Keeping Clients Loyal with Multiple Products is a Bank’s Strategy

One size fits all service and advice model from the bank

Do you like big organizations that treat you like a number, put you in a queue and focus on how efficiently they can process you? Well, for some people this is a great fit. They like to know they are part of a larger system that has all the efficiency in the world and don’t care about the personal touch or the relationship they can build with a financial advisor. For others, they hate being treated like cattle – herded through the lines and given the same canned advice and products as everyone else.

The banks have models and do manage clients very efficiently. They have to, since millions of Canadians do multiple transactions with them every month. Bank staff are authorized to move clients up the chain of service, with more experience bankers and better products offered to clients with higher balances, more products at the bank, and larger monthly deposits. For those with fewer products and less cash deposits, there is less service and advice. The real issue comes when you want more than basic advice from your banker. You want a relationship and trusted guidance. You want to know your advisors name, and be able to call them after hours to ask a question.

This is where the banks fall flat. They just can’t afford to give everyone that level of service and advice. It would eat up all the time of their personal bankers, and nothing would get down. This is why bank staff are sales driven. Get more loans, sell that credit card, bring the mortgage over, etc. Each client is a sales opportunity, and they are always looking to move you up the profit line, not down it with time wasting advice.

Complexity ties you to your bank and limits your choice

One way banks create loyalty is to heap on complexity to your financial affairs. They will sell you multiple products and so that you have so much going on with them it is hard to close down all your accounts and move to another bank. The average Canadian family has 2-3 bank accounts, a line of credit, a mortgage, at least one credit card, a high interest savings account, savings accounts for their kids, an RRSP, RESPs for Kids, and more, and more, and more…

Do we need all this? The banks are making killer profits off the small administrative fees on each of these accounts. It basically costs them nothing to administer your accounts once they are set up, so the small monthly fees really add up. And that line of credit, mortgage, car loan, etc. all might be insured with the worst type of life insurance on the market – bank’s mortgage/creditor life insurance. This is almost a 100% profit margin product to the bank’s bottom line.

The average Canadian family can’t make heads or tails out of all the different products and services they have going on. The banks have them so confused it is like mentally and emotionally tying them up, and keeping them “loyal” because they can’t imagine the pain of switching everything to another bank.

Felling you must do business with your bank

Now here’s a funny thing –many Canadians think that when it comes to financial services and advice, their bank is THE ONLY place to go. The huge marketing dollars banks spend to give you that message is amazing. The impression that if you need a loan, set up an account, save into your retirement program, etc., that THE ONLY place to go is your local bank – and there are just 5 to choose from in Canada.

Well the truth is so far away from this perceived reality it makes me laugh. You can get much more efficient loans and bank accounts from major financial services companies that don’t have the bricks and mortar branches across Canada (costing millions of dollars to run). They can invest in advanced product development, offer higher interest rates, and generally be more competitive. But the average Canadian doesn’t know about these products and services unless they get to know a financial advisor or insurance broker who can show them options.

Just know that you don’t have to do all your business with the bank if you choose not to. You do have options, and they might save you money or make you a lot more money.

Products/Service/Advice very streamlined by your bank

As I said above, products, service and advice are put into boxes for clients that fit into different categories. For the highest net worth clients with big loans, there is an elite level of service, with bankers that have been 15 plus years in the business and have the best rates and most advanced products to offer. For middle income Canadians there is mid-grade service with in-branch personal bankers (grouped into A, B, C type categories of authority, so they can only sell certain products).

Not everyone can get the platinum credit card with no annual fees (but you can if you’re a high value client). Not everyone can get prime minus 2% on their mortgage (but you can if you have a huge mortgage, other loans and large deposits at the bank). You get slotted into a certain level of service and advice based on how valuable you are to the bank. Unfortunately the types of products available to you are also limited based on your value to the bank.

Again, this allows the bank to be more efficient and streamline their service levels. Certain clients get more attention and time, others get only basic service and hardly ever a telephone call. Where do you fit in the bank’s service model?

Life insurance planning will always be secondary to bank model

I can just imagine where life insurance planning would go if bank’s were allowed to sell personal life insurance in branches (which they are not allowed to yet because of the Bank Act of Canada). Banks would slot the vast majority of Canadians into a Term Life Insurance offering. If you were self employed, then some basic form of Disability Insurance for income protection would be offered, stripped of important benefits and riders to keep the price down and increase sales. Critical Illness Insurance would only be available online, like one of the major banks current offers, covering only the top 4 major illnesses and offered in simple, $25K, $50K or $75K amounts (all term 10 coverage meaning the price goes up every 10 years).

If you were making over $150,000 per year you might warrant some personal advice for permanent life insurance, like whole life or universal life and more advanced disability insurance advice. Maybe. It all depends on whether or not it would be more profitable to keep selling you the cheap, simple insurance with lower long-term value for the client and higher profit margins for the bank (for example, term life insurance which is very cheap is much more profitable for life insurance companies because they rarely pay a death claim, while more expensive permanent life insurance, like universal life, has a much lower profit margin because they pay out much more money in claims).

Insurance would also be treated as the ugly cousin to the bank’s traditional products, such as loans and investments. I have worked in banks and they generally don’t understand life insurance and bankers want their clients to have very little to do with the product. If banks were allowed to sell life insurance, and bankers were forced to offer it to their clients, they would generally do a poor job of explaining and selling proper life insurance protection.

Tell us what you think about banks boxing their clients in

From my many years working inside two of Canada’s largest banks, and seeing how they operate, I know how people are boxed in. I know the banks’ strategy to overwhelm you with products and complexity. I know their service models for different levels of clients. Do you want to be boxed in by the big banks, or do you want a personal relationship with a trusted financial and insurance advisor? Tell us what you think of this article and how banks might sell life insurance if they were allowed to do so in branches.

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 being boxed in by Canadian big banks’ sales strategy would be very much appreciated.

Can You Buy Life Insurance If You Smoke Marijuana?

Many Marijuana Smokers Qualify for Standard Smoker Premiums for Life Insurance

The majority of people in Canada who smoke marijuana just do so occassionally. In this video I want to explain to you the difference between casual/recreation marijuana use and habitual marijuana use when buying life insurance. Life insurance companies take a very different view-point of the risk you present the company depending on how much marijuana you smoke on average.

For those who only occasionally use marijuana, like 2 to 3 times per week, they will just be treated like a standard smoker (assuming no other medical conditions). Habitual marijuana users will not be looked on so favourably. I think there are many reasons for this. The old argument that marijuana use is a gateway drug to harder substances is a factor once a person is using it very regularly. Also, there is a stereotypical lifestyle that is associated with habitual marijuana use that is not very healthy. But, I think the biggest factor is the hard evidence that people who regularly smoke marijuana do have much higher instances of health problems and an unhealthy socioeconomic standard of living.

Even though this might not be you, the insurance company is looking at broad statistics, and any risks you bring, be they lifestyle choices or health problems, are evaluated on the average or most typical outcome. So, your choice to smoke marijuana, either occassionally or regularly, with result in either standard smoker premiums or an increased premium (and even a possible decline if you smoke a lot).

Marijuana users can get confidential insurance advice

I hope you find this video helpful. And, as always, if you would like to speak with a qualified insurance broker about whether or not you could qualify for life insurance, please contact us. We can give you private and confidential advice about your insurance planning considering your marijuana use.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about buying life insurance when using marijuana would be very much appreciated.

Banks Like to Simplify Insurance for Clients

Are Simple Insurance Products Meeting Your Needs?

We’ve all seen the ads by the big banks – “easy to understand insurance” – “we make insurance simple”. The ads are great too, with the insurance agent acting as the hero when people are getting robbed or a bear is attacking their car. The marketing around simple insurance speaks to Canadians because the bank seems to be some kind of savior, swooping in with the power to clear away confusion and give you simple, straight forward insurance that everyone can understand.

So, what’s the truth behind the advertising? If you bought an insurance policy from a big bank do you think they will give you a contract that is written in brief clear language that anyone can understand? No – they will give you the same old insurance contract like a small book packed full of legal speak that most people can’t make heads or tails of. The one thing I will give the bank’s credit for is they run a very good customer service call centre, where you can speak with a live person about your policy and get answers and help. But that doesn’t mean the contract is any simpler than the other guys.

And, for life-long insurance planning, does simple mean good? Or does simple just mean easy to understand, package and sell? Simple life insurance could be lacking a whole bunch of things that you would really benefit from (will explain more below) and as I will show you, simple insurance is often the most profitable policy for the insurance company, or bank.

In Branch Mortgage Insurance – Example of Simple = Bad Insurance

The traditional life insurance policy that banks have been allowed to sell in branch thus far is mortgage/creditor life insurance (some banks also offer disability and critical illness creditor insurance too). I have gone into it on numerous occasions why the bank’s mortgage insurance is a terrible product compared to owning your life insurance personally. Here is a brief recap of all the things wrong with bank’s mortgage life insurance:

• A declining benefit for a level premium
• The bank owns the plan, is the beneficiary of the plan, and you pay the premiums
• You can’t move the policy from one bank to another or from one home to another
• Prices increase if you move banks or move houses
• There is a high likelihood your claim will be denied because underwriting is done at time of claim, not when you apply for the policy
• The plan can’t be continued after you pay off your mortgage, even if you wanted to keep the insurance

All these factors make bank’s mortgage insurance a poor insurance policy, since none of these issues are a concern when you own personal life insurance. To add a little salt into the wound, let me tell you how profitable this insurance policy is for the bank. This is a BIG MONEY MAKER for Canadian banks. I’ve worked in two of Canada’s largest banks, and I know how they account for the profits of each mortgage life insurance sale. When a lender convinces a client to take the mortgage insurance, the bank branch gets to immediately add 25% of the annual premium to the net profit line of the branch, regardless of whether the client keeps the policy or not. This is like the sales commission to the bank branch for selling the policy.

And then the policy is still profitable to the insurance division of the bank. Very few claims are ever paid because of post claim underwriting (the process of determining, after you are dead, whether or not you qualify for the insurance). Either through an outright denial of the claim or a through client fatigue trying to get through the claims process, a very large number of death claims for bank’s mortgage life insurance are never paid out.

So, here is an example of very simple life insurance that is really not in the clients’ interest, but is really best for the bank. Think twice before signing the mortgage insurance stapled to your mortgage/loan documents because it really is a way for the bank to add a big fat profit margin to the loan they are giving you.

Simple Life Insurance Means Term Life

So, if you’re not getting mortgage/creditor insurance but are phoning the life insurance call centre of the bank (since they can’t use in branch sales staff for personal life insurance – yet) what do they have to offer. They have term life insurance on the shelf – typically Term 10 or Term 20. Now, there isn’t anything wrong with term insurance. It is the most affordable way to get your risks protected in Canada today. What I have a problem with is if that is all they have to offer you’re not able to cover all your bases. Term life insurance is for short to medium term risks in your life, like paying off the mortgage, raising children, dealing with a business loan, etc. These risks can most economically be dealt with by using term life insurance.

There are a whole host of reasons people buy life insurance other than term needs. There is taxation issues at death, estate planning and leaving a legacy, charitable giving, tax sheltered cash accumulation inside life insurance as another asset class of your investment portfolio, etc., etc.  The problem here is I probably just confused some people and maybe scarred the rest off from finishing this article. This is why dealing face-to-face with an experience and licensed insurance broker is the best idea. They will help you understand how the different types of life insurance work, the different needs you might have, and how to design an insurance package that can meet those needs, provide you with real value, and fit it into your budget. No – this is not a simple process. Yes, it will probably take a few meetings and lots of paperwork. And, yes – the process is worthwhile because you will own something that has real value to your life, not just another profitable product of the bank’s.

Easy to Train Staff for Basic Life Insurance Knowledge

The insurance sales staff in the bank’s call centres, and now in their insurance mini-branches, are trained only with a basic knowledge of life and health insurance. The product that makes the banks’ insurance companies the most money and has the highest sales volume is home and auto insurance, not life and health insurance. So, their staff gets most of their product knowledge training around P&C insurance (Property and Caasualty – also called Home & Auto). Life insurance is really an after-thought as in, “we also sell life insurance.” In order to get their staff up to speed on life insurance sales, they focus on simple products – which is term life insurance again. Product knowledge and sales training around permanent life insurance is almost non-existent for bank’s insurance sales staff.

So, if they don’t know anything about the permanent insurance solutions how are they going to tell you about them and sell them to you? They aren’t. Their managers and departments have sales targets to meet too, so they push their sales staff to close deals for term life insurance, even when the client expresses a need for something more advanced or permanent. Simple is Good – Simple is for Everyone – Sell the Simple Insurance! I can almost hear the morning pep talk before the staff hits the phones.

No Advanced Insurance Offering

As said above, the bank’s insurance sales staff doesn’t offer permanent life insurance solutions. There is only one Canadian bank that I know of who has a commissioned sales force who sell permanent life insurance and complex living benefits, like disability insurance and critical illness coverage. The rest just don’t bother. And even for this one stand-out bank offering a greater level of service, getting clients referred over to that division from the insurance call centres or insurance branches is like pulling teeth. Why would one division, with sales targets and incentive bonuses, send a potential client down the street to another division and all they get in return is a nice thank you and maybe a Tim Horton’s coffee card.

Your needs are not their main concern. The bank’s need to make each division profitable, to maximize sales, and to earn their annual bonuses. These are the real driver’s of behaviour. When dealing with an independent life insurance broker, they too are paid on commission, but they are only paid when they sell you something. If you don’t like what they sold you, and cancel your policy, they have to repay their commissions to the insurance company. Their motivation is to do good work for the client, build a strong life and health insurance plan the client can afford and is happy with, so the business stays on the books and everyone is happy. Independent insurance brokers don’t have sales pressure coming down from above to maximize the return on every client – regardless of what is right for that client. If they do a good job as an insurance advisor, they make a very nice living. If not, they starve and fail out of the business. It’s really that simple.

Let us know what you think about simplified life insurance offered by banks

After reading this article, what are your thoughts. Do you see value in the simple approach and easy sales process of dealing with bank’s for your life insurance, or would you rather enter into a more complex sales process with advanced insurance solutions and ultimately higher value to you? Leave your comments below and I will respond to everyone on this important debate about insurance sales models for the benefit of all Canadians.

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 Simple Insurance from the Banks is Good for Canadians or Not would be very much appreciated.

The Big Canadian Banks Have Begun Selling Life Insurance

Is it a Good Thing to have Canadian Banks Sell Life Insurance?

This is the first article in a 5-part series about Banks Selling Life Insurance in Canada.

This is a big topic and a perplexing question – Should Canadian banks be allowed to sell life insurance? In many ways this question is already a mute point, as some of Canada’s largest life insurance companies are owned by the big banks, and are even branded with the bank’s generic logo (usually saying Insurance next to the logo). In many other ways this is a simmering debate in the Canadian financial services industry that will affect the products being produced and the level of service provided to Canadian consumers for years to come.

The Federal Government of Canada has held the line on their strong stance that banking and insurance should be maintained as separate businesses and all insurance products (life, health, home, auto, etc.) should NOT be offered to consumers through the local bank branch network. Why? Traditionally in Canada there were 4 pillars of the financial services industry:

• Banking
• Trust Companies
• Mutual Fund/Investment Companies
• Insurance Companies

None of these different financial services companies could do business in the realm of the other. Well, the walls have fallen and Canadian banks almost totally control the Trust companies in Canada and have huge mutual fund divisions, controlling over 40% of all mutual fund assets in Canada (and with the largest amounts of new money coming into them all the time). The only pillar of financial services that has remained separate from the banks (well sort of) is the insurance industry.

That too is changing as the big banks have begun buying up life insurance companies and strategizing about how they can leverage their powerful brands and national distribution arms to reach the mass market of Canadians. Now, I’m not saying this is totally a bad thing. Canadians are very under-insured and there really does need to be more sales people and a more efficient distribution model to get the insurance protection people need out into the market place. But, changing the fundamental rules (in The Bank Act of Canada) to allow big banks to sell life insurance might be a huge mistake.

I will take the next four articles to explore this topic in more depth. It is just too complex to rush through, and as a consumer you should be aware of all the ramifications of buying life insurance through the current bank owned distribution models and what the world might look like if things were to drastically change. Here are some brief highlights of the upcoming articles on banks selling life insurance in Canada (being written over the next 4 days).

Simple or Complex Life Insurance Advice

One scary thing, from the eyes of a licensed insurance professional, is the push for simplicity around insurance planning. Is simple always the best thing? Simple is easy to understand, easy to package, market and sell. However, when it comes to life insurance, simple doesn’t mean high value. Simple means low value for the consumer and big profits for the insurance company. Life is complex. Your investments, wealth creation, risk management issues are complex. How can an overly simplified product address all these needs? There is a reason life insurance, especially permanent life insurance, is complex, and that’s because to create value for the client the product must be designed with many moving part – insurance protection, cash value, investment funds, dividends, optional riders and benefits, etc. We should be careful about the bank’s push to simplify or commoditize life insurance products, as the real winner is the bank, not the client.

Being Boxed in by the Big Banks

The fundamental marketing strategy of the big banks is to get you into as many financial products as possible so that you will never leave them (it’s just too much of a hassle). They get you with a bank account, a credit card, investment funds, mortgage, lines of credit, another bank account for savings, and now they can tack on life insurance (not to mention home and auto insurance and health products). Some people do like dealing with just one financial institution, like their local bank, and keeping everything in one shop. Others like choice and different points of view. The one major concern is the quality of advice being given. Canadian banks are notorious for segmenting their clients based on assets and “value” (how much money they make the bank) and providing varying levels of service and advice. The wealthiest clients with the biggest loans and largest bank accounts get gold key service. The poorest clients get junior bankers fresh out of college. Does this model adequately serve the mass Canadian market when it comes to life insurance planning?

Concerns about Privacy and Sharing Client Information

Far too often the banks are quick to respond to sales opportunities, but slow and broken when providing holistic service to the client. Your client profile is passed around the different divisions of the bank if there are other products and services they think they can sell you. But, the different parts of the banks operate in silos, and don’t communicate well with one another, except when there is an identified sales opportunity and it is part of the bankers mandate and measurable reward system to follow-up on these potential sales. Unless you have developed a personal relationship with your chosen banker, and hopefully they don’t get moved to a new branch, how does the complexity of your total financial needs and now your risk management needs get properly served in a massive, disjointed organization? Are you getting advice or are you being sold?

Acting in the Spirit of The Bank Act

The government of Canada has decided that the differences between managing a person’s money and managing their risks are different types of business, and should be sold by different types of advisors. The rules in The Bank Act, section 416, clearly state that no sales or promotion of personally owned life insurance products (called prohibited activities) take place inside bank branches. The major banks in Canada are taking great care not to violate the express letter for the law, but are finding ways around the laws, as they are written, which many would say is going against the spirit of the Act. Understand what The Bank Act says about insurance sales, why these laws are in place, and how the banks are manoeuvring around them to capture your business.

Let us know what you think about Canadian banks selling life insurance

I’m going to be honest. These articles are all going to position the advice of an independent life insurance broker as a better level of service and product over a bank distribution model (either what they are allowed to do today and what they hope to do in the future should The Bank Act be amended). At Life Guard Insurance we know the value of advice, and working with a professional and skilled life insurance broker. But we would like to hear what you think. Let us know if you want things to change or stay the same and why. Looking forward to hearing your thoughts.

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 Canadian Banks selling life insurance would be very much appreciated.

Buying Insurance is the Practical Way to Say I Love You

Insurance planning should never be done on Valentine’s Day

If you think I’m going to write some sappy, love sick article about how buying life insurance is one of the greatest acts of love for your spouse, think again. I don’t want to conform to the Valentine’s Day hype and standard sales pitch. If I did write that article (which I think I already did) it would go something like this:

“Protecting your family with life insurance is a truly selfless act of love. Be there for them even if tragedy strikes, and always take care of them. Life Insurance can protect their future and, if you were to pass away prematurely, they will always feel your love with the gift you left behind.”

Ok, that’s about as lovey-dovey as I can write. Actually I don’t think life insurance planning has anything to do with Valentine’s Day. In fact, don’t buy life insurance today. There are another 364 days of normal life outside of Valentine’s Day each year that makes a lot more sense to buy life and health insurance. That’s because insurance planning is practical and necessary. Chocolates and flowers are impractical and unnecessary (but if I don’t go out and buy my wife a card and some flowers I’m going to feel her impractical foot in my …).

I heard a comedian say a simple truth recently which made me think about what buying life insurance is all about. He said, “Real love begins when infatuation ends.” I think that speaks volumes to the practical, down to earth planning that is insurance and risk management. I think once you have gotten over that infatuation stage of young love, when talking about death and disability is probably going to make at least one member of the couple cry, then you can focus on the nuts and bolts of designing a plan.

An insurance plan should be more than just life insurance, even though an adequate life insurance policy is the cornerstone of any risk management plan. You need to consider the “what if” scenarios of death, disability, critical illness and even long term care. How are people going to get on without you? Who would take care of you? Can you afford extra medical bills and changes to your lifestyle? So, here’s a summary of the different personal insurance products, why you need them and what to look for when designing a practical insurance plan.

Life Insurance – Your ultimate backup plan

You need to cover the financial risk of your premature death and the loss of income your family would face. Now, if you’re gone from the picture, so are your expenses like food, clothing, vehicle, etc. But there are many constant expenses your family needs to pay for. Utilities and property taxes, paying off debts, groceries for everyone else, etc., etc., etc. The easiest way to plan for this is have enough life insurance to pay off all your outstanding debts, including your mortgage, and then replace your income at 70 -75% until your youngest child is age 21 (not 18 – when was the last time you met a financial independent 18 year old who had finished college or university). Be sure to set aside some extra money for emergencies and education funding through your life insurance.

Also consider adding some permanent life insurance to the mix instead of all term insurance. It is likely you will need some permanent life insurance for estate planning and taxation needs at the end of your life, and the earlier you buy it the cheaper it is. And, of all the different insurance policies you can buy, a permanent life insurance policy is the only one that fully guarantees a payout, because no one is getting out of life alive. Therefore you can consider permanent life insurance as another asset class in your overall portfolio.

Disability Insurance – Because your family still needs to have a life

Making sure your income is properly insured is very important. Unless you have enough money saved to provide for yourself and your family from now through retirement, you are at risk. When income stops, people go bankrupt and lose their house. RRSPs and savings disappear in a matter of weeks that took years to accumulate. And the likelihood you will have at least one period of long term disability in your working life in almost 50%.

Even though it’s your income, it’s your family’s lifestyle that is at risk. Be prepared to still be their bread-winner, even while serious ill or injured and unable to work.

Critical Illness Insurance – To protect your retirement savings and assets

The cost of becoming critically ill with something like cancer, heart attack, stroke or bypass surgery (the Big 4 illnesses) is 1 in 3 before the age of 65 for Canadians. So, if 1 in 3 will have a serious, life altering illness, do you think it might be you? Could be. And if it is you, do you want to put your life-savings and house at risk to pay those extra medical expenses you so willingly would pay if it means the difference between life and death? The unforeseen costs surrounding having a critical illness are huge, and quickly eat away your savings. A critical illness policy would inject a large amount of tax free cash into the situation so that you don’t have to stress about finances (which only makes you sicker).

Long Term Care Insurance – You don’t want to be a burden to your children

With 1 in 2 Canadians going to need some serious long term care sometime in their life, who is going to pay for it all? The wave of baby boomers is now hitting the healthcare system as they age and something has to give. It will probably be health services that are not protected under the Canadian Health Act, like long term care. As you age there is a good chance you will need care. And if you can’t pay for private home care or facility care, and if the government doesn’t have a sponsor bed for you, then your adult children are legally obligated to care for you. No one wants to be a burden to their children later in life. With a long term care insurance policy you will have tax free income available to pay for the high cost of care, and at least retain the independence to choose your own care provider.

Life Guard Insurance can help you design a complete insurance plan

A comprehensive risk management plan should have all these immediate and future needs balanced. Some policies, like critical illness and disability insurance, can be converted into long term care insurance later in life. Term life insurance can also be converted into a permanent life insurance policy when you can afford it. Contact us (maybe not on Valentine’s Day) and we will connect you with a professional life insurance broker in your area who can help you design a proper insurance plan to protect the ones you love.

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 Insurance Planning on Valentine’s Day would be very much appreciated.

How to Get Non-Smoker Premiums if you’re A Cigar Smoker?

Lite to Moderate Cigar Smoking can Qualify for Non-Smoker Rates

If you’ve ever looked at buying life insurance and you smoke, you know there is a large difference between smoker and non-smoker premiums. If all you smoke are large cigars (not cigarillos, which are the size of a cigarrette but use cigar tobacco) you can very easily qualify for non-smoker premiums and save a lot of money.

Almost all life insurance companies in Canada offer some leniency when it comes to smoking large cigars. The typical allowable amount is an average of 12 cigars per year or less (that’s one per month). If you are an occasional cigar smoker – like you’ve done it while on vacation in Cuba or go to a cigar bar a few times a year with friends, then you can easily qualify for non-smoker premiums without much trouble. Once you smoke more than 12 vigars per year, all insurance companies except one will rate you as a smoker, and you cost for life insurance will more than double.

There is one life insurance company that has more favourable treatment for cigar smoking – Canada Life. They allow up to an average of 52 cigars per year (that’s one per week). So if you like to indulge in cigars on a somewhat more regular basis, then Canada Life is your best choice for life insurance because their non-smoker premiums are still very competitive and you can get it even if you are a moderate cigar smoker.

One thing you can’t qualify for is preferred rates, or discounted premiums for a non-smoker in good health. Even if you are an outstanding athlete, a few cigars per year means you can only get standard non-smoker premiums. No discounts.

Hope you enjoy the video above and leave us a comment below about other useful life and health insurance videos you wish to see. If you need help getting lower premiums for your life insurance, please contact us to speak with a life insurance broker in your area.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about getting non-smoker premiums as a cigar smoker would be very much appreciated.

Video about Various Investment Products Available from Life Insurance Companies

Seg Funds, and Annuities and GMWBs, Oh My!

In this short 4 minute video we showcase the various investment products available to Canadians from life insurance companies. Many of the products are very similar to those available from the Mutual Fund Dealers Association (MFDA) while others are turly unique to the life insurance industry.

When it comes to designing income generating products, life insurance companies are far more advanced than traditional investment management firms. With the guarantees they can offer as insurance contracts, Canadians can invest their money into an Annuity or a GMWB/GLWB (Guaranteed Minimum/Lifetime Withdrawl Benefit plan) and know they will have a steady stream of income for the rest of their life.

Investment products produced by insurance companies you can buy from a life insurance broker are:

• GICs (Guaranteed Investment Certificates)
• Accumulation Annuities (like a GIC but an insurance contract with a named beneficiary)
• Segregated Funds (pooled investments like mutual funds but with a death benefit and maturity guarantee)
• GMWB/GLWB – allows you guaranteed income with possible upside when the stock markets go up
• Annuity – guaranteed income for a term or the rest of your life for a heaped deposit

We hope you enjoy our Insurance Industry Investment Video.

Transcript of Insurance Industry Investment Products

You have a lot of choices when it comes to investment products. You may already have well-known investment products like Mutual Funds and GICs.

 

But did you know that Life Guard Insurance offers a wide range of investment products produced by insurance companies?

 

Many are similar to well-known investments. Some are exactly the same. And some are unique, and only available through an insurance contract.

 

The first type of investment is Guaranteed Investment Certificates or GICs, also called Term Deposits.

 

A GIC is a fixed-term investment that pays a guaranteed interest rate until it matures. These are among the safest investment products.

 

The return depends on prevailing interest rates and how long you invest – three months, one year, two years, five years and up.

 

GICs are guaranteed by Assuris for up to $60,000, or 85% of the promised guaranteed amounts, whichever is higher.

 

Second are Accumulation Annuities — a guaranteed investment very similar to GICs.

 

Because Accumulation Annuities are offered only by a life insurance company, they have different guarantees.

 

They also have the added benefits of a beneficiary designation and potential creditor protection.

 

Third is a Segregated, or Seg Fund. This is like a mutual fund — a pool of investors’ money managed by professionals to provide a good return over the long-term.

 

Seg Funds are actually insurance contracts with two components: an investment that produces the return, and an insurance contract that covers the risk.

 

Unlike mutual funds, seg funds guarantees from 75% to 100% of your principal will be available upon maturity.

 

Seg funds also offer creditor protection and allow you to name a beneficiary to avoid probate and legal fees.

 

The next investment is Guaranteed Minimum or Lifetime Withdrawal Benefit Plan – GMWB or GLWB. This investment product guarantees you will never lose the principle you invest and you will have a steady stream of income throughout your retirment.

 

These have been very successful helping Canadians transition from saving for retirement, to generating income in retirement.

 

Both offer a guarantee on the withdrawal of 5 to 7 percent of their portfolio each year.

 

The GLWB is a lifetime benefit, while a GMWB is a benefit for 15 to 20 years.

 

And finally, an Annuity is an excellent income generating investment product.

 

Simply put, an Annuity is a contract between you and a life insurance company.

 

You invest money. The insurance company provides you with a steady income for a fixed term or the rest of your life.

 

Annuities are a popular alternative to Registered Retirement Income Funds, especially for people in their later years who no longer want to follow their portfolios or take any risk.

 

Your annuity income will depend on the amount you invest, the interest rates at the time you purchase the annuity, your gender, your life expectancy, and your age at the time you bought it.

 

As you can see, there are many choices for investing your money to create income and wealth.

 

Life Guard Insurance has a network of professional brokers that can answer your questions and help you decide which investment products might be right for you. Call us today for all your investment needs.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about Insurance Industry Investment Products would be very much appreciated.

Disability Insurance Income Protection Important to the Super Rich

Even being with financial independence, Sydney Crosby bought disability insurance

In the last day or two it has been all over the news that Sydney Crosby, the world superstar of hockey and one of Canada’s favorite sons, might have to retire from the game and claim on a massive disability insurance policy he bought – $20 million benefit. Upon hearing this story I immediately thought Sid the Kid was very smart to purchase disability insurance to protect his income. Then, after hearing he paid $1,000,000 for the coverage, all up front, I began to question if this was a wise move with his money.

You see, Sydney Crosby is a wealthy, superstar hockey player. He is the face of hockey, both in Canada and in the more lucrative US market. I’m sure, even if he is forced to retire because of continuing concussion symptoms, he would have a great career inside the NHL, and his endorsement deals would go on for many more years before his bankable name fades. Why then, being already financial secure and with bright future prospects even off the ice, would Sydney Crosby spend $1 million to buy disability insurance? This article works through some of my thought process of whether or not it is worth it for Sydney to buy the insurance and how his income protection policy compares to personal income protection available to regular working Canadians.

Crosby’s policy was very limited compared to personal disability insurance

Let’s look at Sydney’s actual policy. It seems to be very limited in nature. Not everything is clear from the news reports on how the policy was designed, but one thing is: Sydney’s disability must be TOTAL and IRREVERISBLE so that he never returns to the game of professional hockey once retiring from the NHL. If Crosby is forced to retire due to a disability, his benefit ($20 million) would only be his if he never returns to hockey again. If, somehow, medical advances and recovery treatments allowed Sid the Kid to return to playing professional hockey in the NHL, he would have to pay back the entire $20 million benefit.

What we don’t know is if the condition causing the disability had to come from an on-ice accident, or if he was covered 24 hours a day, both on and off the ice. We also don’t know if he was insured against illnesses, like cancer and heart disease, or was the coverage just accident related. These would also be limiting factors if they were part of the policy.

Simply because of the dangerous nature of professional sports, insurance companies design specialized insurance products for pro-athletes making the mega-salaries. These are not the common off the shelf disability insurance policies that regular Canadians can get. And, quite frankly, they are more expensive for the amount and type of benefit the person is getting.

As a comparison, a 40 year old man in good health and a non-smoker, needing $5,000 of tax free income from a disability policy (personally owned) would pay around $200 per month for a top of the line, professional disability insurance policy. The type of benefit on this plan would cover:

• Disability from both injuries and illnesses
• Disability benefit of $5,000 per month payable to age 65
• Coverage for your regular occupation through to age 65, so the insurance company can’t force you back to work flipping burgers in McDonalds to get you off the books
• Coverage for total disability and partial disability, meaning you could still receive half your benefit even if you were working part-time
• Ability to go on and off claim with multiple disabilities or recurring disabilities throughout your life
• Premiums locked in and guaranteed never to increase

There are even more bells and whistles that can be added to a personal/professional disability insurance plan that would make the benefits much more valuable than Crosby’s policy.

Total cost of Sid’s policy is similar to personal disability insurance, but all up front

Sydney Crosby had to fork over $1 million, up front, to get his disability insurance coverage. That is a hefty price tag to pay for insurance that, if you’re lucky, will never pay out a dime. Only if he is forced to retire from the game and career he loves will he see his benefit of $20 million. A sad scenario, but typical of all disability insurance claims. So, let’s look at this with some basic math (no present/future value of money calculations thank you – this is supposed to be understandable).

Sydney Crosby spent 5% of the total benefit up front to have disability insurance of $20 million. Does personal disability insurance cost the same, more, or less? Taking the example above of $200 per month for $5,000 coverage and we can quickly see this man is paying 4% of the cost of the benefit for a much more comprehensive policy. AND, our 40 year old man does not have to pay everything up front. He pays installments over time. If he ever did become disabled, his premiums would be waived until he is able to return to work. If he never returns, his premiums are gone forever.

Let’s take an example. Our 40 year old man buys his disability policy and pays $200 per month for benefits. At age 55 he becomes permanently disabled for the rest of his life. How much did he pay in and how much benefit will he get? He has contributed $36,000 for his first 15 years of coverage. At age 55 he will receive benefits for the next 10 years, until age 65. He is then paid out $600,000. His total cost to benefit ratio in this scenario is 6%. Not a bad investment to have 10 years of lost earnings replaced for only 6% of the total value of those earning. We only realize the true value of insurance at claim time – before that it feels like a monthly bill.

Income protection is worth the cost, even for rich people with financial independence

On reflection, Sydney Crosby did a very smart thing. If he is forced to retire because of his concussions, he will receive the largest disability insurance payout in NHL history. He doesn’t really need the money to live, but he is liable to lose his $7.5 million per year salary. Sid has only played 7 years in the NHL. Gretzky played 20 NHL seasons and Bobby Orr only 9 before knee injuries forced him out of hockey.  His $20 million payout only covers about 3 years of his gross income as a player. Sid is still potentially losing 5 – 10 more years of NHL mega-salaries, which could add up to over $70 million.

Who knows how long the endorsement deals will last. Who knows if he will suffer from concussion symptoms his entire life and never able to hold down a regular job. Who knows if endorsement deals will dry up over night. Who knows, who knows, who knows! And that is why you buy disability insurance. Because your continued income is just too valuable to gamble away, and your whole future depends on your ability to earn.

Have you taken steps to protect your income?

For most people in Canada, continued income is even more valuable than it is to Sydney Crosby. Unless you are independently wealthy, able to retire comfortably today, you need income. And what if that income is at risk every day you walk out your front door? Does your employer offer comprehensive disability benefits? Are you self employed without coverage? How long could you last financially if tomorrow you couldn’t go into work, and were disabled indefinitely?

At Life Guard Insurance we have insurance brokers across Canada who can design a disability insurance plan to protect you income and lifestyle. Contact us today for your personal disability insurance income protection plan.

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 Sydney Crosby’s disability insurance policy would be very much appreciated.

Getting Instant Life Insurance Quotes has Never Been Easier

Easy Access to Instant Life Insurance Quotes in Canada

It has never been easier in Canada to get free, unfettered access to instant life insurance quotes than with Life Guard Insurance. Unlike most other websites in Canada, Life Guard Insurance never asks you for your name, phone number and email address just to run a simple online quote. We know that many Canadians are just browsing, and would like to do their shopping without being bothered by sales people. That is why we don’t put barriers in your way to getting as many instant life insurance quotes as you want.

Think of it like shopping in an electronics or clothing store. There is so much to see and take in you just need some time to browse around and get a feeling for the merchandise and what you are looking for. People walking through the doors of a store might come in different categories:

• The casual shopper: who is there just to browse around and isn’t likely to buy anything today.
• The deal shopper: who is looking through the stock, and might buy today if they find a really good deal.
• The confused shopper: who has a problem and thinks there might be a solution in the store, but doesn’t know what that might be.
• The motivated shopper: who knows exactly what they want and flags down a sales person the minute they walk in the door to get in and out of the store ASAP.

The same goes online when people are visiting the website. We feel that running instant life insurance quotes could fit into any of the four shopper categories, and really only the last 2 are looking for immediate service.

Doing multiple instant life insurance quotes

Imagine you need some life insurance. You might not be sure how much you actually need, but you want to see how much it costs for different amounts of coverage. Then you see different types of products you can quote – Term 10, 20 and 30 or Term 100 and even Whole Life Insurance. Hummmm. Maybe you want to get many different quotes to see what the price differences between the products are.

If you were using a life insurance website that asked for your name, phone number and email address each time you ran a quote that could get very annoying. Also, the insurance company on the other end of the website now gets multiple hits from you checking different products and amounts of life insurance. You could get phoned (tele-spam) and emailed (email-spam) over and over again, just because you were doing multiple comparison quotes.

Wouldn’t it be nice to know you can use an online system, like our Quoting Tool at Life Guard Insurance, as much as you want and never enter your personal information and never be marketed to just for browsing online.

After you’re done quoting we would like to help if you have questions

At Life Guard Insurance we have life insurance brokers across Canada ready to help you, if you ask. Just like in that store above, there are lots of sales people hanging around waiting to serve you. All you have to do is ask. We provide a contact form right on the Quote Centre webpage, or you can use one of our many other contact forms on the website – or just call us at 1-877-811-4043. We can connect you with a professional life insurance broker in your local area who can help find you the most cost effective and highest value life insurance policy to meet your needs.

Limitations of Instant Life Insurance Quotes Online

There are a number of limitations to using the online life insurance quoting tool. It isn’t the same as speaking with a licensed life insurance broker who can customize a life insurance plan for you and your family. Here are some of the limitations you might face:

• Cannot show joint life insurance policies or multi-life policies which are cheaper than individual plans
• Cannot show universal life insurance quotes because they are too complicated
• Only simple life insurance plans can be quoted, so no:
  • Disability Insurance quotes
  • Critical Illness Insurance quotes
  • Long Term Care Insurance quotes
  • Complex Life Insurance quotes
  • You won’t see the cash values of permanent life insurance quotes online, so you can’t really compare apples to apples

These problems are easily remedied. You can use our specialized online quote request forms (linked to above) of you can contact us to be connected to a local life insurance broker who can get you the customized quotes you need when shopping for life and health insurance online.

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 instant life insurance quotes online would be very much appreciated.

Video about Estate Planning in Canada

How legal council, professional accountants and life insurance help with estate planning

Our latest video about estate planning shows how, through preparation and forethought, you can be prepare for the eventual costs of death – taxation and final expenses. Depending on the value of your estate there are major tax consequences at death, which can be dealt with through drafting and executing an estate plan. Also, putting in place a legacy through your estate plan can make sure loved ones are looked after, charities or organizations you support are given funding, and business continuation plans can be fulfilled.

Proper estate planning involves many important dosuments:

• A Will to make sure your wishes and desires are fulfilled after your death.
• A Power of Attorney to make sure you personal and business affairs are properly managed if and when you can not longer look after them yourself.
• A Personal Health Directive to tell your family and medical professionals what level of care you want if you are so ill you can no longer communicate your wishes.
• Life Insurance Policies to make sure at death that tax free cash flows into the estate to minimize the tax burden and/or to named beneficiaries and fulfills your wishes.

This video will help you understand the many things you should think about when designing an estate plan, and to make sure you have all the pieces in place, with the help of qualified professionals, to make sure your estate is intact and passes to those you want to give it to.

We hope you enjoy this 3 minute video.

 Transcript of Estate Planning in Canada

They say there are two certainties in life: death and taxes.

 

You can’t escape them, but you can help your family deal with both issues… through Estate Planning.

 

An Estate plan lets you decide while you are healthy, how, when and to whom, the proceeds of your accumulated wealth will be distributed.

 

You probably know you need to have a Will. Along with that, your estate plan package includes a Power of Attorney, Personal Health Directive and Life Insurance Policies.

 

But these are only one part of the puzzle you should solve for your family now, so your final estate settlement will go as smoothly as possible?

 

There are many pitfalls that can get in the way of fulfilling your final wishes:

 

Things like Taxation…Family conflict over your will…Excessive legal costs …Double taxation… and other legal and tax issues.

 

To design an estate plan that will work for you and your family, you need the help of several professionals:

 

A lawyer with estate experience, who knows the legalities of wills, powers of attorney and personal health directives.

 

An accountant familiar with estate taxes.

 

Brokers with Life Guard Insurance can refer you to the best Estate & Tax Lawyers and Accountants in Canada to assemble your estate planning team.

 

Your insurance broker also plays a significant role in your final Estate Plan, to help you optimize your wealth and the legacy you leave behind to your loved ones or charitable organizations you support.

 

An exempt insurance policy is the most cost effective way to create tax-free cash flow at death.

 

This easily accessible cash is very beneficial during settlement of assets. Life insurance proceeds can be used to pay off the final tax bill to the estate and preserve the wealth in the estate.

 

Life insurance proceeds can also be used to fund charitable donations through the estate, which creates very favorable tax deductions.

 

It is also a way of moving wealth to a direct named beneficiary without public disclosure of assets through the will and wealth losses due to legal, executor and probate fees.

 

Take a look at the list of ten estate planning tips on our website so that things go smoothly for your heirs later on.

 

Do you have a solid estate plan in place? If not, or if you would like a thorough review of your estate plan, contact Life Guard Insurance.

 

 Life Guard Insurance is in partnership with a network of professional life insurance brokers across Canada. We can put you in contact with an insurance broker in your area who will give your unique situation the special attention it deserves.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video 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 video about Estate Planning in Canada would be very much appreciated.