Personal Finance

Life Insurance Q&A - w/ FAQ Section

  • Last Updated:
  • Oct 12th, 2017 11:41 am
Member
Jan 16, 2009
216 posts
58 upvotes
I've been reading the last few pages of this thread, seems like everyone is going for term, as opposed to whole life insurance.

If the purpose of the life insurance is really just a death benefit and not considering cashing out the life insurance, with all things equal, I know term insurance is cheaper per year, but you need to pay that for x numbers of years until you die. So if you live until 95, and you are only 30, you need to pay 65 years. Whereas for whole life, usually you are done in 20 years or even less with using the dividends. Might turn out paying less than term.

Am I missing something? Why is everyone here so against whole life?
Sr. Member
Nov 13, 2013
641 posts
219 upvotes
OTTAWA
wayneg9999 wrote:
Mar 23rd, 2017 5:47 pm
I've been reading the last few pages of this thread, seems like everyone is going for term, as opposed to whole life insurance.

If the purpose of the life insurance is really just a death benefit and not considering cashing out the life insurance, with all things equal, I know term insurance is cheaper per year, but you need to pay that for x numbers of years until you die. So if you live until 95, and you are only 30, you need to pay 65 years. Whereas for whole life, usually you are done in 20 years or even less with using the dividends. Might turn out paying less than term.

Am I missing something? Why is everyone here so against whole life?
Generally it is assumed you will invest your savings from buying term rather than whole life and your returns will vastly exceed the whole life product which is a conservative investment with very high fees and commissions.

It does have some tax advantages but this mostly comes into play if you are very wealthy. It is also a forced savings vehicle which can be useful for some.
Newbie
Mar 14, 2017
3 posts
Vancouver
SteveDfsin wrote:
Mar 16th, 2017 1:23 pm
I'd recommend a T20 for life insurance for the both of you; for CI, it's hard to say what type of CI you should get without a clear picture of your finances, but you should both have it. I wouldn't recommend a permanent plan (UL, Par, WW) at this point as costs would be higher and may eat away at your cash flow. Stick to a T20 and as your insurance needs reduce, you can decrease coverage. As your insurance needs decrease completely, you can start focusing on estate planning and convert some or all of your T20 into a permanent plan or just get rid of the insurance completely.
the financial adviser suggested me to buy the CI and T20 from equitable life of canada:
CI husband $100,000 $122 per month.
CI wife $100,000 $116 per month.
T20 husband $500,000 $37 per month.
T20 wife $500,000 $28 per month.

Question: is equitable life the company to go? Do the prices make sense?
Member
Jul 29, 2013
345 posts
130 upvotes
My T20 expires soon. Can I renew without medical report? I know it will be at a much higher rate.
Member
Sep 23, 2013
230 posts
107 upvotes
Windsor, Ontario
wayneg9999 wrote:
Mar 23rd, 2017 5:47 pm
I've been reading the last few pages of this thread, seems like everyone is going for term, as opposed to whole life insurance.

If the purpose of the life insurance is really just a death benefit and not considering cashing out the life insurance, with all things equal, I know term insurance is cheaper per year, but you need to pay that for x numbers of years until you die. So if you live until 95, and you are only 30, you need to pay 65 years. Whereas for whole life, usually you are done in 20 years or even less with using the dividends. Might turn out paying less than term.

Am I missing something? Why is everyone here so against whole life?
Personally I think there is nothing wrong with Whole Life insurance, I just feel it's for a different demographic than what I'm seeing on RFD. I've only used it twice in the last three years, small families and it's term all of the way. The only time a young family should consider whole life, is if there is more money coming in than they know what to do with (maxed investments, no debts, etc)
Member
Sep 23, 2013
230 posts
107 upvotes
Windsor, Ontario
profile wrote:
Mar 23rd, 2017 11:00 pm
My T20 expires soon. Can I renew without medical report? I know it will be at a much higher rate.
Depending on your age, your T20 should renew automatically, that's also assuming it's standard life insurance you have in force. The prices will be a higher rate which you seem okay with, you should be receiving some kind of communication soon letting you know. Any reason why you wouldn't want to just reapply for lower rates? I'm guessing it's medical issues?
Member
Sep 23, 2013
230 posts
107 upvotes
Windsor, Ontario
fangtasy wrote:
Mar 23rd, 2017 10:07 pm
the financial adviser suggested me to buy the CI and T20 from equitable life of canada:
CI husband $100,000 $122 per month.
CI wife $100,000 $116 per month.
T20 husband $500,000 $37 per month.
T20 wife $500,000 $28 per month.

Question: is equitable life the company to go? Do the prices make sense?
It's hard to know if these prices make sense without knowing about the Critical Illness insurance policies. I haven't used equitable life yet, but I do hear good things about them from advisors. What are your exact birthdays and how are the CI plans structured? Also, you mentioned your incomes were $70,000 and $50,000, so why $100,000 of CI? Usually the goal is to cover 1 year of income in the event of a Critical illness.
Member
Nov 16, 2013
228 posts
24 upvotes
Mississauga
This has been my thinking
wayneg9999 wrote:
Mar 23rd, 2017 5:47 pm
I've been reading the last few pages of this thread, seems like everyone is going for term, as opposed to whole life insurance.

If the purpose of the life insurance is really just a death benefit and not considering cashing out the life insurance, with all things equal, I know term insurance is cheaper per year, but you need to pay that for x numbers of years until you die. So if you live until 95, and you are only 30, you need to pay 65 years. Whereas for whole life, usually you are done in 20 years or even less with using the dividends. Might turn out paying less than term.

Am I missing something? Why is everyone here so against whole life?
Deal Addict
User avatar
Dec 27, 2009
3361 posts
1308 upvotes
Ottawa, ON
vivmk20 wrote:
Mar 24th, 2017 7:21 pm
This has been my thinking
Most people don't really need it once they reach a certain age. It is usually for when kids are young, you have a mortgage, etc. By the time my dad died, they had been mortgage free for nearly 40 years, both had good pensions, all kids long grown, no shortage of cash, no debt at all. What on earth would they need life insurance for? I won't bother with it once the mortgage is gone.
Newbie
User avatar
Mar 21, 2017
20 posts
10 upvotes
Vancouver
wayneg9999 wrote:
Mar 23rd, 2017 5:47 pm
I've been reading the last few pages of this thread, seems like everyone is going for term, as opposed to whole life insurance.

If the purpose of the life insurance is really just a death benefit and not considering cashing out the life insurance, with all things equal, I know term insurance is cheaper per year, but you need to pay that for x numbers of years until you die. So if you live until 95, and you are only 30, you need to pay 65 years. Whereas for whole life, usually you are done in 20 years or even less with using the dividends. Might turn out paying less than term.

Am I missing something? Why is everyone here so against whole life?
The cool thing about being in the insurance business for so many decades is that I've been privileged to see the "buy term and invest the difference" philosophy played out. What I've seen is that people have been fairly diligent in investing the money saved by buying term into increasing their RRSP & TFSA contributions or paying down debt. More importantly, they have been able to afford an amount of coverage that has protected their families against the loss of a breadwinner's income in event of death.

What I have also seen is a bit of regret when the inevitable premium increases come, as there are still needs for cash in the estate that present themselves later on in life. Examples include estate equalization among heirs, paying capital gains taxes, estate expenses, etc. I recently helped a client to take $75,000 paid out when her husband passed at age 80 and do something special for her children.

What I'm saying is that term insurance generally fits the bill. However, if the RRSP & TFSAs are maxed out and all non-deductible debts including mortgages are paid down, having some permanent insurance such as T100, whole life or universal life can really help in the transfer of wealth from one generation to the next.
Deal Addict
Feb 4, 2015
2453 posts
405 upvotes
Canada, Eh!!
georvu wrote:
Mar 22nd, 2017 10:32 pm
Had my cousin ask me for insurance advice past weekend and while I gave my opinion based on how I understood... I nevertheless strongly advised he see an insurance adviser or financial planner. He is 42.

Thought to get some additional feedback here.
  • His parents own a 50k whole life policy where he is the insured [bought many decades ago].
  • Presently a roughly 20k guaranteed cash value plus roughly 6k accumulated dividends so about 26k cash value presently.
  • Accumulated dividends are used to pay annual premium of about $400/year so parents have not been paying any premium for number of years.
  • If dividends stay as is then insurance policy will lapse by 2051 unless pay premium at that point or they can pay starting now [7 annual payments of $400] and then policy good until age 99 if dividends do not decrease [Note: dividend scale have been decreasing for many years now]
  • If dividends decrease then insurance policy will lapse way before 2051 [like around 2034]

What to do:
  • Do nothing and revisit in 2050 or so [or 2033 if dividends decrease]?
  • Start now paying annual premium out of pocket of $400 for next 7 years?
  • Cash out policy and invest in good dividend stock?
  • Cash out policy and buy a term 20 policy?
  • Question: The cash out amount received is equal to the cash value of $26k or just 20k guaranteed cash value?
  • Question: Presume there will be a capital gain component to this that parents will have to report?

Thanks.
Anyone pls.

He's like an older brother so want to help as much as can. Thanks.
Newbie
Jan 7, 2013
2 posts
RICHMOND
Any life insurance advisor from BC? Please message me. My husband and I would like some advice for our family. Thank you.
Deal Addict
Jul 22, 2015
1463 posts
459 upvotes
Saint-Hubert, QC
Met with a financial advisor today and he advised me to save around 17% of my income for retirement based on 1.5% inflation, 5% return on equities, 1.5% raise per year and 60% of my current income until I retire (65).
Since I already save 12% from my work DCPP (7% from me and 5% employer), he proposed that I get some insurance (long term disability, universal life insurance, and critical illness) to protect myself financially with the 5% left.

I am 27 years old, live with my parents while I pay down debt (around 7.5k left) and save money to buy a house/condo. I have no dependants.
I already have 2x my salary in life insurance and a long-term disability insurance from work.

Am I right thinking I need none of these products for now?
Deal Addict
User avatar
Dec 27, 2009
3361 posts
1308 upvotes
Ottawa, ON
MoneyHypeMike wrote:
Apr 3rd, 2017 6:43 pm
Met with a financial advisor today and he advised me to save around 17% of my income for retirement based on 1.5% inflation, 5% return on equities, 1.5% raise per year and 60% of my current income until I retire (65).
Since I already save 12% from my work DCPP (7% from me and 5% employer), he proposed that I get some insurance (long term disability, universal life insurance, and critical illness) to protect myself financially with the 5% left.

I am 27 years old, live with my parents while I pay down debt (around 7.5k left) and save money to buy a house/condo. I have no dependants.
I already have 2x my salary in life insurance and a long-term disability insurance from work.

Am I right thinking I need none of these products for now?
You are right. You don't need it.
Sr. Member
Aug 28, 2007
502 posts
87 upvotes
Vancouver
My wife and I are looking at getting Life insurance and we currently only have the Scotia mortgage insurance. We want to cancel the scotia mortgage and sign up for something else but we're not exactly sure. Starting to do a lot of reading in this thread but in the mean time would anyone have a insurance adviser they would recommend in Vancouver that we could speak to?

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