Ten reasons for using a Life Insurance Broker

Finding the correct life insurance policy can be easy, difficult, impossible, or just extremely frustrating depending on how much time you have to research it and the people who you end up talking to on the phone. Each person you phone with regards to a policy is going to try and get you to sign their policy by telling you about all of the good things, while conveniently glossing over some of the not so good things. Unless you are an expert at reading contract language there is a strong chance that you signed for something you may not have wanted. This is where an insurance broker comes in.

They know the product.

By definition an insurance broker sells insurance. Or to be more precise, in today’s world an insurance broker will connect you with an insurance company and broker the policy deal between you and them. They are aware of what products exist, what the product is and what it means to you in terms of money out and money in.

They know the people.

As insurance brokers tend to deal with lots of people, each with different situations and requirements they tend to have a large portfolio of insurance companies that they deal with, on a daily basis. They know who to phone at these companies to get quick answers. They have contacts that they regularly speak to, who you as a member of the public may never get in touch with. People who can make your process of getting a policy easier.

They know the language.

Insurance contracts are steeped in legal jargon. They have to be, there is a lot of money involved in each policy and every eventuality has to be covered in the document that forms the policy you sign. This language is difficult to follow and comprehend to the layman, but to someone who deals with it every day, it is simple.

Experience with problems.

Hopefully when you decide to take out a life insurance policy there will be no problems. But this is life, there could be lots of problems. You may find that your scuba diving hobby is making the insurance company hesitate and that they are asking you lots of questions about it. You gave up smoking two years ago and the company want a blow by blow account of your smoking history. All of this delays you getting a policy with you sending in the form, getting questions back, replying, etc. Back and forth constantly. An agent will be able to ask you all of the relevant questions, then only come back when they have definitive answers.

It’s their job to shop around.

You obviously want the best policy for the minimum monthly outlay. Unless you get extremely lucky with your first enquiry to an insurance company, this is going to involve you phoning lots of companies to compare prices. Even if you use the internet to do the comparisons before you start phoning you are still going to have to look through a lot of sites before you narrow down your search. A broker will be able to ask you how much do you want to spend, what coverage are you looking for. Then just by looking in his laptop, or case they will be able to pull out a list of companies that have policies to meet your requirements.

They can answer your questions in layman terms.

Phone an insurance company up and query page 3, paragraph 6, sub section 12 of your policy. When you finally get through to someone who is qualified to answer you, the answer they give you will be in pure insurance language, leaving you more confused than when you started. A broker is there to make sure that you are answered in laymen terms, in terms of what it is going to cost you, what the pros and cons are. Basically they are there to explain it to you in a way that you can understand.

They should be impartial.

A good insurance broker should be impartial. They should not be affiliated with any particular insurance company and be able to suggest a number of companies to you when you ask them about available policies. It is there job to find you the best value policy for your situation, not the highest paying customers for an insurance company. If an a broker is unable to recommend a number of different companies, find another broker.

They can sort out problems.

You are travelling to Russia next week on business and need to check if Russia is still a restricted country, and will travelling there affect your life insurance policy. You don’t have time to sit on hold for days on end trying to find someone in your insurance company who actually knows the definitive answer. Your broker is there to help you. Field the question to them, let them use their contacts to find out the answer. Then when they have they can get back to you and let you know if there is anything you need to do.

They are one stop contact.

In theory, once you have a policy you are locked into a company. That company will have a customer support department and should be able to answer your question or handle your problems. In the real world this is not always the case. There are support departments for billing, claims, questions, legal and so on. With a broker, they are a one stop shop for your insurance dealings. Have a problem with your monthly payment; field it to them, a problem with a claim; let them handle it. By using a life insurance broker, you should only ever need to speak to one person.

Peace of mind.

Insurance is complicated, there is no question of that. When you sign that policy are you sure that every “t” is crossed, and every “i” dotted? That’s what a life insurance broker is for, to make sure every thing has been covered and to give you the peace of mind you require.

In conclusion, most people are capable of going out and finding a company that will offer them life insurance, and most will find a policy that suits them to a certain extent. But is it worth the chance that when you found the policy you liked, you missed something. Something that could potentially cost you thousands in the future ?

To put it another way; when your car needs to have the breaks replaced, do you take it to a mechanic and make sure that the job is completed properly, or do you have a look on the internet and do the job yourself, risking the scenario that when you need to stop you might not have done the job as well as should have been expected?

Life insurance for cancer sufferers

Insurance companies are in the profession of making money from their policies, they take a gamble on each policy they issue that they will gain more in premiums (and interest accrued on investing those premiums) they will be required to pay out in claims. It is not in an insurances company’s best interest to take on a policy that is likely to require a higher pay-out, than the amount paid in.

With regards to life insurance this poses a problem for people who are known to have existing medical conditionals, inherited diseases, or are diagnosed as critically ill (or any other factor that may reduce their life expectancy).

It is not in a life insurance company’s interest to offer them normal life insurance policies – they will probably lose money on the deal.

How does this affect Cancer patients, specifically those recovering from cancer treatment?

First of all, if you started your life insurance policy before you were diagnosed as having cancer, your insurance company cannot – by law – cancel the policy. This is especially important with regard to permanent insurance, and your policy is guaranteed for your whole life (as long as you keep up the payments). With “term” life insurance problems can arise at the end of the “term” as your insurance company may be loathed to renew the term upon news of your diagnosis, even if you are in recovery.

With annual term policies, you are advised to check your documentation, as although the concept of annual term policies is that the insurance company guarantees to renew you policy each year. Also there may be the ability to convert the Term insurance into a permanent product without having to prove good health.

Some insurance companies will outright refuse to accept a policy for someone who has, or is recovering from cancer, whereas others will accept a policy depending on the type of cancer.

Companies that do insure cancer, or ex-cancer patients will normally accept a policy holder if they had prostate, breast cancer (usually only stage one) or testicular cancer. They may also accept clients who had a cancer that was caught, and treated at an early stage.

Insurance companies that do provide Insurance for those recovering from cancer will normally require the following:

  • You must have gone for more than a specific period since your last cancer treatment (this can be as much as 5 years, but varies from company to company).
  •  You must be medically diagnosed as cured, or in remission.
  • You must have medical evidence (a certificate from your medical advisor) of your continued good health.

Even with the above conditions met, most life insurance companies will charge you a greater premium than that offered to the general public.

Sometimes it may be easier to get life insurance through your work if you are a recovering cancer patient. This is due to the fact that certain insurers are allowed to insure a whole collection of people (usually over 50) without individual medical conditions being taken into account.

Facing the possibility of not being able to obtain insurance because of your current or previous condition, it may be worth your while looking at your insurance needs:

  • Are you looking for insurance to pay off existing financial commitments in the event of your untimely death? You can opt for paying larger premiums to the company that you hold a debt with so as to clear it as early as possible.
  • Do you require insurance to take care of your funeral costs? A simple savings plan may be your best choice here, making sure that enough is put by and safe in an account you hold to pay for any immediate after death costs.
  • Is the insurance required to make sure your family are taken care of in the event of your death? Again a savings plan or investment plan may produce a larger return than a normal insurance policy. This has similar advantages to permanent life insurance, I that you can withdraw from your investment if you require funds for a specific reason (subject to the terms and conditions of your investment plan), and in the event of your death the amount in your investment portfolio will be passed on to your next of kin.

So if you are a cancer sufferer, or recovering from cancer, you do not need to despair that you cannot take out life insurance (or find it too expensive or restrictive to make it viable), you can always use standard investment tools to make sure that your next of kin are not overly burdened financially should you face an untimely death.

Taxation of Life Insurance

Photo of Life Insurance information

How is Life Insurance Taxed

Life insurance can be divided into two types: term and permanent. Term insurance has no investment component and pays out a tax-free death benefit if you die during the life of the policy. Permanent insurance, generally universal life or whole-life is designed to last throughout your life time and often has an investment component allowing you to build up cash values inside the policy in a tax-sheltered manner.

The laws regarding the taxation of life insurance in Canada are anything but straight forward and can be a complex topic; the best possible advice will come from a tax professional that can assess your own individual circumstances. The subject of taxes and life insurance are basically broken down into two main areas; the payments that are made at death, and the payments that are made during life.

When an insured person dies, the life insurance policy is settled in the form of a death benefit that is not subject to income taxes, federally or provincially. Because these proceeds are protected from income tax, life insurance is an ideal way to transfer assets to your beneficiaries.

The second area is a little more complicated in that a life insurance policy can be used as an investment tool. As a universal life or whole-life insurance can have a cash value that can potentially pay dividends or income, it has the potential to outgrow the amount paid in premiums. In those cases, the difference is considered a taxable gain. If the policyholder surrenders their coverage the money that is paid that is in excess of the policies’ ACB is taxable. The ACB is calculated as the premiums paid less the cost of the actual insurance.

It is always advisable to speak with a tax professional as they can help you evaluate the different options available to you. SolutionsFinancial.ca helps Canadians get in touch with financial advisors who can help you get the coverage you need, at the best possible price.

Return of Premium Life Insurance

Family signing life insurance policy

Return of Premium Life Insurance

So you’ve decided that you want the protection that only life insurance can

provide for you, now what? For the majority of Canadians what comes next is a period of online research followed by deciding which particular type of insurance will best cover their needs. The choices that you have boil down to three basic types: term life insurance, whole life insurance and return of premium (ROP) life insurance. If you’ve made it this far, chances are you’re more than familiar with both term and whole life insurance but a little unsure as to what exactly return of premium life insurance is and the advantages it offers.

Return of premium life insurance is essentially a hybrid of term and whole life insurance. Like all life insurance policies, it guarantees a death benefit should you pass away. It is similar to term life insurance in that it provides coverage over a specific period of years, and like whole life insurance you do get money back.  But unlike whole life insurance buying return of premium life insurance is a lot more straight forward, in that you only select the amount of coverage you desire and for how long. If you outlive your policy’s term, you get all the money you paid in premiums returned to you.

The cost of return of premium life insurance

Return of premium life insurance is more expensive than term life insurance, but considerably cheaper than whole life insurance plans. As a rough guide, Return of premium life insurance is approximately 50% more than a comparable term life insurance plan. It is important that a return of premium life insurance plan is not mistaken for an investment tool as it offers no returns. It is for this reason many financial advisors suggest a term life insurance, while investing the difference.

We can help

At SolutionsFinancial.ca we know that life insurance shopping can leave most people’s heads spinning, SolutionsFinancial.ca is here to help guide through all the different plans available. If you’re interested in getting the best coverage available at a price you deserve then we can help. All we need is a little information, and we’ll take care of the rest. SolutionsFinancial.ca is simply the quickest and easiest way to life insurance in Canada.