Are you confident that your group disability insurance will pay out if you are injured and unable to work? Most companies offer some form of group disability insurance plan to provide some value or benefit to its employees. These plans can provide a level of protection, generally 60% of salary, should you become unable to work due to sickness or injury.

Downside of Group benefits

Do you know the full details of your group plan? There are drawbacks to group plans, and in many circumstances the policy will not pay.  This is where an individual disability insurance plan can provide the needed coverage to ensure you have an income to pay your bills and families needs.

Disability definition

It is important to understand the term “disabled” when looking at your group plan. Many times you must be 100% disabled and unable to perform the duties of your specific occupation for a group plan to payout. Personal insurance will have a payout on a percentage of a disability.

Partial disability

This is one of the key differences between a group plan and personal plan. Many people are only partially disabled, meaning they can work but only for a shortened period of time or can only perform some aspects of their occupation.

An individual plan can pay out a percentage of the maximum payout when partially disabled. As an example, if your monthly maximum payout is $5,000 and you are 60% disabled. Individual plans will pay out $3,000 a month, or 60% of the max amount. Most group plans will not pay out on a partial disability.

Timeframe

Group plans generally change the disability term after 2 or 5 years of coverage, which can result in payments stopping. If after the timeframe you can’t work your regular occupation but can work any occupation even at a lower salary your payments will stop.   Individual plans can still pay out a benefit even if you are working in another occupation.

In addition, group plans can be cancelled by your employer at any time, the cost could increase over the years, and if you leave the position your coverage ends. Individual plans do not have these limitations. Yes, it will cost more but you get what you pay for when it comes to disability insurance. If you are disabled due to sickness or injury, that inhibits your ability to keep the roof over your head or food on the table, your thoughts will not be on the higher premium payment. It will be on ensuring you get that cheque each month.

Playing the lottery can be enticing. Each week there are countless advertisements for the ability to win millions in an instant. The emotions and thoughts of winning can become habit-forming putting down money each week to win. I too play the lottery at times, when the winnings are just too good to pass up. Who would not want to win millions of dollars by just putting down a few bucks? What about life insurance, the probability of it paying out is far greater than the lottery. 

Odds of Winning

When you start breaking down the odds of winning each week, is the lottery the best option? The chances of winning the lottery jackpot can be 0.000007%, that’s about 1 in 14 million. These odds never improve each week or each year. Yet, people are continuously willing to put money down each week believing this is their week to win. With such low odds, would it not be a smarter decision to put your money towards a product with higher odds of paying out? Life insurance is one of those products and it can cost even less than your monthly lottery ticket. The odds of a life insurance policy to pay out the death benefit for a 20-year-old is .05% or about 1 in 2000. In addition to that, your odds increase, that at age 40 you are 3 times more likely to receive the death benefit. 

Life Insurance Benefits

Compared to winning the lottery you are 10,000 times more likely to receive a life insurance death benefit at the age of 20.  As long as you continue to pay your monthly premiums life insurance will guarantee a tax-free lump sum payout and to your family. The amount of payout can be in the millions of dollars as well, allowing your family to pay off debt, the mortgage, time off work, or anything else they may need. Does it not make more sense to put your weekly lottery ticket money towards the smarter option of life insurance?

Final Thoughts

With a life insurance policy, you as the life insured will not be able to enjoy the money, but if you don’t win the lottery nor have life insurance your family never will either. Take a portion of your monthly lottery tickets and put it towards a better cause, with better chances, and a way to protect your family at the same time. Talk to me today to learn more about your options and how to protect your family and improve your odds.

You have decided to purchase your first house or you are re financing your mortgage. Financial institutions will usually offer you mortgage insurance when selling you the mortgage. Mortgage insurance ensures that in the event of your death your mortgage will be paid off. Sounds great right – what is left owing on your house is paid and your partner will not have to worry about a mortgage. However, there are drawbacks with the product; a personally owned life insurance policy can be a better fit for your needs. Here are some key points to think about before signing up for the banks mortgage insurance.

Ownership

Mortgage insurance is owned by the bank and they are the beneficiary.  This means that you have no control over the policy and if there is a payout, the bank receives the funds. While this would pay off our mortgage, it does not leave your family with any funds. With a personally owned life insurance product, you own the product and you can name the beneficiary. If there is a payout, your beneficiary receives the funds and can decide what to do with them.

Coverage Amount

Mortgage insurance is tied to the value of your mortgage and will only pay out the balance owing. Your rates stay the same as your coverage amount decreases. This means that as time moves forward, your cost per $1000 of coverage is increasing. With personally owned life insurance, your coverage amount is not tied to the mortgage value so it remains constant for the duration of the policy. Your rates stay the same for the period selected, meaning your cost per $1000 of coverage stays the same. The bonus is that generally speaking, the cost of personally owned life insurance is less than mortgage insurance. Also, if you purchase $400,000 of life insurance and your mortgage has decreased to $200,000 at time of death, your beneficiaries receive the full $400,000, at which point they can choose to pay off the mortgage and have $200,000 tax-free in their pocket for whatever else is needed.

Guarantees

Mortgage insurance has no guarantees built into it, meaning that the rate you pay now may increase in the future. Also, each time you refinance your mortgage, you have to re-apply for mortgage insurance. If your health changes when re-applying, you may not qualify for the insurance when you refinance your mortgage. With personally life insurance, your rates are contractually guaranteed and therefore cannot change; the policy is also guaranteed to renew, regardless of your health and will stay in force as long as you continue to pay the premium.

Underwriting

Financial institutions do all their underwriting for mortgage insurance at the time of a claim. Meaning if you submit a claim, there could be months before a payout could happen. Secondly, if there is a discrepancy at the time of claim in terms of your current health and what you stated on the form, there may not be a payout at all. Personal life insurance does all of the medical underwriting at the time of application. Once you are approved any changes in your health will not affect the payout. As long as you are truthful in all your answers and do not omit any health concerns when completing the application, the policy will pay out some time in as little as two weeks.

The last thing to consider is with mortgage insurance, the people selling it are generally not life insurance agents by trade; they are mortgage brokers and not subject matter experts on life insurance products. By comparison, when you purchase personally owned life insurance, you are working with a life insurance agent who will walk you through the full application process and do their best to make sure that you fully understand the benefits and costs associated with each product. Properly protect yourself and get the coverage that will provide security when you need it the most. 

For some people, one of the greatest obstacles to obtaining life insurance is the medical evidence needed prior to the issue of a policy. Traditional life insurance policies require the applicant to complete medical questionnaires, and could also require physician reports, paramedical exams, blood and urine tests.  With this information, the life insurance company determines whether or not they will offer the applicant coverage and if so determine the appropriate premium. Guaranteed issue life insurance does not require medical exam let’s explore the pros and cons of this type of product. 

Pros:

• Only a few questions to be answered to qualify
• No medical exam required, no blood or urine samples
• Immediately issued
• Can be a term or permanent coverage

Cons:

• The life insurance company can offer graded benefits: Meaning if the person dies within a specified period of time the beneficiaries will see a portion of the death benefit or portion of their premiums will be returned.
• The premium cost is higher versus traditional life insurance. 

Guaranteed life insurance is typically a last resort life insurance policy because you can’t obtain life insurance through the normal underwriting process. If you have prior health issues but you are unsure if you could qualify for traditional life insurance speak to an advisor. Based on your medical history they will let you know if guaranteed issued life insurance is the right choice for you. Coverage amounts can range up to $500,000 in certain circumstances.  It is a good idea to speak to a professional adviser to get advice and answer your questions to make sure you understand the terms of the policy before you sign.