Insurance
Insurance is an important part of any financial plan. Insurance is designed to protect you and your family for unforeseen situations. We are all very concerned about insuring that our material goods such as our house and car are looked after but what about your earning potential? The cost of losing your income for 20 years is simple - 20 times your salary - is this more or less than the value of your house or car? We think nothing of paying our car or house insurance as we know that an accident or fire can happen. What about death? A critical illness? A disability? Spending time in a long term care facility? A situation while out of the province? Any of these will affect your ability to pay your taxes, mortgage, grocery bills, etc.
In order to serve clients, Dan Willett is able to offer insurance from 20+Canadian Insurance companies and this number continues to grow as different companies offer different products that uniquely meet his clients’ needs.
There are only two discounts in insurance - health and age. The younger and healthier you are, the lower the cost. Both are items that are largely out of your control.
With insurance you are basically transferring the monetary risk to an insurance company. We look at insurance as protecting your earning potential.
Insurance is not as simple as one might think and as such a simple description of the insurance offered is listed below:
Life Insurance
This is one of the older forms of insurance. This type of insurance is typically used to ensure that loved ones are looked after, debts are paid or a donation is made to a charity after death.
Life insurance comes in a number of different styles. Each has a place in the world and some will work for you and some will not work for you.
Term
Term Insurance is the most common form of life insurance. This type of insurance has a term be it 5,10,15, 20 or more years. Your policy will charge you a set amount for the term, at the end of the term the premium raises to the next contracted rate. Many term policies offer the ability to convert the policy to a permanent type of life insurance. Most term policies will expire at some point so it is considered more like renting insurance rather than owning. This policy works great for covering mortgages, young children, or other short term needs.
Universal Life
This policy is based on the premise buy term and invest the difference. The idea with this policy is there is an investment portion to the insurance. The investment growth in the policy is paid out tax free at death. There are a number of different options on how the insurance is paid for and what investments one can choose for their personal plan. This type of policy requires regular meetings with your advisor if you are actively using the investment portion of the policy.
Participating Whole Life
Participating Whole Life is an insurance policy that gains value based on the earnings of the underlying insurance company. The dividends that may be paid on a yearly basis can be used for increased insurance payouts or cash values that can be used as a loan if needed.
With Life Insurance, each person’s situation is unique and as such a blend of some of these products maybe the best option. For example a young family may need $1 million in coverage for debts and to look after their family but after 65 may need a significantly reduced amount to look after final expenses.
This is why a consultation is needed; it is not like ordering your morning coffee off the menu.
Critical Illness Insurance
This is a newer form of insurance that provides a payout in the event of being diagnosed with a critical illness. Different companies offer different definitions of what is a critical illness but the main ones are heart attack, stroke and most forms of cancer. There is typically a clause that states that one must survive 30 days after diagnosis. The payout is made to you and you can do whatever you want with the payout. The money can be used to pay for a trip around the world, modify your house to make living easier, pay everyday expenses while you are recuperating, etc.
Disability Insurance
This insurance is designed to protect your income in the event you cannot work. Disability insurance can be purchased with different waiting periods and where payments will continue until age 65.
Long Term Care Insurance(main Heading)
This type of insurance is designed to provide payments to look after the cost of having assistance in day to day tasks. Many people think this is something used primarily for people in their later years as this can cover the cost of nursing or retirement homes. Although this is the primary market for this type of insurance younger people may need similar assistance as a result of illness or injury.
Health, Dental and Travel Benefits
With more and more companies reducing costs and people becoming self-employed there is a need to have some form of plan to look after the cost of prescription drugs, dental and other health care costs. Plans can be insured plans where a monthly premium is paid and benefits are set out typically there are maximum values that can be claimed. Another option is a health care spending account where a maximum dollar value is set and the individual(s) can spend as they wish on medical or dental expenses.
Travel insurance coverage is a vital component that needs to be investigated as the cost of emergency medical assistance outside of Ontario can be extremely high. This can cause your financial assets to take a significant reduction in order to pay for these unanticipated costs.
