Life Insurance –Questions and Answers you need to know.

Life Insurance –Questions and Answers you need to know.

Last night; during my weekly volunteering at APC and the food bank, the subject of life insurance came up and I realized that not everybody knows why it is important, who can sell insurance and what would be considered good or appropriate coverage. As a result I have written the following post in order to answer these questions and shed light on what coverage is right and answered the questions you need to know. Mr. Toma this post is for you.

Why we need life insurance?

To answer the question of why we need life insurance at all we have to look at the reason behind the creation of life insurance and where and when it should be applied. Life insurance was originally designed to deal with the three predictable risks which can occur in the course of a persons lifetime.

The first risk is that of premature death. Now we all have to agree that we know that people pass away every day and that this is an unavoidable. However, when some one passes on to early it can have a devastating affect on our families and put undo stress and financial burdens on those we leave behind. Life insurance is a product that can help individuals ensure that this burden is reduce or even eliminated. For example if a husband and father were to die in his early forties, he may be leaving behind the following for the surviving spouse to deal with above and beyond the emotional component.

1. Funeral Costs
2. Outstanding Mortgage
3. One income to cover the same expenses prior to death
4. Required care giver to assist with taking care of the child
5. Education financing for the child
6. Less resources for planning the surviving spouses retirement

The second risk insurance address is that of disability and sickness.

Disability and sickness can both have severe consequences. These can range from a loss of income due to inability to work, to medical expenses, to requiring lifetime support and assistance. Using the same example above, let us imagine that the father did not die but was in a car accident which rendered him paralyzed. I am sure that we can agree that this is not a pleasant thing to think about, however it is no outside the realm of possibility.

Much like the requirements in the last example we would be leaving the wife with many new responsibilities and costs. Instead of funeral costs, she would need to deal with the ongoing costs of caring for someone who could not care for themselves and may even have to find a new residence or do some major renovating to accommodate things such as a wheelchair, appropriate bathroom facilities and also ongoing medical needs and treatments.

Given all this added responsibilities it is easy to see that there will be a great impact on the quality of life of the entire family. Now imagine if there were no insurance coverage, no resources to fund the medical costs, an inability to do the renovations, and perhaps the second job the wife would need just to cover the every day expenses. We can quickly see now the need for some sort of coverage to not only replace the missing income but to also provide some on top of that for the additional medical costs.

The last predictable risk is associated with old age. In today's society, we typically equate old age with retirement. Retirement generally means a loss of income, but this can be a very expensive time. Despite the fact that we are living longer lives there is a great risk that we will be affected by a debilitating disease which would require some sort of ongoing long term care as a result.

We all would like to think and believe that if one of our parents was afflicted by such an event that we would be able to care for them, but this is not always the case. Alzheimer's and Dementia are two of the biggest concerns for our aging population total and these to illnesses can be difficult to deal with. Not everyone is equipped to handle such an event despite our best intentions. In 2011 the Alzheimer’s Society of Canada estimated that 14.9% of Canadians over the age of 65 were afflicted in some way or form. Although we have excellent medical coverage in Ontario and Canada, not all long term care is covered. In Ontario, the Ministry of Health and Long-term care regulates, inspects and sets out accommodation fees for all long-term care homes which can range from $1,731.62 to $2,438.81monthy.

As you can see from the above three predictable risks insurance can play a key role ensuring not only our quality of life, but that of our families and loved ones.

Who can sell life insurance?

The second question I would like to address is who can sell life insurance?

As with most industries Life Insurance is regulated at a Provincial level and individuals who sell these products are required to have a valid license in the province that they are working in and operate under the watchful eye of The Financial Services Commission of Ontario. These licenses are issued only after vigorous private and provincial educational and testing requirements are met and have ongoing learning requirements.

Another mandatory requirement of a seller of these products is Error’s and Omission insurance coverage which protects the consumer against any human error that may occur when purchasing insurance. So be sure to ask for proof of these two things before dealing with anyone.

Now that we have dealt with the individuals, lets move on to the carriers and companies who issue the insurance products them selves.

The Office of the Superintendent of Financial Institutions (OSFI) conducts regular reviews of the reserves of insurers to make sure they are properly funded. OSFI is a federal government body charged with regulating the solvency of all sorts of financial services companies, such as banks and insurers.

In 1990, the insurance industry in Canada got together and formed an insurer whose primary role is to deal with the bankruptcy of an insurer. Originally known as CompCorp, this entity is now known as Assuris.

In the event of a failure of an insurer, Assuris steps in and makes every effort to make sure that beneficiaries who are owed benefits get what they are supposed to. Basically, Assuris pays benefits during the bankruptcy, when it is normally not possible for the bankrupt insurer to pay any benefits.  

Assuris works with other insurers, and organizations such as the Canadian Life and Health Insurance Association (CLHIA) to get other insurers to buy the business of the bankrupt insurer. The insurer who ultimately ends up buying that business also buys the responsibilities associated with those policies. Assuris makes certain minimum promises, so that clients know that they will receive something no matter what in the event of the failure of an insurer.

Insurance companies are also rated by a third party; called AM Best, so that consumers can make informed decisions as well as independent sellers such as me.

What coverage do I need?

This is one of the most important questions to have an answer to as it will affect the bottom line for you the customer and the amount of premiums you will have to pay.

I know that a lot of you surf the web and love instant quotes, but when we are talking about decisions that will have a major impact in your life should you really be doing a five minute online transaction? The answer is no.

In order to ensure that you have the right comprehensive coverage you should sit down with an agent and prepare what is called a needs analysis. This process is very in-depth and takes time and so it should. Consider life insurance like any other investment you make and give it the due diligence it deserves. Every one has different life styles and personal needs and your insurance likewise will need to be just as diverse. Stage of life, martial status, estate planning and many other factors are involved in putting the right coverage (s) in place. The best way to ensure that your are properly covered is to work with an independent broker who has access to many carriers and can help you develop your needs analysis and find coverage best suited to your unique situation.

To learn more about the advantages of dealing with a broker or to get helpful information and guides visit www.protectingwhatmattersmost.com.

Edgar Schuchardt

416-806-5813

Cancer, Are the Odds in your favour?

It’s not a topic that any of us like to talk about, but awareness can save your life. In recent years this concept of awareness has taken on many forms including Movember, those gross rear end posters urging men to check their butts, breast cancer walks and, well you get the picture. This April is Cancer is awareness month, you probably will notice the Daffodil pin worn to raise support and get people talking.

You don't have to look far to find someone touched by Cancer.  A new survey by the Canadian Cancer Society finds that 3 out of 4 Canadians have been affected through diagnosis one way or another.  A little more than half of those say they didn't feel prepared to support themselves or loved ones' diagnoses with cancer.

Almost everyone I speak with knows someone in, or close to their families who has been afflicted by Cancer. But despite that fact, Critical illness and other insurance products are looked down at and even compared to buying a car from a low down greasy used car salesman. Except, of course, by those who have actually experienced a major illness, but at that point it is too late.

This topic is actually hard to talk about, even for myself. I saw my first mother in-law deteriorate before my own eyes as the Cancer ravaged her body, while we were left feeling helpless and unable to stop its progression.  She and several other people close to my family have experienced a lot of pain and even death due to Cancer.  And it is because of this reason I feel responsible and even believe it to be a duty to inform people about the risks to themselves and their families.

I want to stop here and ask you to think about those people who are closest to you. I want you to picture them in your mind, remember them having good times, laughing, celebrating and enjoying life. This is the way we want our love ones to feel all the time, but the reality is, tough times come and usually at the worst times. I bet that when you were picturing your family and friends that there was at least one person who would fit into this tragic topic. A friend or spouse of a friend who has experience the pain of Cancer, I know that it wasn’t nice to think about, but we have to.

The good news is that the medical industry is continually battling this and other major diseases and survival rates are improving. The only problem is that we are unprepared financially to deal with this type of life changing event. Here are just a few well known people who have been affected by a major illness:

Sheryl Crow,

Mario Lemieux,

Lance Armstrong,

Michael J. Fox

I know, I know, you think that it will never happen to you ………..until it does.

The problem here is that we can’t imagine, or simply don’t want to imagine, the unimaginable. No one hopes to get sick or ill, no one even wants to think about it. Come to think about it no one typically wants to be around it. I would say about 80-90% of the people in my life dread going to the hospital.  But the reality is that 3 out of 4 will be afflicted by this disease, this means the odds are not in your favour.

So the question remains, how do we prepare for this? And the answer is the same for everything in life, with planning and preparation. Some people can afford the financial burden of an event like this, or are covered by an employment plan, others cannot. For the majority, I say that Insurance is the only way to go and you should cut costs elsewhere to get it done.

Think about what matters most in this life, that fast car, that new gadget, that big TV? Or is it your life and those people you and I surround ourselves with, those we love, those who count on us to be there when they need us. I want to make sure you protect what matters most.

I suggest that at a minimum your Life Insurance coverage should cover your debts and passing. The preferred situation would be providing for your loved ones in your absence as well as protecting your retirement and estate planning from any unplanned pillaging of funds due to a serious illness.

You insure your house and your car, things that can be replaced, why do you not insure yourself, something your family can never replace?

For more information about affordable coverage visit www.protectingwhatmattersmost.com

Written by Edgar Schuchardt – Life Insurance Advocate & Agent

April 8, 2015