

Now, I’m not saying you need to have a life insurance broker over just after the dishes have been cleared from the table on Christmas Day. What I’m saying is that you probably have some downtime between Christmas and New Years, or maybe just after New Year’s Day that you can easily have a life insurance broker come by and talk to you about life and health insurance.

If you are going to be around over the Christmas holidays and don’t have every minute of every day planned out, you might be able to see a life insurance broker – even during the day – very easily and with less stress than an evening appointment during the work/school week.

It’s a great time to focus on the future and do some life planning

How many of you are making a New Year’s resolution? How many are looking forward to the New Year with big plans of how you are going change/improve your life. Well, maybe it’s time to include some financial planning into those future plans.

A life insurance broker can help you plan your risk protection to make sure you and your family are properly protected from life’s risks. They can also help you save for retirement, put money away for children’s education, and even do some estate planning for the next generation. Don’t just dream about all the good things that the New Year will bring, put some rock solid plans in place to help you get there.

Your life insurance broker will probably work over Christmas too

In case you don’t know, life insurance brokers and agents are paid on commission. They don’t make any money just sitting at home over Christmas. They don’t get holiday or vacation pay. They really only get paid to speak with clients and help them buy the insurance they need.

So, if you contact a life insurance broker over the Christmas holidays, and they are eager and willing to meet, you don’t have to think to hard about why. Also, they can probably do a daytime appointment with you, when clients are relaxed and feeling festive. What a pleasure! It’s a lot different than meeting you at 7pm on a work night, when kids are refusing to go to bed and you might have just had a hard day at work. The Christmas holidays are a break from the stresses of everyday life, and a comfortable time for everyone to sit down and talk.

Life Guard Insurance can find you a life insurance broker over Christmas

If you are home over the holidays and have been putting off getting the life insurance you really need, why wait until sometime in January. Contact us here at Life Guard Insurance and we will be sure to find you a life insurance broker in your area who would be happy to meet over the Christmas season.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about Christmas being a great time to buy insurance would also be very much appreciated.

Term Life Insurance is More Affordable than Mortgage Insurance

A quick look at why term life insurance is so affordable

Term life insurance provides you with a more affordable insurance policy to ensure you debts, like mortgage payments, in the unfortunate event of your death. It is much more affordable than the bank’s mortgage insurance. Even though they are offered for a limited time-period (hence the name Term as in Term Period of Time), but you can closely match them up with your mortgage payment time horizon; i.e. 10, 15, 20, 25 or 30 year term contracts. For the budget conscious, this definitely seems to be a smarter alternative for a low cost death benefit.

Insurance companies offer cheap term life insurance policies with different contract time periods, special conversion options during the first five years (many Term 10 policies and convert into a Term 20 policy within the first 5 years and retain the age at which you bought the contract), convertible into permanent life insurance and are transferable (the policy goes with you even if you change banks or move houses).

You can shop all the affordable alternatives that are available in Canada through our instant online quoting tool. It will survey the entire Canadian market and find you the best rate for term life insurance for any length of term you need.

Other than being a cheaper option, term life insurance is better in other aspects when compared to a mortgage life insurance. There are many personalization options available for a term life insurance policy, such as a child term rider, waiver of premium, critical illness rider, etc. The proceeds from a term life insurance policy go directly to the beneficiaries instead of the lender (i.e. the bank), so the money can be used by your dependents as they see fit, which might be to pay off other higher interest rate debts. Term life insurance very often provides full coverage on both spouses (Mom and Dad) for less money than a joint first-to-die mortgage insurance policy.

Term life insurance offers the cheapest alternative to provide insurance coverage for your dependents in Canada today. It has allowed individuals with a budget-crunch situation to buy policies with larger benefit payout amounts for their limited term coverage needs.

There are many reasons why permanent life insurance might be a good solution for Canadian families too, but it isn’t always affordable. So, if you need insurance protection for you loved ones term life insurance is an affordable alternative to more expensive insurance policies, like the bank’s mortgage insurance or whole life insurance.

Life Guard Insurance can find you affordable term life insurance

Our life insurance brokers across Canada have access to all the Canadian life insurance companies. We can shop the entire insurance market to find you the best price for term life insurance that will meet your needs. Please contact us today for personalized service.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about Affordable Term Life Insurance would also be very much appreciated.

You Might Have Heard of Life Insurance Settlements

Life Insurance Settlements: Trading on your life insurance policy before you die

The life insurance death benefit refer to the amount of money your beneficiary receives after you die and is very different from life insurance settlements. The life insurance company pays the death benefit based on the amount of life insurance you originally purchase plus additional life insurance acquired through dividends on whole life policies or the investment fund value inside a universal life policy. A life insurance death benefit can only be paid out after your death, however life insurance settlements are a way of cashing in your life insurance to a third party before you die.

The practice of trading in life insurance is illegal in most provinces of Canada. According to Section 115 of the Insurance Act only life insurance companies are permited to trade in life insurance policies (this is the practice of reinsurance, where large pools of Canadian risk – many insured lives – are sold to international reinsurance companies that aggregate risk across the globe). A third party company in Canada cannot buy a life insurance policy from a person and become the owner of the policy and the beneficiary.

Things are different in the US. In many states the practice of trading on life insurance policies is legal and a secondary market for life insurance policies has been created. The arguement is that many people would benefit from having a secondary market to sell their unwanted life insurance policies and realize a reurn on their invested premiums while they are still alive.

Why are Life Insurance Settlements illegal in Canada?

The Canadian government prohibited trading on life insurance policies back during the Great Depression, when financially destitute people were selling their life insurance policies for much needed immediate cash. This created a predatory market for life insurance policies from people that have fallen on hard times. The same precedent is true today, where many people can fall on hard times and they might want to cash in their life insurance to get the cash value out of the policy or be able to sell the policy for more than the insurance company is offering in cash value. The question remains: is this a good thing? Is it in the interest of the client to have a third party company to sell the life insurance contract too?

The answer is a resounding NO. If it was in the clients best interest to sell their policy then they would be receiving full value for that policy and there would be no room for profit on behalf of the life insurance settlements company buying said policy. In order for this secondary market for life insurance policies to work the company buying the policy MUST underpay the owner of the policy for the contract in order to make a profit on it.

Policy owners typically sell their life insurance policy for 12 – 15% of the death benefit of the policy as a life insurance settlement. This means that if they had a whole life insurance policy with a death benefit of $100,000 they would be able to sell it for $12,000 – $15,000. The life insurance settlement company buying the policy become the owner of the policy, agrees to pay all future premiums and is the beneficiary.

Do you want a corporation having a vested interest in your death?

The corporation who then owns the life insurance contract will incur costs to hold onto that policy until the person eventually dies. Upon death, the tax free death benefit is paid to the life insurance settlements company and they can realize a profit.

This means the life insurance settlements company needs to keep track of the life insured (the person who sold the policy) until they die. They are following your whereabouts and waiting for your death. Not a pleasant thought – a soulless corporation waiting (often impatiently) to profit from your death.

The Viatical or Life Insurance Settlements industry is not guaranteed and has had considerable problems

In Canada there are a number of companies acting as alternative investment firms raising capital to invest in the US Life Insurance Settlements industry. Many of these companies have had serious setbacks. The first problem arose in the 1980s and 90s when life insurance policies on terminally ill AIDS patients were purchased with the expectation that the AIDS patients would die in a few short years. Then medical advances created new AIDS and HIV medications that could extend life of AIDS patients for decades. The Viatical companies lost millions and many went bankrupt.

In today’s Life Insurance Settlements market (the new name for Viaticals, since the old name had to many bankruptcies associated with it) there is little to no regulation of the investment programs being offered. Returns are usually advertised as high as 18% annual compound return, but nothing is guaranteed. There is also the problem of liquidity. An investment with a Life Insurance Settlements company is usually not cashable for a minimum of 5 years, and at that time the life settlement company would need to have liquidity to honour the investment redemptions or they could refuse to pay.

If you are thinking in investing in life insurance settlements company raising capital in Canada to buy US life insurance policies, be extra careful. Medical advances continue to improve life expectancy and people are living longer and longer. The risk is that these companies are sitting on too many costly life insurance policies and the people are not dying. The life insurance settlement company would need to either raise more money to stay in the waiting game or go bankrupt. either way your investment is at risk.

Canadian Life Insurance Companies Offer Compassionate Benefits

Another reason the life insurance settlements business should remain illegal in Canada is that most Canadian life insurance companies would extend a compassionate benefit to a terminally ill patient with life insurance. A compassionate benefit is an early payment of a portion of the life insurance death benefit (up to 50%) to a terminally ill policy owner while they are still alive.

The early payout – the compassionate benefit – is given in the form of a loan, usually at prime plus 1 or 2%. This loan is repaid to the insurance company upon the death of the insured person and the remaining death benefit is paid out to beneficiaries. So, the one main reason people sell life insurance policies for cash – because they are terminally ill and need the cash – is nullified by the insurance company’s compassionate benefit program. The insured person would realize 100% of the death benefit they bought minus a small interest charge. And up to 50% of that death benefit can be used while they are still alive.

At Life Guard Insurance we believe your life insurance is for your estate and beneficiaries

The life insurance settlements market is basically illegal in Canada, the investment companies are unregulated with a poor track record, and the whole industry seems to pray on the weak and needy. At Life Guard Insurance we believe in selling life insurance to protect families, solve estate issues, create a legacy for the next generation. We believe in creating excellent rates of return on life-long investments into life insurance that can ultimately pay you back more than you can ever get from a third party trading on your life. Contact us to find out more about personal risk protection or the problems with life insurance settlements in Canada.

Special Addition – 21 Dec 2011

The province of Saskatchewan does allow trading in life insurance policies because they never enacted legaslation to their provincial Insurance Act prohibiting the activity. However, they do warn both consumers and life insurance brokers or agents to be wary of selling these products. The warning goes so far as to say that an life insurance agent who has a complaint logged against them for encouraging the sale of a life insurance company to a life insurance settlements company will face misconduct hearings unless ALL prudent efforts have been made to ensure the sale of the life insurance contract was in the client’s best interests. So, the liability for making a referral to a life insurance settlements company rest on the shoulders of the life insurance broker/agent, not the client.

Here is the Life Insurance Council of Saskatchewan information bulletin on the subject.

Also see the Securities and Exchange Commission’s views on Life Insurance Settlements in the US.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about Life Insurance Settlements are Illegal in Canada would also be very much appreciated.

10 Things You (Probably) Won’t Hear From Your Doctor

Infographic: Basic health tips to improve your life

Here is another fund and informative infographic. We hope you enjoy these 10 basic health tips that you can possibly implement to improve your life and live longer with a higher quality or life each day.

We hope you enjoy this week’s infographic.

10 Health Tips You Won’t Hear From Your Doctor

 Life Guard Insurance cares about your health

At Life Guard Insurance we care about your health and your life. Take care of yourself – live a healthy life. The best life insurance policy is always the one that took many years of maturing before it gets used. We can manage your financial risks – you manage your health risks. Contact us today to find out about life and health insurance you can use to offset your financial risks.

The infographic was posted by +Mitch Reynolds. If you found it interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this infographic about life insurance cheat sheet would be very much appreciated.

Sun Life Financial Shocks Market With Announcement To Pull Out Of The US

Sun Life will stop selling Life Insurance and Variable Annuities in the US

Sun Life will no longer offer individual life insurance or Variable Annuities in the US.

Another shocking announcement from one of Canada’s major life insurance companies, Sun Life Financial. The big announcement came yesterday, December 12, 2011, that Sun Life will no longer be offering new individual life insurance products or variable annuities (akin to Canada’s GMWBs) as of December 30, 2011. This annoucement came shortly after the company’s sharp financial losses last quarter.

Continued instability in the world stock markets is making it harder for all insurance companies to manage their long-term investments and accurately forecast interest rates, investment returns and expenses. This makes investments with guaranteed income streams in the future, like variable annuities, very hard to account for and leads to balance sheet losses when stock markets move sharply lower.

The Canadian life insurance industry has been handed a series of powerful blows in the last few weeks. Over the last month, life insurance companies across Canada have been announcing and implementing price increases to many of their permanent life insurance products, like universal life and term 100 policies. Then, on November 29, 2011 Standard Life of Canada announced it was exiting the Canadian life and critical illness insurance markets to focus on its investment products.

Many would argue that the future of things like Level Cost of Insurance for universal life insurance and Term 100 policies could be in jeopardy. The guarantees from GMWBs and GLWBs could disappear if the world markets don’t stabilize and interest rates increase. Even the guaranteed cost of insurance on Critical Illness Insurance could go the way of the UK, where premiums are not guaranteed and could be increased even after you buy a policy.

This article below was posted on Advisor.ca, and is worth a read regarding the changes that Sun Life is making, and the implications for the Canadian life insurance industry. I think we are seeing the beginning of a major shift in how companies do business and the financial planning options that clients will have.

SUN LIFE TO STOP SELLING VA, INDIVIDUAL LIFE IN U.S.

Sun Life Financial has announced that it will stop selling variable annuities and individual life products in the U.S., as the products were the primary causes of the company’s deep financial loss last quarter.

 

The Sun Life’s new CEO Dean Connor says the insurer will discontinue sales starting Dec. 30. The move will not affect existing policyholders.

 

The move to exit the variable annuity and individual life business in the U.S. comes after Sun Life faced massive charges in the third quarter as it hedged against future liabilities related to the insurance products.

 

One of the attractions of variable annuity products is that they offer a minimum rate of return guaranteed to investors, which can cost the insurer when markets are underperforming. Last month, Sun Life reported its first quarterly loss in two years, mostly as a result of U.S. operations which took a more than half-billion-dollar hit due to stock market chaos.

 

“Today begins a new chapter in the history of Sun Life Financial,” Connor said in a release.  “We are charting a new course with a new strategy that leverages what we do best today, and positions us for success as we pursue the many opportunities in our business around the world.”

 

Sun Life said about $200 million of its third-quarter loss was related to an annual update of its actuarial methods and estimates–used to calculate the company’s obligations under various products sold.

 

However, the insurer didn’t specify how much of the hit would be from equities and how much from interest rates.

 

The company will focus on what it calls its four key pillars:

• Continuing to build on its leadership position in Canada in insurance, wealth management and employee benefits;
• Becoming a leader in group insurance and voluntary benefits in the U.S.;
• Supporting continued growth in MFS Investment Management, and broadening Sun Life’s other asset management businesses around the world; and
• Strengthening Sun Life’s competitive position in Asia.

“To achieve growth in the U.S., we will focus on increasing sales in our employee benefits business, which is already a top ten player, and will expand our presence in the growing voluntary benefits segment,” said Connor. “We are confident that with the focused investment announced earlier this year we can build leading positions in these two sustainable, less capital-intensive businesses.

 

“We will also continue to support growth in MFS, our highly successful investment manager that has a large U.S. presence and over US$250 billion of assets under management globally.”

 

Filed by Steven Lamb, with files from wire services, editor@Advisor.ca

Originally published on Advisor.ca

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about Sun Life Financial exiting the US life insurance market would also be very much appreciated.

Real World Example of Bad Bank Mortgage Insurance

Mortgage Life Insurance from Canadian Banks is a waste of money

Again I want to rant about how bad the bank’s mortgage insurance is. It is a terrible product that is far too costly for consumers and is really just a big money-maker for the bank.

Yesterday I had the pleasure of helping a couple get rid of an overly expensive bank mortgage insurance plan and save them over $70 per month. I am not at liberty to say which bank these clients were dealing with or any personal information about my clients. Let’s call them Bob and Mary, and the bank as Big CND Bank. Here is the case:

Shopping for better rates on the internet

My clients found my website, Life Guard Insurance, when shopping for life insurance to replace their expensive mortgage insurance from Big CND Bank. They had recently moved to Alberta, AB from a major Canadian city in the east and had recently moved into a newly built home. Bob and Mary’s mortgage is about $500,000, not unusual for a home in Alberta.

Because Bob (mid 40s) and Mary (early 40s) are middle age, they don’t fit into the bank’s prime target age for mortgage life insurance, and so the premiums are starting to rise rapidly. The premiums are based on the oldest person’s age, so in this case it is a middle aged male plus spouse. This could be anyone who is moving houses or upgrading to a new property in their 40s.

Bob told me he was paying the mortgage weekly and the bank’s premium for mortgage insurance was about $45 per week. That works out to $2,340 annually, or $195 per month.

What does their $200 per month mortgage insurance cover?

Bob and Mary had their home covered for loss of life. It was a joint first-to-die life insurance policy that would pay out the remaining balance of the mortgage if one of them were to die. Then the policy would end.

Currently they are covered for $500,000 but as they pay down their mortgage their life insurance coverage will decline. However, the premiums for the mortgage insurance will remain level – at almost $200 per month.

Also, there is no actual cash payout to the family. The bank would be paid the cash from the mortgage insurance death benefit, and then payout the mortgage and give the survivor 100% ownership of the home – mortgage free.

I don’t know about you, but I can’t eat the house or pay utilities with a paid off home. The surviving family might have to re-mortgage the home or sell it if they can’t afford the upkeep on the home.

The Solution – personal life insurance with some extras

I was able to provide them with an excellent solution from Manulife Financial. We used a Term 20 policy that locks in the premiums for the next 20 years. After 20 years the mortgage will be very small or paid off and all children will be grown up – so not much financial risk left. If nothing has happened to them they can cancel the policy.

The Manulife Combined Term 20 policy was able to cover both Bob and Mary for $500,000 EACH – double coverage. If one person dies the $500,000 is paid out and the survivor still has their $500,000 life insurance policy. In the event of a joint disaster, Manulife will pay out $1 Million to their children.

They were also able to afford to add Child Protection riders for their 3 children at a total cost of $7.50 per month extra.

The base premium for the $500,000 term 20 coverage was $123. 38 – saving them about $72 per month over their mortgage insurance. The extra $7.50 to give insurance to their children brought the total cost of the policy to $130.88 per month.

This life insurance is level coverage for a level premium. That means the premiums stay at $130.88 per month for the next 20 years and the coverage remains at $500,000 each over the next 20 years (plus the children are covered until age 25, when they can take out their own life insurance policy – no medical questions asked).

After 20 years Bob and Mary could renew the insurance, but the price does go through the roof. It is designed to cover them while they pay down their mortgage. If they wanted to, they could convert this policy into permanent life insurance coverage for their estate needs sometime down the road.

At least with personal life insurance you know what you’re getting. You can save money and make sure that if something happens your family gets the death benefit – not the bank. The death benefit will remain $500,000 each over the full 20 years. Even if the mortgage is only $200,000 in the future the personal life insurance will pay the full covered amount ($500,000), and the family will have extra cash to offset things like income loss and final expenses.

Have your bank’s mortgage insurance re-evaluated

If you are currently insuring your mortgage through the bank, you should get a second opinion. It just makes sense – get something that brings much higher value for a lower cost. Contact Life Guard Insurance today to see if you can save money on your mortgage insurance by switching to personal life insurance.

The article was written by +Mitch Reynolds. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about bank’s mortgage insurance in Canada getting worse would also be very much appreciated.

INFOGRAPHIC: Life Insurance Cheat Sheet

Life Guard Insurance’s quick reference guide to buying life insurance in Canada

Keeping with our Infographic weekend tradition (this is the fourth week we have posted an inforgraphic) we would like to share our quick, one page life insurance cheat sheet. Feel free to print this out and use it as a discussion piece with your spouse around the need for life insurance and your insurance options.

We hope you enjoy this week’s infographic.

Life Insurance Cheat Sheet

Contact Life Guard Insurance for personalized life insurance planning

If you need help with your family’s life insurance planning, please contact us. We have life insurance brokers across Canada who can help you take the ideas from the Life Insurance Cheat Sheet and implement a real life insurance plan.

The infographic was posted by +Mitch Reynolds. If you found it interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this infographic about life insurance cheat sheet would be very much appreciated.