Sun Life is the third largest life insurance company in Canada in terms of revenue in 2014. Even with its success, Sun Life understands that life insurance is a competitive market. Therefore, it recently announced that starting on February 2, 2015, it will be making improvements to its term life insurance policy, also known as SunTerm.
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?
While life insurance is an integral part of a comprehensive financial plan, we'd all like to pay as little as possible for the protection. Life insurance premiums are often much lower on the priority list than bills, groceries and other mandatory expenses, so people skimp on the coverage to fit it in their budget. But coverage should be the last thing you reduce when trying to save on life insurance, since having enough coverage is the main objective for purchasing life insurance in the first place. For those of you who are looking for other ways to save on life insurance, layering your life insurance may be a strategy you can use. Here we'll introduce the concept of layering your life insurance, and how it saves you money long term.
Life insurance can be bought in several different configurations. The most common is on a single life, where a death benefit is paid out when the insured dies. Other configurations include joint last-to-die, where the death benefit is only paid on the last death of 2 or more insureds. The third most common configuration is joint first-to-die, in which the death benefit is paid upon the first death of 2 or more insureds. Joint last-to-die is suitable for estate planning strategies, but what is joint first-to-die life insurance used for?
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.
Between term and permanent life insurance, term is usually the product of choice when it comes to breadwinners providing protection for surviving dependents. The main reason being that term offers the greatest amount of coverage for the lowest initial cost. Although term has a low initial cost, its premium rises at the end of the term when it is up for renewal. Besides simply renewing the term and paying the increased premium, there are several other term insurance renewal options that you can employ.
One of the reasons holding Canadians back from applying for life insurance is the perceived cost. Many don't feel like they can afford what they deem to be an adequate amount of coverage. We've mentioned in the past that many consumers cited costs that were three to four times higher than the actual premium. With that big of a discrepancy, it's no wonder many of us are underinsured. In order to paint a clear picture of the true cost of life insurance, we've put together several tables with the best rates in the industry to show you how much life insurance actually costs.
In an earlier post, we discussed the different underwriting decisions that can be handed out to applicants of life insurance. One of the outcomes is an approval at preferred rates. As the name implies, these policies have a lower premium attached to them, rewarding the applicant for a healthy lifestyle. Qualifying for preferred underwriting is one of the most effective saving methods for life insurance, although it is also one of the hardest to achieve. How exactly is eligibility for preferred underwriting determined? This post will review some of the criteria that insurance companies look at when applying preferred rates.
Last week we looked at when you should perform a life insurance review. One of the suggestions that was brought up during a review was to replace your current policy if a new one would better serve your needs. How do you determine if a new policy is more suitable for you? In which way is it better? Worse? Is there a cash surrender value in the old policy that would trigger tax if you cancelled it? Would you qualify for a new policy for the same or better rate? These are all questions that you need to ask before replacing a life insurance policy.
The main argument against term insurance is that premiums often increase dramatically at renewal, becoming up to five times as expensive at the first renewal and up to one hundred times the initial premium at the final renewal. The premium increases do not reflect the increase in an individual’s income. On the other hand, permanent insurance is likely to be too expensive initially, beyond the means of the average consumer. There appears to be room for an intermediate product that has neither the outrageous renewal increases of term nor the staggering initial costs of permanent insurance. PPI Solutions, along with Assumption Life, came up with a solution, called LifePhases and LifePhases Plus.