A major health event is more common than you may think. 2 out of 5 Canadians will develop cancer during their lifetimes, with 69% of new cancer cases occurring between age 50-79. 9 in 10 Canadians have a risk factor for heart disease or stroke. Fortunately, our chances of surviving a major health event is greater than ever. What we may not be prepared for is the elevated financial stress following the event and the impact it will have on our retirement plans.
It's no secret that life insurance becomes more expensive as we age. Premiums are related to the mortality rate and the decrease in our life expectancy as we get older is reflected in the increased premiums. What you may not realize is that this risk is not represented by a linear line. If you graph the probability of death from an actuarial life table, you would notice that the probability of death increases exponentially as we age. What this means for term insurance is that renewal premium also rises exponentially, such that they become unaffordable during retirement. So, what are your options for your term insurance policy as you head into retirement?
Last week, when we mentioned that life insurance can serve a certain need in retirement, we specifically noted the use of permanent insurance. Since all term policies expire at age 80 or 85, they cannot be relied upon to pay out a death benefit. Therefore, a permanent policy must be used to ensure that the funds will be available when needed. Many of the estate planning goals do not require a benefit to be paid on each death. Instead, the goals can be achieved by having a single death benefit paid on the last survivor's death. An effective and relatively inexpensive life insurance policy that covers two people but only pays on the last survivor's death is called joint last-to-die life insurance.
Last week we looked at insuring the different stages of life, with emphasis on the importance of life, disability, critical illness and long-term care insurance at each phase. Here, we want to elaborate on life insurance during retirement. While some people believe that life insurance is absolutely necessary even in retirement, others argue that it's a waste of money. We won't comment on which group is right and wrong, since everybody's situation is different and there is no right or wrong. However, we will present the arguments of both sides so you can make your own decision.
Charitable giving is an important part of many people's lives. Charities depend on benevolent individuals and corporations for funding so that they can improve our communities and help those in need. As a donor, you are contributing to an organization you feel strongly about and ensuring that it can continue to enrich people's lives. In Canada, you are also rewarded for your gesture with the charitable donations tax credit. The tax credit provides tax relief for donors and incentive for them to give.
An insured annuity is a retirement strategy that can increase your after-tax income while leaving a large estate to your beneficiaries. It makes use of a life insurance policy to provide the legacy and a prescribed annuity to provide the income. As the case study shows, using the concept of an insured annuity increases the income that you can receive over a GIC strategy.
Wonder how much income you can receive from an annuity? These annuity quotes will give you with some idea based on the 5 factors that affect annuity income: amount of money deposited, interest rate, annuitant's age, annuitant's sex and options chosen (joint, guarantee, etc.)
If you are nearing retirement and live in Canada, you may know that one of the options when your RRSP matures at the end of the year you turn 71 is to use the funds to purchase a life annuity. Of course, an annuity can also be bought before you reach 71 and there's no requirement that it must be bought with registered money. There are many options for the types of annuities you can choose. In this post, we'll sort through all the different types of annuities that are available to fund your retirement.
As more and more baby boomers are entering retirement, they will begin to find that the retirement that they envisioned is quite different than previous generations' versions. What used to be a simple and short retirement supported with generous government assistance is now turning into a complex experience accompanied by cutbacks, market volatility and non-guaranteed pensions. With more investment options than ever before, many seniors are struggling to find the optimal asset allocation for retirement. On top of that, many will face chronic health issues that will adversely affect their standard of living towards the end of life. Here are four financial risks in retirement that seniors face today.
When people talk about life insurance, they immediately think of the working class with a family that depends on them for their income. The loss of their lives would have a devastating effect on their families’ finances, and life insurance on their lives is common to prevent such a loss. While that may be the most common demographic that requires insurance, the elderly segment of the population should not be neglected. In this post, we will discuss the types of insurance seniors need.