TEST YOUR FINANCIAL IQ – Life Insurance
As part of a mini-series, we challenge you to test your understanding of the myriad of life insurance and financial services products on the market today. You can be the master of your own financial planning … with a bit of advice and guidance from Safeway’s advisors provided at no charge to you. Our Life Insurance & Financial Services specialists await your call!
CHAPTER 1 – LIFE INSURANCE
Life Insurance seems to be the most widely-accepted financial services product to buy – usually bought when a life event of some kind occurs, such as getting married, buying a house with a mortgage, establishing a new business, having kids and planning for their education, and, of course, when one addresses the back end of life for Estate Planning purposes. The challenge is often to keep the premium affordable both in the short- and long-term. Rest assured that we can always match your budget, so let’s take that off the table. Test your knowledge now, and call Safeway if you’d like more details.
- When are life insurance products cheapest?
ANSWER: When you`re young. Also, parents should consider setting their kids’ life insurance up as early as possible to give them a head start. You never know which way life will take you, so it’s best to plan for the worst, and if your good fortune holds, end up with the best. Safeway surveys all independent insurance companies and provides the most competitive life insurance pricing.
Sample pricing (as of May 31, 2016) for a female aged 25, Non-Smoker, best health:
$100,000 of Term 10, where the premiums increase each 10 years and coverage eventually runs out, with no money back at expiry or on cancellation — $6.97 per month
$100,000 of Term 20, where the premiums increase each 20 years and coverage eventually runs out, with no money back at expiry or on cancellation — $8.78 per month
$100,000 of Term to age 100, where the premium remain level until age 100, with some cash values built in — $43.11 per month
You may find that some combination of long- and short-term coverage makes sense to cover off family rearing years and mortgages, as well as final expenses of death at any age.
- When should I open a plan?
ANSWER: Again — when you`re young. If your parents haven’t started this ball rolling, you should do so as soon as you start earning income to get the lowest premiums. Premiums rise with age and adverse health history. The general rule of thumb is to sock away 10% into savings accounts (such as RRSP, TFSA), and buy your first life insurance as soon as you’re settled into a full-time job.
- Does it matter if I am single or married?
ANSWER: Really the answer is no, but perhaps the more relevant question is: Will the loss of my earnings or savings matter to anyone? You may be a single parent, or a single child with a dependent relative. What matters is the loss of your financial support to those who depend on you, and then life insurance to replace those finances when you’re gone does matter. So single people should think ahead, and again, buy life insurance when you’re young and it’s inexpensive. If you`re married, likely you rely on both incomes to support your lifestyle and therefore you will want to insure the loss of both incomes.
- Do I have to buy Mortgage Insurance?
ANSWER: No, unless the Mortgagor insists as part of your loan. Still, if you care to ensure your family has a roof over their head when one of you passes away prematurely, Life Mortgage Insurance is a Must. Just be sure to buy it through an independent broker like Safeway, not a bank, for the best product and premium selection short- and long-term. Just a few advantages of your Safeway plan over that of any bank:
+ Protects your family – you can name your family members as recipients of the proceeds instead of the bank and they may continue the mortgage payments instead of being forced to renegotiate a new more expensive mortgage.
+ Gives you control – you own the policy, choose the beneficiary, and select the type of coverage you want – usually at a much improved premium!
+ Is fully portable – your plan will continue when you move to a new home and/or new mortgage, and you don’t necessarily have to buy a more expensive policy (if you are older).
+ Provides flexibility – upon death, your family has the option of paying off the mortgage or investing the funds if the economic conditions warrant it.
+ Allows shopping for interest rates – upon renewal, you are not tied to one lending institution and can shop around for a better mortgage rate.
+ Offers you a choice of plans and benefits – you choose the type of policy and benefits you want. Term plans can be converted to a permanent plan, usually without a medical.
+ Gives you a choice of amount of coverage – you choose the amount of coverage you require and the amount of coverage you require and the coverage does not decrease as the mortgage is reduced.
+ Provides stable coverage – your customized plan has a built-in grace period from 30-90 days for missed premiums.
+ Expert advice – deal with a professional financial services representative. All your insurance and financial services matters can be processed through one broker.
Sample Mortgage Insurance for male age 30 Non-Smoker, best health for $100,000 — $10.08 per month (as of May 31, 2016)
- What happens when I have kids?
ANSWER: Aside from more expenses and less sleep … kids mean more responsibilities. Ensure they are protected if you and/or your partner are not around during their growing years by properly life-insuring yourselves – and don’t forget to include computations for University or College tuition in the event of your premature passing.
- I have Group Benefits at work; isn’t that enough?
ANSWER: Maybe Yes, Maybe No. Maybe Yes, if you’re single and have no dependents. Maybe No if you have a spouse, family, larger income, larger debts (including a mortgage, bank loan or line of credit). Group Life Insurance is often for a limited amount and is not portable to your next job. Be proactive instead of reactive for preferred pricing by talking to our Financial Services Advisors as soon as possible. Take control of your family’s financial future out of the hands of your employer and into your own hands. Remember, you might change jobs and/or lose benefits over time, but your private insurance is always in your control.
- I don’t have Group Benefits at work; what should I consider?
ANSWER: The short answer is: Call Safeway now. We can build a Full Benefits Plan which includes the same elements offered in traditional Group Benefits at work: Life Insurance, Disability Insurance, Critical Illness Insurance, Healthcare, Dental Care and more!
- I’m self-employed or in a partnership; what should I consider?
ANSWER: If you have the initiative and know-how to be self-employed, don’t overlook insuring your earning power, your overhead, your financial obligations, and your Key People should something happen to affect your bottom line. We can tailor a package to suit your financial objectives. We can certainly provide Group Benefits to your staff so you can hold onto those important assets.
- I’m old; what do I need life insurance for?
ANSWER: Estate planning happens at all ages, if you care about what you leave behind to your chosen beneficiaries. Death brings Estate Taxes at the highest marginal tax rate. Don’t force your beneficiaries to sell your assets at a loss just to pay the Tax Man. Proper planning can reduce your estate’s financial burden and preserve the value of your Estate. You didn’t think about this when you were young, but it may not be too late. Call Safeway now.