Personal Finance

Life Insurance Q&A - w/ FAQ Section

  • Last Updated:
  • Nov 10th, 2017 3:52 pm
Sr. Member
Dec 14, 2011
824 posts
233 upvotes
London
Thank you! Your estimates are about right, time to look into it and act. Very informative thread.
Newbie
Apr 8, 2017
3 posts
Markham
wesboag wrote:
May 3rd, 2017 3:02 pm
Drake,

No need to have your life insurance with the bank you hold the rest of your stuff with - unless of course they will give you a super duper discount on bundling it with home/auto, but it has to be worth it. Usually its about about a 5-10% discount if applicable. That said, I do not find either RBC nor TD have good conversion options (if you ever require changing to permanent insurance) - which to me (as an advisor and policy holder) is very important. While RBC is sold in the broker channel, TD is not. If you are going to choose between those two only, go with RBC.

That said, there are much better insurers (again in my opinion) out there besides TD and RBC. For that amount you require, term 10's and term 20's are within a few cents of each other - although premium cost should be second to quality of insurer.

FYI, top rates for T10, $250k, 45 male non smoker are all around $27/month. Top rates for Term 20, are around $50/month. Top 10 insurers are all with $.50-$1/month difference between them.
Would you give me some estimation about top rates for T20, $500k, 47 male non smoker and T20, $500k, 38 female non smoker?
Thanks
Newbie
May 27, 2007
37 posts
7 upvotes
British Columbia
Hi, am I correct that whole life participating policies issued before 1982 can be cashed in without any tax liabilities?

thanks
Deal Addict
Sep 15, 2009
2699 posts
1002 upvotes
Toronto
davvos wrote:
Jun 12th, 2017 11:21 am
Hi, am I correct that whole life participating policies issued before 1982 can be cashed in without any tax liabilities?

thanks
Hello Davvos,

Unfortunately no that is not the case. Pre 1982 policies - also known as G1 policies, are still taxable as "gains" when the policy is disposed of. The main difference between pre 1982 policies and current ones (G2/G3) are that they are not usually subject to exempt testing - as are current policies to make sure only a certain amount is tax deferred.

So in a nut shell, you must still pay tax on the policy gains of it is cashed out.
Newbie
Apr 25, 2009
89 posts
18 upvotes
I am a 41 year old NS male with two children 6 and 4. I have a stay at home wife and a mortgage of about $140k. I think about 500k-750k insurance should be enough and about a 20term? I know everyone situation differs but I want to try to keep things simple. Any better ideas or products to look at? Is there a site that compares rates? Thank you
Member
Sep 23, 2013
237 posts
110 upvotes
Windsor, Ontario
bcbud3 wrote:
Jun 15th, 2017 12:32 pm
I am a 41 year old NS male with two children 6 and 4. I have a stay at home wife and a mortgage of about $140k. I think about 500k-750k insurance should be enough and about a 20term? I know everyone situation differs but I want to try to keep things simple. Any better ideas or products to look at? Is there a site that compares rates? Thank you
You have the right idea with the term length, as your kids will be dependent in 20 years and with the proper planning you'll have built up a nest egg for your wife to live off of, should something happen to you. It's hard to say exactly how much life insurance you should have without other numbers. For example, any other debts? Would you want your children's education taken care of if something were to happen to you? What is your current income? Is it important to have money available if you were diagnosed with a critical illness?

You're best to go to an insurance advisor to help with the above, an advisor can develop a Financial Needs Analysis and put together an actual insurance plan, rather than throwing generic quotes your way. Even a simple plan requires an FNA and some playing around with numbers.
Newbie
Apr 25, 2009
89 posts
18 upvotes
Thank you, is there other name for insurance advisors? Any companies you know of in the Vancouver area that provide this service?
Newbie
May 27, 2007
37 posts
7 upvotes
British Columbia
wesboag wrote:
Jun 12th, 2017 8:52 pm
Hello Davvos,

Unfortunately no that is not the case. Pre 1982 policies - also known as G1 policies, are still taxable as "gains" when the policy is disposed of. The main difference between pre 1982 policies and current ones (G2/G3) are that they are not usually subject to exempt testing - as are current policies to make sure only a certain amount is tax deferred.

So in a nut shell, you must still pay tax on the policy gains of it is cashed out.
Thanks wesboag!!
Member
Sep 23, 2013
237 posts
110 upvotes
Windsor, Ontario
bcbud3 wrote:
Jun 15th, 2017 2:30 pm
Thank you, is there other name for insurance advisors? Any companies you know of in the Vancouver area that provide this service?
There is one on here I believe, I just can't recall the person's user name. I know he's provided solid advice in the past, you may have to go back a few pages to look for it.
Member
Sep 23, 2013
237 posts
110 upvotes
Windsor, Ontario
qweasdzxc63 wrote:
Jun 15th, 2017 3:22 pm
OK. I fit into the category of "more money coming in than they know what to do with (maxed investments, no debts, etc)", Married 48/43, both get decent job with two kids 16,12 . Never purchased any life insurance other than from work. I am thinking something better than Tangerine saving. In my case, does Sunlife Par whole life better than universe and make more sense than T10/20? or Am i too later for insurance? Thanks
It's still important to cover the next 10 years of income for your children, that's where a 10 year term might make sense. Also what type of Critical illness protection do you have in place? I'd consider looking into something until retirement, and because you have excess cash flow, look for the return of premium options. After that, you can definitely start looking into PAR options, you're by no means too late for any of the above.

Have an advisor do a financial needs analysis for you, to start, let your objectives be known (ex: insurance for future dividends or estate planning) and the advisor should be able to give you a few options for you to choose from.
Deal Fanatic
User avatar
Apr 29, 2008
5816 posts
1589 upvotes
Montreal
Husband of a gf's friend recently died, 35 years old, had 4 young children.
Only had 2X annual salary in life insurance.

Please take care of this if you have children counting on you... financial stress on top of other issues is awful.
Member
User avatar
Jan 15, 2017
372 posts
174 upvotes
cashinstinct wrote:
Jun 15th, 2017 10:52 pm
Husband of a gf's friend recently died, 35 years old, had 4 young children.
Only had 2X annual salary in life insurance.

Please take care of this if you have children counting on you... financial stress on top of other issues is awful.
Yup, because you never know.
Jr. Member
Feb 26, 2010
183 posts
21 upvotes
Montreal
We are a couple with a newborn, shes 38, im 41. She is employed with a $160k salary, im self employed making roughly $200k, sometimes a fair bit more in good years but that is a safe average. We have no debt, no mortgage, no car loans and about $2M in property, savings and investments. We do not currently have life insurance but with the recent birth of our first child, we are considering enrolling in her work insurance plan, or some other coverage if its better.

My thoughts are that if something were to happen to either of us, or even us both, as it stands now we would be leaving behind more than enough to care for the little one. Do we need insurance in our situation? If so, what kind?
Newbie
Jan 1, 2007
50 posts
3 upvotes
Toronto
Alpha-Zulu wrote:
Jul 16th, 2017 10:17 pm
We are a couple with a newborn, shes 38, im 41. She is employed with a $160k salary, im self employed making roughly $200k, sometimes a fair bit more in good years but that is a safe average. We have no debt, no mortgage, no car loans and about $2M in property, savings and investments. We do not currently have life insurance but with the recent birth of our first child, we are considering enrolling in her work insurance plan, or some other coverage if its better.

My thoughts are that if something were to happen to either of us, or even us both, as it stands now we would be leaving behind more than enough to care for the little one. Do we need insurance in our situation? If so, what kind?
This really depends on what you mean by "enough" to care for the little one. With respect to Estate Planning, I'll assume you mean there will be enough to cover raising the child until the age of 21, and enough for education until your child is able to start making his / her money. If that is what you mean, do you have other dependents (perhaps parents?) If you also have that perspective covered, then the next thing to look at is, what happens if something happens to either you or your wife in terms of illness or injury.

This brings up Critical Illness or Disability Insurance. In the case that (knock on wood), you fall ill or are injured and we are not talking about just a regular cough; you or your wife will need to take time off work to rest and get better. This in turn stops one or both sides of your income, will that be enough to support your current lifestyle? Do you have a portion saved up to deal with such scenarios if they happen?

Work Insurance Plans typically only cover up to a 2X or 3X of annual salary. In addition, only when you are employed. Once you quit / retire, the life insurance coverage will typically stop. It is always better to get coverage outside of work plans.
Deal Addict
May 15, 2004
2075 posts
68 upvotes
since i cannot understand this illustration...
how do you calculate dividends in whole life insurance policy where the dividend scale is 6.25%

guarantee cash+additional insurance cash = total cash * 6.25% = how much dividends you get?

if the dividends earn > premium i can premium offset?

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