Tag Archives: disability insurance

How Life Insurance Can Save Your Family – Stories from the Heart

At IRONSHIELD, it is important for us to help you make the best decisions possible when it comes to your everyday finances. Life insurance is a tool that can greatly improve your life and provide your family with financial stability. In today’s blog post, I want to show you some examples of how a proper insurance policy can be an excellent security tool in the event of a terminal illness diagnosis or the death of the insured. For five individuals, life insurance significantly changed their lives forever. Be inspired by their stories below and discover how life insurance can make an impact on you and your loved ones.

Victoria’s Story

Nancy was a widow whose husband had died at a young age. His small insurance policy was not enough to support his wife and their two daughters, so Nancy decided that she wanted to purchase additional comprehensive insurance in case anything were to happen to her. Sometime later, Nancy was diagnosed with cancer and was able to use the terminal illness portion of her insurance, which allowed her to receive 75% of the policy’s face value. Nancy used this money to finance a home for her daughters, purchase a car for her parents, pre-pay her funeral arrangements, and pay for expenses such as clothing. In addition, she saved some of it for her daughters’ college tuitions. Described by her insurance agent and friend, Victoria, as “an advocate for life insurance,” Nancy loved her family enough to take action while she was still alive to protect them. Her greatest wish was to help her daughters live comfortably and have the lifestyle she would have given them, and with the money from the life insurance policy, her wish was granted.

Irene’s Story

Irene’s client, Susan, had stayed at home with her children and did not have life insurance since her husband, Mark, was the family’s main source of income. Irene initially set up an insurance policy only for Mark because the couple didn’t feel that Susan needed any protection if she was a stay-at-home mom. However, Irene convinced them to buy insurance for Susan, citing the argument that Mark could not just give up his job to stay at home and care for his family if something were to happen to his wife. Susan passed away in a speeding accident some time after they purchased life insurance; Mark also suffered injuries, lost his income due to a disability, and needed to stay home with the kids. Irene said, “the life insurance continued to provide the opportunity to keep a roof over their kids’ heads.” With that money, their daughter was able to attend college and accomplish her goals. While he still misses his wife dearly, Mark said, “to buy an insurance policy is the best thing I did in my life.”

Mike’s Story

Mike’s client, Anne, and her husband wanted a big family and adopted five children within a few years. As their family continued to grow, Mike suggested that they needed more “life insurance for protection,” since Anne wanted her family “to be taken care of.” The family then purchased term for both Anne and her husband; more for him, since he was the one bringing home the money, but also enough for her because she was a stay-at-home mom who took care of the children and the household. When Anne passed away suddenly, her husband and their kids were able to adjust and live comfortably with the extra money, which can actually help you find the strength to get through the grieving process. Mike offers this advice to his clients: “Do not forget about the stay-at-home mom.” It is vital to consider how valuable her contributions are to the family.

Larry’s Story

Larry’s client, Dan, was the president and manager of a small company. Larry discussed insurance programs with him that would help fund a buy-sell agreement between Dan and his business partners, as a means of protecting their company’s name and employees. They decided to buy “key person insurance,” which is essentially life insurance for the key persons in the company – usually the owner, founders or employees that are crucial to the business. In the event of a death or departure of a key person, the money comes straight into the company and is used to find a replacement for the empty position. When Dan passed away in a plane accident, the infusion of capital from the life insurance policy enabled the company to find a replacement for him and maintain the efficiency of their business. Dan’s former business partner and the current president and CFO of the company advises that all business owners should be responsible for their employees, and to “make sure there is some succession planning,” as well as insurance for key persons, in order to protect their company’s legacy.

Helen’s Story

Helen’s client, Alice, worked at a country club that offered its employees a comprehensive medical plan and a small insurance policy. The club believed that all employees should have the option of purchasing additional life insurance. Alice made the decision to buy life insurance not only for herself, but more because her husband was going through an organ transplant. Helen suggests that, often, people don’t realize the need for insurance until they are going through a real-life situation. In this case, Alice also wanted to make sure that their young son would be taken care of in the future. When Alice passed away unexpectedly, their family lost her income and had outstanding medical bills from the transplant. The money from the life insurance policy that Alice had initially bought greatly assisted her husband and son in their time of need. Alice’s husband calls the insurance money “a gift that [Alice] left me.”

* Some names and identifying details have been changed to protect the privacy of individuals.

Related Links
The IRONSHIELD Insurance Plan
https://www.ironshield.ca/services/insurance-plan/

Long-Term Care Insurance 101—Part 1
https://www.ironshield.ca/articles/long-term-care-insurance-101-part-1-the-basics/

Long-Term Care Insurance 101—Part 2
https://www.ironshield.ca/articles/long-term-care-insurance-101-part-2-the-dos-and-donts/

Long-Term Care Insurance 101–Part 2: The Dos and Don’ts

In my last blog post, I introduced you to Jennifer Jacobs, the top living benefits specialist in Canada, and sat down with her to discuss the essentials of long-term care insurance. To quickly recap, a long-term care insurance policy is essentially a security tool used in the event that you encounter a serious injury or that hinders your ability to perform day-to-day activities. The policy provides you with an added tax-free cash flow that allows you to maintain your ability to continue to financially run your household.

Today, I want to introduce the pros and cons of the various plans available, as well as to point out their most exciting features. In addition, I will also reveal a bit more detail on being “physically dependent.”

pros and cons

Jennifer tells us that a key aspect of a long-term care insurance policy is to apply early and get an offer back from the insurance company first. They will look at your medical records to check that everything is in order. In some cases, further medical testing could delay the process for up to a few months. In other scenarios, a couple may learn that only one party can be approved, thereby causing them to consider other financial plans. So it is important to put in an application early because you never know what the insurance company is going to say or how they view things. Applying early for a long-term care insurance policy is beneficial as it allows clients to stay informed on their situations in case there are delays. This way, there will be no surprises.

A long-term care insurance policy has a number of exciting features that appeal greatly to the mass public. The first feature of this policy is the payment period. In the majority of cases, we are looking at situations where the client is aged 35 and above. One of the options available is for you to deposit into the plan for 20 years and then be covered for life with no further deposits required. This is a very beneficial advantage because it not only protects the younger self in the event of an injury, but it also creates a fully back-loaded retirement plan with a cash flow protection plan in place once you have reached an older age. If you do make a claim in the first 20 years while you are depositing to the plan, your required deposits are waived during your claim, and the amount of time you have collected on this policy will not be added on to the deposit period. It will only simply lessen the amount you paid into the policy.

The second feature is interesting in that it is unique to a long-term care insurance policy. Extended term insurance provision is a feature that incorporates the acceleration of your payments by a bit so that you are pre-paying in advance. This action prevents you from missing a payment and protects you from the risk of losing your policy. Typically, this action does not come into effect until after the five-year mark of the policy being put into place, but the upside of this feature is that you can choose to stop your payments, yet the coverage will remain enforced for anywhere between five and fifteen years from the time you stopped the payments.

Long-term care insurance policies have a lot of flexibility, making it possible for them to be tailored to each specific client’s needs. This is the reason why it is smart to be informed on the optional benefits available and extra features that can be added on to these policies. I do not actually recommend them in most cases as they easily become drawbacks in the cost versus benefits examination. However, it is still important to take note of these options in order to stay knowledgeable about financial planning for the future.

One such optional benefit is inflation protection, which is highly discouraged in many cases due to the high cost and poor rate of return in the feature. For example, if you decide to purchase $2000 in monthly benefit, and add the inflation adjuster to keep things in line as time went on, the premium would go from $100 to $180 for the inflated product. At a 2% inflation rate, it would take 30 years before it is worth $4000 a month. Alternatively, you could have bought $4000 a month right now for the same price as adding the inflation adjuster and waiting for the benefit to catch up.

This feature then seems, in most cases, unnecessary. However, there are two scenarios in which an inflation adjuster may be beneficial. The first situation occurs when the insured is given a limit on the collected amount; inflation protection is the only way to have more insurance when an unlimited benefit is taken away.

The second time in which this feature is used is with executives, high earners and very young, wealthy clients. Because these types of individuals recognize the need for insurance coverage in spite of their wealth, inflation protection becomes a less expensive way of protecting their future cash flow. Unless you find yourself in either of these situations, I strongly discourage adding the inflation protection feature to your policies.

Another feature of optional benefits arises when people express concerns about wasting money or buying something that they may not need—they wonder whether premiums can be returned if the insured passes away without making a claim. I will make a note here and say that you are more likely than not to use a long-term care insurance policy based on actual medical experience.

This feature essentially gets the insured to spend more money in unnecessary places by declaring that the insurer would return the premiums paid, less any claims, in the case that the policy is never used. However, you usually only need to collect for six months to a year in your whole lifetime for that amount to equal the 20 years of payment paid for the policy. Risk is a factor that we need to consider, but I assure you that the chances of you using long-term care insurance are very, very high.

Lastly, I want to talk a little about comprehensive and facility insurance coverages. As the names suggest, one covers care facilities such as retirement homes or hospitals, while the other encompasses cases regarding the mental ability, such as brain injuries, regardless of where care is needed. Remember what I said in my previous post about being “physically dependent.” For this policy, a claim can be made as long as you are in need of either physical or mental assistance; you do not require both.

In addition, the policy does not differentiate between temporary or cognitive impairment, either. However, it is extremely important to note that you CANNOT make a claim with long-term care if factors such as work stresses, anxiety or depression occur because they do not render you dependent on others—these are situational issues. Being “physically (or mentally) dependent” in daily activities is not an insurance company’s definition; it is a standard medical assessment that is critical to an income policy that is essentially based on you and your body.

I hope that you will take advantage of a long-term care insurance policy, a very beneficial security tool that will help you and your family in the long run. Talk to a financial planner today to speak to a specialist in this field. It is never too early when preparing for the future.

Related Links

Long-Term Care Insurance 101—Part 1: The Basics
https://www.ironshield.ca/articles/long-term-care-insurance-101-part-1-the-basics/

Find Out if You Have the Right Type of Insurance Plan
https://www.ironshield.ca/services/insurance-plan/

Health and Dental Insurance
https://www.ironshield.ca/online-healthdental-insurance/

Four Mistakes to Avoid When Creating a Retirement Income Plan
https://www.ironshield.ca/articles/four-mistakes-to-avoid-when-creating-a-retirement-income-plan/

Long-Term Care Insurance 101—Part 1: The Basics

As a company, IRONSHIELD has embraced the need to include long-term care insurance as part of an overall comprehensive benefit plan. This has brought us in touch with Canada’s most talented experts in the field. I had the pleasure of speaking with Jennifer Jacobs, a top long-term care insurance specialist, who had provided us with an excellent overview of what long-term care insurance encompasses.

Today, I want to share with you Jennifer’s expertise. In Part 1, I will give a brief description of what long-term care insurance is and dispel some of the most common myths surrounding this type of insurance coverage. In Part 2, I will share some insight into the various plans available in the market today and talk about some of their pros and cons.

Long-term care insurance is something that people don’t tend to think about when they are young because they feel that there is no need to. This is precisely the first myth that I wish to dispel in today’s post. Until a while ago, I had never been injured and never thought that I would have to think about long-term care. But then, I was involved in a serious water skiing accident and suddenly, I found myself changing the way I thought about long-term care and how it would benefit my family.

The misconception on long-term care comes from our association of the term with long-term facilities, when in fact, the two are not related at all. A long-term care insurance policy is essentially a security tool that allows you to go through life with confidence in the event that you encounter a serious injury or a situation in which it hinders the daily activities of everyday life. This type of insurance coverage protects your entire financial plan and provides you with an added income that would help maintain the life choices of your household.

When we are young and involved in various activities, we never quite imagine the chances that we may be taking. We are logical and presume that the possibility of injuries is something that we don’t have to consider until we are much older. It is only when we do experience a potentially life-threatening situation that we realize the affects of our injury could be financially devastating. For example, you may require assistance with routine tasks while you are injured, and whether it is by hiring a service or reallocating the task to another family member, the action will affect your overall income in some way.

A long-term care insurance policy is simply an income benefit. By acting proactively and securing an insurance policy in place, you are giving yourself the protection you will need in the future. However, it is important to understand that long-term care insurance is not a replacement for disability insurance. The second myth that I want to dismiss is that a long-term care insurance policy would affect the other various plans you already have in place. This is not the case with this particular type of coverage. The difference with this policy is that it isn’t asking whether or not you can do your job; it is asking if you can live independently. There are very strong overlaps between long-term care and disability plans, but rest assured that you are able to collect on both.

The third myth that I want to discuss is what it means to be able to live independently. While long-term care is strictly about whether or not you need help with your daily living, there are a few criteria that must be met before a claim can be made. First of all, there is a short waiting period to prevent small claims, such as sprains or strains. This ensures that the policy is effective for more severe circumstances, such as fractures, recovery from surgery, and incidents that actually affect you for typically more than 30 days. Secondly, the long-term care insurance plan will provide you with the income no matter what injury you have or how it happened. The only restriction here is criminal acts, such as drug use and the like, for obvious reasons.

In short, the whole purpose of a long-term care insurance policy is to promote your life into the stable state in which you want to maintain it. This type of policy is so unique because it has an unlimited status on it, which means there is no limit on the number of times you can collect in your life time. An unlimited status makes the long-term care insurance plan absolutely one of a kind in the Canadian market today.

To ensure that you are protected financially in the event of a serious injury, don’t forget to check back for Part 2, in which I will discuss the various plans available, as well as a little bit more detail on what counts as being “physically dependent.” I will also talk about the pros and cons of these plans, and point out their most tempting features. I strongly advise you to take the initiative and learn more about securing this very beneficial insurance plan. Its long term effects will certainly prove to be most rewarding in the future.

Related Links

Find Out if You Have the Right Type of Insurance Plan

https://www.ironshield.ca/services/insurance-plan/

Health and Dental Insurance

https://www.ironshield.ca/online-healthdental-insurance/