Personal Finance

Life Insurance Q&A - w/ FAQ Section

  • Last Updated:
  • Aug 16th, 2017 3:44 pm
Deal Addict
Mar 14, 2004
2612 posts
156 upvotes
North Etobicoke
I have an older relative who signed up for one of the no medical insurance, mainly because of their age and them being diabetic. One question was "has your diabetic medication changed in the last 6months" After going over the policy with her, she is saying that her diabetic doctor was having her increase her insulin by 10 units in the last 6 months.
The broker is saying that is not a problem because it's not a major change. Is the true?
or should she just cancel the policy and start new.
Simplified Elite Life
http://www.cpp.ca/no-medical-permanent- ... insurance/
Deal Addict
User avatar
Sep 15, 2009
2715 posts
1006 upvotes
Toronto
Menthol wrote:
Feb 22nd, 2017 9:55 pm
I have an older relative who signed up for one of the no medical insurance, mainly because of their age and them being diabetic. One question was "has your diabetic medication changed in the last 6months" After going over the policy with her, she is saying that her diabetic doctor was having her increase her insulin by 10 units in the last 6 months.
The broker is saying that is not a problem because it's not a major change. Is the true?
or should she just cancel the policy and start new.
Simplified Elite Life
http://www.cpp.ca/no-medical-permanent- ... insurance/
If the Broker actually told your relative purposely to not disclose the change in medication, he or she is being untruthful and it could very well lead to the policy being voided if it is found out. Further to this, the broker could lose their license for this. Its an omission of truth when the application specifically asks about a change. If the doctor increased her medication, this should be fully disclosed as it may change the underwriters opinion of risk.

So to answer your question, no it is not true. This change needs to be disclosed.

How old is this person and how controlled is their diabetes? Do they have any other health issues?

Just because someone has diabetes does not necessarily mean they are uninsurable. I find CPP's rates very high. If they really need life insurance they should try to purchase a medically underwritten policy first. CPP should be a last resort.
Certified Financial Planner (CFP)

"Our goals can only be reached through a vehicle of a plan in which we fervently believe, and upon which we must vigorously act. There is no other route to success...."
Deal Addict
Mar 14, 2004
2612 posts
156 upvotes
North Etobicoke
wesboag wrote:
Feb 23rd, 2017 2:37 pm
If the Broker actually told your relative purposely to not disclose the change in medication, he or she is being untruthful and it could very well lead to the policy being voided if it is found out. Further to this, the broker could lose their license for this. Its an omission of truth when the application specifically asks about a change. If the doctor increased her medication, this should be fully disclosed as it may change the underwriters opinion of risk.

So to answer your question, no it is not true. This change needs to be disclosed.

How old is this person and how controlled is their diabetes? Do they have any other health issues?

Just because someone has diabetes does not necessarily mean they are uninsurable. I find CPP's rates very high. If they really need life insurance they should try to purchase a medically underwritten policy first. CPP should be a last resort.
She did not purpose lie, she forgot. She then called the broker to disclose but he said not to worry as it's not a major change in medication. Is this acceptable? or is he lying.
Deal Addict
User avatar
Sep 15, 2009
2715 posts
1006 upvotes
Toronto
While she unintentionally forgot, it should still be reported. The broker should not simply tell you it doesn't matter.....this is not for him to decide whether it is or isn't important. Its not difficult for him to notify the insurer. There is no excuse.
Certified Financial Planner (CFP)

"Our goals can only be reached through a vehicle of a plan in which we fervently believe, and upon which we must vigorously act. There is no other route to success...."
Member
Sep 23, 2013
217 posts
104 upvotes
Windsor, Ontario
Just to clarify, it was a broker, and not someone from CPP head office that she called? I only ask because sometimes people get mixed up with titles.

Wes is right though, look into medically underwritten insurance. I have four clients with diabetes and two are over the age of 55. There was a rating but it's still a better plan than what CPP had to offer.
Newbie
Apr 7, 2014
3 posts
Toronto, ON
Hello,

I would appreciate if anyone can provide me advise.

In 2008 as a newly married couple who purchased a big mortgage at that time, my husband and I purchase the 'Standard Life' Perspecta Universal Life insurance for $400,000 which is now part of Manulife.

Here are the details:
Basic Plan of Insurance: Perspecta Life Policy - Joint Life (First to Die)
Death Benefit option: Increasing
Type of Cost of Insurance: Yearly Renewable Term-100
Shelter Optimizer Option: No increase and no decrease
COI: 0.10667/$1000 however this constantly increases
Insurance Age at Issue:38
non-smoker profile 3
Enhanced waiver on disability, amount to be waived $150 to age 60

Premium information:
Selected Premium: $100.00 monthly

We were presented with a 10% return investment however since 2008 to present date its been an average of 3.39%. This obviously means that the we can run out of cash value sooner than anticipated with the rise of COI.

Upon reviewing the policy I am now questioning whether this was the best option.
Questions:
1. Does this mean I will be paying insurance until the age 100 if both my spouse and I live until 100?
2. Once the policy lapses (100 years), the 400,000 goes out the window, however I may get the cash value (which won't be much since this amount will be used to support the COI, correct?
3. Based on my calculations from now until the insurer of the policy is 89 the monthly cost of insurance would be the following:
$103.41
$111.41
$118.75
$126.08
$134.75
$143.75
$152.41
$162.75
$175.41
$189.75
$205.41
$240.08
$257.41
$282.75
$310.41
$341.75
$360.75
$401.08
$444.75
$493.75
$549.08
$610.75
$679.75
$744.00
$827.00
$922.33
$1021.00
$1135.33
$1262.00
$1401.00
$1553.00
$1719.00
$1900.67
$2081.33
$2268.67
$2473.00
$2705.33
$2976.67
$3285.00
$3623.67
$3994.33
$4400.00
$4843.33

This seems really unreasonable since at the most vulnerable time of our lives, we would not be able to afford the policy.... I took into consideration a 3% yearly increase of inflation which would be approx $1500-2000 monthly at that time. Adding all the COI insurance would exceed the policy pay out by almost 200,000; the yearly cost from 2008-2061 I would have paid approx 629,000.

I understand that insurance is insurance not an investment, however at some point I need to make a decision where to cut my losses.

At the current $120 premium (we increased it in 2012) at the insurer age of 49, I will not have enough cash value to help with the COI. The insurance would lapse.

Should I just continue this is policy and cancel the policy when my mortgage is paid off or until the age of 60 or 65?

Should I look into other options out there? Instead of the term maybe a level option? Not sure if I can go from UL to term insurance?

If any experts in the field that are willing to give me a unbiased advise to what would be my best option I would really appreciated it.

Maybe I am not fully understanding the policy and if some can explain it to me that would be really appreciated.
Any help would be greatly appreciated.
Newbie
Feb 26, 2017
1 posts
I am planning to get a life insurance to a relative who is an agent in Vancouver and I am currently living in Toronto. He said he needs to get a license in Toronto before he could sell me an insurance but he said there's a way we still could do the transaction via electronic/email while he is vancouver and would just claim that we signed up to him when we visited vancouver on a vacation.

question is would we be in trouble later on when we have to claim on something? would the transaction with him will not get void?
Deal Addict
User avatar
Sep 15, 2009
2715 posts
1006 upvotes
Toronto
mixas99 wrote:
Feb 25th, 2017 11:32 am
Hello,

I would appreciate if anyone can provide me advise.

In 2008 as a newly married couple who purchased a big mortgage at that time, my husband and I purchase the 'Standard Life' Perspecta Universal Life insurance for $400,000 which is now part of Manulife.

Here are the details:
Basic Plan of Insurance: Perspecta Life Policy - Joint Life (First to Die)
Death Benefit option: Increasing
Type of Cost of Insurance: Yearly Renewable Term-100
Shelter Optimizer Option: No increase and no decrease
COI: 0.10667/$1000 however this constantly increases
Insurance Age at Issue:38
non-smoker profile 3
Enhanced waiver on disability, amount to be waived $150 to age 60

Premium information:
Selected Premium: $100.00 monthly

We were presented with a 10% return investment however since 2008 to present date its been an average of 3.39%. This obviously means that the we can run out of cash value sooner than anticipated with the rise of COI.

Upon reviewing the policy I am now questioning whether this was the best option.
Questions:
1. Does this mean I will be paying insurance until the age 100 if both my spouse and I live until 100?
2. Once the policy lapses (100 years), the 400,000 goes out the window, however I may get the cash value (which won't be much since this amount will be used to support the COI, correct?
3. Based on my calculations from now until the insurer of the policy is 89 the monthly cost of insurance would be the following:
$103.41
$111.41
$118.75
$126.08
$134.75
$143.75
$152.41
$162.75
$175.41
$189.75
$205.41
$240.08
$257.41
$282.75
$310.41
$341.75
$360.75
$401.08
$444.75
$493.75
$549.08
$610.75
$679.75
$744.00
$827.00
$922.33
$1021.00
$1135.33
$1262.00
$1401.00
$1553.00
$1719.00
$1900.67
$2081.33
$2268.67
$2473.00
$2705.33
$2976.67
$3285.00
$3623.67
$3994.33
$4400.00
$4843.33

This seems really unreasonable since at the most vulnerable time of our lives, we would not be able to afford the policy.... I took into consideration a 3% yearly increase of inflation which would be approx $1500-2000 monthly at that time. Adding all the COI insurance would exceed the policy pay out by almost 200,000; the yearly cost from 2008-2061 I would have paid approx 629,000.

I understand that insurance is insurance not an investment, however at some point I need to make a decision where to cut my losses.

At the current $120 premium (we increased it in 2012) at the insurer age of 49, I will not have enough cash value to help with the COI. The insurance would lapse.

Should I just continue this is policy and cancel the policy when my mortgage is paid off or until the age of 60 or 65?

Should I look into other options out there? Instead of the term maybe a level option? Not sure if I can go from UL to term insurance?

If any experts in the field that are willing to give me a unbiased advise to what would be my best option I would really appreciated it.

Maybe I am not fully understanding the policy and if some can explain it to me that would be really appreciated.
Any help would be greatly appreciated.
Hello mixas99,

This isn't the first time I have seen these policies sold to unsuspecting individuals by insurance reps either uneducated/inexperienced and/or just out looking to make a quick buck. Joint first to die certainly has its merits in certain cases, but not on a yearly renewable basis (cost) and never with an expected annual return of 10% on the investment portion (this is after fund MER's). As you have illustrated, YRT costs become unaffordable to most as you get older. Reason of course is your statistical likelihood of dying gets that much greater. The problem is, these agents either unknowingly or ignorantly illustrate unearthly rates of return to suggest the policy will "maintain" itself after x amount of years or curb the increasing cost. This is rarely if ever possible.

If you are going to buy a joint first to die (or even a last to die), in my opinion it should be only be as "level" cost of insurance. Don't kid yourself, you will pay for this feature, but at least it’s guaranteed. This way you do not have to worry about sustaining a required rate of return. You are paying for the pure cost of insurance.

To answer your questions:

1) Yes you will pay until the first person passes. Could be tomorrow, could be age 100, you don't know this. Further, once a policy owner reaches age 105, the policy is considered contractually paid up and no further payments are required. The likelihood of this occurring is VERY rare, even more so on a JFTD.

2) The policy will not lapse at 100, unless the first of you die at that point or you cancel the policy. If any remaining cash value is in there (next to impossible), it is yours - taxable of course.

3) Increase in cost looks within range. Clearly it’s going to become unaffordable.

If you still need insurance coverage you should have insurance. If you still have your mortgage and the surviving spouse would be left in a precarious financial position, you need insurance. Your particular circumstances will dictate what you need in terms of coverage (if any) and for how long. I recommend you go through a needs assessment with a qualified insurance advisor - not someone simply looking to sell you the flavor of the month. The needs assessment will look at incomes, debts, other financial needs, etc in helping you determine what your risk is - and how to protect against such.

As unbiased as I am, I would recommend you look into new coverage (either term) or permanent (level) if you have estate planning needs as well or a desire to continue coverage past say age 75-80. If all you want to cover for is your mortgage debt, purchase a term 10, 15 or 20 depending on mortgage amortization (decreasing this amount every 5 years or so as the mortgage is paid down). If you are around age 47 (based on your purchase date and age of current policy) - a term 10 for each of you (for $400k) shouldn't cost more than $85/month, a term 15 - $145/month or term 20 for $155/month. If you reduce the coverage amount every 5 years or so even cheaper.

In any event never cancel your current policy until you have other coverage in force. You don’t know how your insurability may have changed over the past 9 years.
Certified Financial Planner (CFP)

"Our goals can only be reached through a vehicle of a plan in which we fervently believe, and upon which we must vigorously act. There is no other route to success...."
Deal Addict
User avatar
Sep 15, 2009
2715 posts
1006 upvotes
Toronto
fbmendoza wrote:
Feb 27th, 2017 10:17 am
I am planning to get a life insurance to a relative who is an agent in Vancouver and I am currently living in Toronto. He said he needs to get a license in Toronto before he could sell me an insurance but he said there's a way we still could do the transaction via electronic/email while he is vancouver and would just claim that we signed up to him when we visited vancouver on a vacation.

question is would we be in trouble later on when we have to claim on something? would the transaction with him will not get void?
He's going to get licensed in Ontario just to sell you a life insurance policy? Craziness. If he is willing to get licensed in Ontario, why not.

Your relative cannot sell you (an Ontario resident) a life insurance policy if he is not licensed in Ontario. Further, he should just claim he was in Toronto or you were in Vancouver, from a compliance point of view, he would be lying and that is against his duty to the insurance body and the client (you).

Further, most insurers require face to face (original) signatures/witnesses.

How large is this premium (or how new is he to the insurance business) that he is willing to get licensed for it and risk fines - or worse, losing his license?
Certified Financial Planner (CFP)

"Our goals can only be reached through a vehicle of a plan in which we fervently believe, and upon which we must vigorously act. There is no other route to success...."
Newbie
Jan 1, 2007
50 posts
3 upvotes
Toronto
wesboag wrote:
Feb 27th, 2017 5:04 pm
Hello mixas99,

This isn't the first time I have seen these policies sold to unsuspecting individuals by insurance reps either uneducated/inexperienced and/or just out looking to make a quick buck. Joint first to die certainly has its merits in certain cases, but not on a yearly renewable basis (cost) and never with an expected annual return of 10% on the investment portion (this is after fund MER's). As you have illustrated, YRT costs become unaffordable to most as you get older. Reason of course is your statistical likelihood of dying gets that much greater. The problem is, these agents either unknowingly or ignorantly illustrate unearthly rates of return to suggest the policy will "maintain" itself after x amount of years or curb the increasing cost. This is rarely if ever possible.

If you are going to buy a joint first to die (or even a last to die), in my opinion it should be only be as "level" cost of insurance. Don't kid yourself, you will pay for this feature, but at least it’s guaranteed. This way you do not have to worry about sustaining a required rate of return. You are paying for the pure cost of insurance.

To answer your questions:

1) Yes you will pay until the first person passes. Could be tomorrow, could be age 100, you don't know this. Further, once a policy owner reaches age 105, the policy is considered contractually paid up and no further payments are required. The likelihood of this occurring is VERY rare, even more so on a JFTD.

2) The policy will not lapse at 100, unless the first of you die at that point or you cancel the policy. If any remaining cash value is in there (next to impossible), it is yours - taxable of course.

3) Increase in cost looks within range. Clearly it’s going to become unaffordable.

If you still need insurance coverage you should have insurance. If you still have your mortgage and the surviving spouse would be left in a precarious financial position, you need insurance. Your particular circumstances will dictate what you need in terms of coverage (if any) and for how long. I recommend you go through a needs assessment with a qualified insurance advisor - not someone simply looking to sell you the flavor of the month. The needs assessment will look at incomes, debts, other financial needs, etc in helping you determine what your risk is - and how to protect against such.

As unbiased as I am, I would recommend you look into new coverage (either term) or permanent (level) if you have estate planning needs as well or a desire to continue coverage past say age 75-80. If all you want to cover for is your mortgage debt, purchase a term 10, 15 or 20 depending on mortgage amortization (decreasing this amount every 5 years or so as the mortgage is paid down). If you are around age 47 (based on your purchase date and age of current policy) - a term 10 for each of you (for $400k) shouldn't cost more than $85/month, a term 15 - $145/month or term 20 for $155/month. If you reduce the coverage amount every 5 years or so even cheaper.

In any event never cancel your current policy until you have other coverage in force. You don’t know how your insurability may have changed over the past 9 years.
Mixas99,

I agree with wesboag. 10% performance is pretty unrealistic granted even most funds barely break an annual 8% mark on a 10 year performance scale. Unless Manulife gives additional bonuses when you hit a certain %, it's going to be very hard to hit 10% year after year. In terms of your policy, aside from surrendering your policy you can consider the following:
1) Ask Manulife if they can convert it to a Level pay policy. Obviously your premiums will shoot up right away but at least you know what you'll have to pay going forward making it easier to budget your monthly / annual finances. Not all insurance policies allow that, but if Manulife allows that, it might be an option for you.
2) Review your funds and perhaps make some tweaks. 3% annual seems like you've invested in conservative funds. I don't know your risk tolerance so maybe indeed the funds you chose fit your risk analysis at the time.
3) UL policies have a max range above the Cost of Insurance which goes directly into the "investment" portion of the policy. Perhaps you would like to put more per month to the policy so it goes into the investment portion. Obviously this still depends on your fund performances so whatever you decide to put in "additionally" still grows at the 3% (or whatever performance your funds will grow at). By putting more into the policy will allow the cash value to increase at a quicker pace hopefully outpacing the increase in premiums.

I'm usually hesitant in telling my clients in surrendering policies unless it's absolutely the last resort. Insurance policies get more expensive as you grow older. So whatever you're currently paying, and the coverage you get at the moment will more than likely be cheaper than if you were to get a quote a few years later. Aside from that, Insurance policies in general do get rate adjustments here and there (e.g. two policies with the exact same criteria - same age, underwriting etc. from early 2016 and now would show the policy in 2016 being cheaper). So while surrendering your policy and getting a term insurance might make sense from a cost of premium point of view, but don't forget if you ever choose to get life insurance again in the future it's hard to foresee what your medical history would be like and your age might cause you to pay the same amount but with much less face amount.

I suggest you to revisit your portfolio with your advisor (or go to a new one) and make some changes. Ultimately, it boils down to what you're looking to do with the life insurance policy. Is it just to cover the balance of the mortgage in case anything happens or are you looking for more e.g. estate / retirement planning? Depending on your needs (Needs Analysis), your advisor can then make changes to your portfolio as needed.
Member
Oct 3, 2008
209 posts
10 upvotes
If there's any life insurance brokers that can deal with BC please message me
Deal Addict
User avatar
Sep 15, 2009
2715 posts
1006 upvotes
Toronto
xGoodwillx wrote:
Mar 7th, 2017 10:23 pm
Is it possible to get a loan against my whole life insurance policy?
Yes, using the cash value as collateral. It's often cheaper through a bank than going directly to the insurer for the loan. If you absolutely need a loan my first suggestion would not be to go this route. It may seriously impact the death benefit down the road. No line of credit? No other liquid assets? Only take a policy loan if you are out of options OR if it was part of a larger plan from the get go.
Certified Financial Planner (CFP)

"Our goals can only be reached through a vehicle of a plan in which we fervently believe, and upon which we must vigorously act. There is no other route to success...."
Deal Addict
Apr 11, 2006
4516 posts
807 upvotes
Mississauga
Does it make sense for parents to buy whole life insurance for their newborns, since premiums will be dirt cheap and their child will be set for life from a life insurance perspective?

Let's assume you get $300+K coverage or something to account for inflation by the time they get older.
Newbie
Mar 7, 2017
28 posts
Hi,

Is this Teacherslife plan any good?

I have just read all the 140 post and still not sure what to do?

Age :
Wife 33
Me 34
4 year old.

Income :
Wife 50k Me: 72k

Mortgage 140 000
Already have Life insurance with work at X2 salary for both of us.
Have 100k in RRSP and TFSA
Live in Ontario

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