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.
As we travel through the journey of life, our financial needs and obligations undergo constant change. For example, your financial obligations increase once you are married, and continue to do so as your family grows in size. It should come as no surprise that insurance varies in importance at different stages of life. Proper planning at each stage of life is necessary to ensure that you and your dependents are protected. Without knowing the risks and a plan to minimize the risk, you are potentially exposing your family to a financial disaster. Here are which types of insurance you should be aware of at each stage of life.
What if there was a way to give a birthday present to your child or grandchild every year, even after your death? A method that doesn't involve costly trusts or confusing clauses in a will? With a lifetime gift annuity, you can ensure that your child or grandchild will have you in his mind as his birthday comes along. A lifetime gift annuity pays out a tax-efficient annual income for the rest of his life. Like the insured annuity, the lifetime gift annuity is another strategy used as a solution for some of the common problems facing Canadians today.
Last week we talked about Manulife Synergy, a combination insurance that incorporates life, disability and critical illness insurance. As part of a series reviewing insurance products from Canadian insurance companies, this week we will focus on Desjardins Life with Long-Term Care Advance. Don't be put off by its long name, as it may be just the right product for you. As implied, its a type of combination insurance that incorporates life and long-term care insurance. We'll begin by summarizing some of its features.
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.
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.