Real Answers to Tough Questions
March 27, 2018 | Updated October 25, 2018
Author: The Link Between
Protecting the future financial security of your family and your business.
I can go online and buy insurance in a few minutes. Why wouldn’t I do that?
Most insurance plans available to purchase online cover you temporarily and have little flexibility, which can be suitable for some simple, fixed, short-term needs. But most of us have lives and finances that are complex, ever changing, and not completely predictable. A professional Insurance Advisor can not only help you sort out, and protect against, potential short and long-term financial losses, but also has access to insurance plans that offer far greater value and flexibility than the simple short-term plans available to you online.
I know I should buy permanent insurance so that I can keep my coverage for my entire life, but I’m worried about the cost.
Securing level premium permanent coverage as soon as you uncover a life insurance need can be far more economical in the long run than purchasing the least expensive temporary plan on the market – particularly because the potential losses you’ll want to protect against during your lifetime are likely to last beyond the inexpensive initial term of a temporary insurance plan. Most of us have a number of different needs for life insurance during our lifetimes, so purchasing a plan that won’t expire before your insurance needs do, and is flexible enough to change with those needs is a prudent planning approach. Hybrid plans allow you to buy a blend of permanent and temporary coverage within your initial budget, and provide benefits and flexibility that allow you to shift your coverage from temporary to permanent as the policy values grow, as your needs change, and as your budget allows.
If I commit to investing in life insurance for years into the future, what will I have if I can’t afford to pay for it down the road?
Not all insurance plans are created equal. Temporary term plans and, even some permanent plans, will expire immediately if you miss one premium. Other permanent plans allow you to deposit extra cash into the policy fund, which can be used to cover the insurance costs if you want to skip premiums in the future. With those plans, once the fund balance is zero, the policy will expire unless you pay your premiums. With a Hybrid plan, not only do you have a fund where you can deposit extra cash to cover future policy costs, but the plan also has additional guaranteed cash values built in. These cash values can be used to keep the policy going for years after the fund balance is used up.
I’ve heard that my life insurance policy can have tax and investment advantages that benefit me in the long-term. How does that work?
A Hybrid plan, EquiBuild, has three features that allow to you to invest money above and beyond the premium for the base coverage:
The first is the tax exempt accumulation fund, which includes a wide range of investment options, including a smoothed return investment account. Investments in this fund grow on a tax exempt basis unless they’re withdrawn. When the fund is paid out as a result of the insured’s death, the proceeds are paid to the beneficiary tax free.
The second is the Fund PUA (Paid Up Additions) Option. This feature allows you to invest, on each anniversary, in fully paid-up insurance with a guaranteed increasing cash value for life. You can use the cash value during your lifetime, or the coverage amount can be paid to your beneficiary on death.
An annual bonus is also payable on the guaranteed cash values, allowing you to take advantage of growth in the market. Policy owners have the option of depositing their bonus in the accumulation fund or using it to purchase extra fully paid-up coverage with guaranteed cash values.
Your advisor can help you understand these options to see what works best for you.
When my advisor recommends an insurance product, does it matter which company underwrites it?
Every insurance carrier has its own investment philosophy, financial strength, culture and expertise. It’s important that your insurer: has a conservative investment philosophy so you can be sure the proceeds of your insurance are well protected for your beneficiary, is financially stable, and is focused on you, the client. Industrial Alliance, which is among the top 4 Canadian Insurers, underwrites the EquiBuild plan. With over 125 years of experience, $170 billion in assets under administration, and their dedication to prudent financial management, iA’s aim is to be known as a Canadian insurer that, together with its distributors, continuously meets and exceeds clients’ expectations.