Insurance

We live in a materialistic world. The more nice “stuff” people accumulate, the bigger the target for burglars and thieves to try to take it away for quick cash. With the summer vacation season upon us and warmer weather tempting us outdoors, we may be unwittingly making ourselves easier targets. Here are a few things we can do to prevent being victims.

Lock the front door – When hosting a back-yard get together, the front door can often be left unlocked. Direct guests to enter via side of the house. If everyone is in the backyard, all the burglar has to do is listen for party noises and try the front door. If it’s unlocked, a quick entry and departure with valuables may take hours to be noticed.

Keep the lawn trimmed – If you are going to be away for a while, make arrangements for the lawn to be cut regularly. A shaggy lawn can be a sure give-away that nobody’s home. Stop newspaper service as well.

Have it checked regularly – Besides it being a requirement of your homeowners’ insurance, have someone check inside your home every two days to make sure there are no problems with plumbing, appliances, etc. Have them do a quick tour of the yard and pick up any trash that’s lying around. Clever burglars will scatter a bit of litter and check back in a few days to see if it’s been picked up. As well have the checker turn on different lights in the house, don’t leave the outside light on. It may look good at night but not so good during the day. Leave a radio on tuned to the news channel.

Vague voice mail message – It can be tempting to leave a message that you’re on vacation until a certain date. This gives burglars a clear window on when they can break in. All that really needs to be asked for is name and number, and perhaps time of call.

No social media news – More and more people are using the Internet social networking sites to keep in touch with friends. Announcing a vacation or posting updates while travelling can potentially drop useful information into the hands of thieves. You think the information is only going to your closest and dearest friends and it is. Then they share it with their friend and so on and so on.

Keep it locked up – A recent news article recounted an incident of a woman who was ticketed for leaving her car windows open on a hot day. She was told by police that she broke the law by leaving her vehicle unprotected. Not only that, it could have led thieves right to her home. If they get your vehicle documents (which many leave in their glove boxes) and the garage door opener, which is usually clipped to the sun visor, burglars can make very quick work of stripping a home of valuables.

Don’t get lured away – Beware of someone posing as a passerby or neighbor who says they noticed something on your roof or home exterior they want to show you. While you’re distracted, an accomplice can slip in and make off with some valuables. Thieves can also use the old lost dog trick or pose as a utility worker who wants to show you where they’ll be working. If you are stepping out, lock the door.

Close the garage – Garages can get very hot during the summer. It is a real temptation to leave the door open to cool things down. A wide open garage can be an invitation for a theft of opportunity. From the curb it could be as tempting as a “garage sale” only free. Install curtains or blinds on garage windows and keep them closed so thieves can’t check out the contents. Keep the garage people (man) door with direct access to your home locked.                                                                                             – M Dumond

We are here to help.

Owen is married and has two children.  He has been working at the same company for over five years and relies heavily on his employee group plan for his life insurance needs.  A new single co-worker got the same benefits after only 90 days and Owen wonders if his group insurance can let him down.

Owen learned that group benefit plans treat all employees the same, regardless of individual needs.  Coverage amounts may be determined by income, but a single worker with the same earnings will get the same benefit as a married worker with children.

          Many plans offer the option of additional coverage for extra premium.  However, the total amount of coverage available is limited and may not fully meet Owen’s needs.

          A group employee insurance plan is a contract between an employer, union or association and an insurance company to provide protection for the employees or members.  Because he is not a party to the contract, Owen has no rights under the plan other than to name a beneficiary.

          The group plan can be changed at any time without Owen’s approval.  His employer may decide to switch insurance companies, reduce coverage or cancel it completely.  Even though he is the insured individual, Owen has no voice in these decisions.

Group insurance is year-to-year coverage.  The insurance company can change the policy on the renewal date.  It can increase the premiums, reduce the coverage or refuse to renew altogether.

The group insurance Owen has is low cost for two reasons.  First, it covers him while he is least likely to die, while he is still able to work.  Second, his employer pays a good portion of the premium.  Some premiums paid for by his boss may be a taxable benefit to Owen.

         When Owen quits, gets fired or retires, he will lose his coverage.  Some companies, associations or unions may continue a portion of the benefits for a short time after retirement.  He will get an opportunity to convert his life insurance coverage to a personal plan, but his options will be limited and can be very expensive.  However, it is unlikely that Owen will feel he can afford it if he has just left his job.

          Whether he is employed or not, Owen’s family will need money to pay off bills and provide income when he dies.  He realizes that his group plan is a nice perk while he is working, but it does not fully meet all of his needs.

The answer for Owen is to obtain personal life insurance now and coordinate his total coverage needs with his group plan.  He will have the option of increasing or decreasing coverage as he sees fit.  Owen can use it as collateral for a loan, perhaps to start a business of his own.  With the purchase of a permanent life insurance policy, he can use the cash build-up as an emergency fund in the future.  In short, Owen will have a policy that he controls and will be in effect whether he is working or not.                                                                                                                                       – M Dumond

Life insurance is initially purchased for any of a number of reasons. As time goes by, however, many people question why they are still carrying their policies, since the original purpose may no longer apply. Only by having regular Insurance check ups will they know what their current needs are and whether their current policies meet those needs. Here are the three basic uses of life insurance:

Estate Creation – When Ralph and Alice bought their first life insurance policies, they arrived at the amount of coverage with the help of their insurance advisor. The advisor used what is knows as a Capital Needs Analysis (CNA) to arrive at the proper amount of insurance. A CNA measures how much of an estate needs to be created in the event of the death of either Ralph or Alice so the survivor can maintain their standard of living.

The CNA has three parts:

1. Cash needs at death – This includes final expenses (funeral & burial,
legal & probate, taxes); mortgages and other debts; child or home care costs; education funding; emergency fund; and, special bequests and charitable funding.
2. Income needs at death – A calculation is made to determine how much income the survivor needs to maintain or improve their standard of living. Existing sources of income are deducted from this amount to arrive at capital needed to replace any income shortfall.

3. Cash available at death – There are some plans in place already that can contribute to Ralph and Alice’s estate to offset their needs such as investments, group life insurance. They used life insurance to create the rest of their estate needs.

Estate Conversion – Ralph is a part owner in a business. He has built up substantial value in his shares and wants them to contribute to his estate value on death. However, Alice does not want to be a part owner of the business nor does Ralph’s partner, Ed, want her as a partner.

Ralph and Ed each bought life insurance to allow them to convert the value of their shares to cash for a surviving widow(commonly known as buy sell agreement). Let’s say Ralph died. There would be enough life insurance proceeds available for Ed to buy Ralph’s shares from Alice.

Estate Protection -Ralph and Alice want all of their estate to go to their children on death. As they grow their assets while they are alive they also increase the expected tax liability owing to their silent partner – the taxman.

In their case, they have postponed tax liabilities growing in their registered retirement plans, Ralph’s business and their lake front cottage. Most estate assets can pass to a surviving spouse without a tax bill, there by delaying the final tax until the second person dies. If there isn’t enough liquid money left in the final spouse’s estate to pay this tax bill, assets will have to be liquidated to pay the tax bill, there by not allowing the kids to receive all of the estate. (especially the lake front cottage). They can’t forget the funeral and legal bills.

Ralph and Alice can use the life insurance policies they originally bought to create tax free liquidity to conserve their estate (life insurance death benefits are tax free). The tax bill will still have to be paid, but their children can use the proceeds from the life insurance, which was paid with pennies on the dollar of coverage.

This article is for information purposes only and is not intended to provide specific insurance or income tax advice.                                                                                                                                                                                                                                            – M Dumond

The purpose of any type of insurance is to offset possible financial losses in the future. We can learn from the following examples:

Tom and Sara had three children, two boys and a girl. One of their sons died at the age of five. Nobody wants to imagine a child dying, but unfortunately it sometimes happens. They had to borrow money to pay for the funeral and other last expenses that arose. Now, whenever they make a loan payment, they are reminded of their loss.

Sara took some time off work to deal with her grief and to help the other two children adjust. This further strained their finances and threatened their relationship.

Grace and Kevin have two daughters and their youngest developed juvenile onset diabetes when she was 11. Fast forward twelve years and she is about to get married. Today it is virtually impossible for her to get affordable life insurance, yet she and her new husband have certain obligations they would like to cover, like a mortgage, car loans income replacement.

Ted and Lynda are excited about their son’s upcoming trip to the Middle East, but they are also concerned. Their son’s hobby is skydiving and with an extended stay overseas, he is unable to get life insurance. He also runs the risk of contracting a serious illness in the areas he will be visiting.

Sam and Debbie have two young children. Their son was struck by cancer and needed extensive treatment. As Debbie earned the higher income, Sam stayed home to help their son battle his disease.

They also needed to pay a caregiver to look after their daughter while Sam took their son for treatments and doctors’ appointments. This added further strain to their already fragile financial situation.

Life insurance can generally be purchased on a child’s life anytime after 14 days of age. A permanent type policy usually has level premiums for the child’s life and they may qualify for a non-smoker premium reduction at age 18. Some plans are designed so that premiums last only for a set number of years and coverage will remain in force for the child’s life.

Additional benefits can be added to a child’s life insurance policy. A guaranteed purchase rider allows the child to purchase additional insurance, regardless of their health, occupation or hobbies, at certain ages or on certain events, like marriage or birth of a child. A rider can be added to cover the premiums if the owner of the policy becomes disabled or dies.

Some parents and grandparents build up cash values in a permanent policy as a way to accumulate and transfer wealth to a child or grandchild. Current tax laws allow this on a tax preferred basis.

A critical illness insurance policy for a child can provide the funds needed to cover the additional costs that arise if a child gets seriously sick.                                                                                                                                                                                                                                                                    – M Dumond