Financial Advisor

As millions of Canadians hit the roads and book flights to criss-cross the globe for the holidays, an alarming percentage don’t fully understand key aspects of their insurance coverage or their need for out of province travel insurance. An accident can happen to anyone, even during a short business or recreational trip. Some health services are not insured by the province and you may have to pay the full costs for those services.  Many health services outside Canada cost much more than coverage by OHIP, and you are responsible for any difference in cost.  Let’s take a closer look….

OHIP will pay very limited amounts for physician services and hospital facility services if certain conditions are met. OHIP will only pay for insured, emergency out-of-country health services that are rendered to an insured person.  To qualify as an ‘emergency’ there are a number of criteria that must be satisfied.  The treatment must be medically necessary, and the treatment must be performed at a licensed hospital or licensed health facility, and the treatment must be rendered in relation to an illness, disease, condition or injury that is acute and unexpected, and arose outside of Canada, and requires immediate treatment.  A lot of “ands” I know, let’s take a look at what they won’t cover.

OHIP does not cover treatment that is not medically necessary, health services that are completed at a facility that is not a licensed hospital, treatment that is generally accepted as being experimental, treatment rendered for an illness or injury that arose inside Canada or ambulance services/transportation costs.  That last one can be a real burden.

Back in Canada, your provincial health insurance plan looks after your hospital and medical expenses and you rarely see a bill. But, once you travel outside of Canada or even outside of your own province, coverage under your provincial plan is limited, and only some of these expenses may be covered. The good news is that the difference can be made up by travel health insurance.

Travel health insurance is designed to pay for certain unexpected costs that may arise when

you are traveling. These can include emergency hospital/medical costs, trip cancellation, lost baggage and accidental death insurance. But, not all plans cover all of these components.

For instance, the trip cancellation insurance you buy when you book your holiday may not include health insurance. Be sure you understand what protection you are buying, and whether it meets your specific needs.

When purchasing travel insurance there are a few key questions you should ask, such as:

• Will your policy cover you for the entire length of your trip from Canada or your home province? If you decide to extend the length of your stay, can your policy be extended? How would this be done?
• What types of restrictions and limitations does this policy have?
• Does your policy deny any benefits if your medical emergency arises because of a pre-existing condition?
• Are there exclusions about specific activities/events i.e., sports, war, suicide, substance abuse?
• What maximums, deductibles and/or co-insurance would apply in the event of a claim?
• Does your policy pay for emergency return home?
• If you are traveling with family or friends, does each individual need a separate policy, or can one policy cover everyone?
• Are there certain countries that are not covered under the policy?
• Does your policy provide for trip cancellation, baggage loss and other damages?
• If you have out-of-country coverage through your group plan at work, are there any restrictions? Does it cover you for business travel only?

So where can you find travel insurance? Well there are a number of places you can go, such as you credit card company or through you group health insurance.  But it is generally recommended that you talk to your insurance advisor or broker to guarantee you get proper coverage customized to cover all of your travel insurance needs.  So whether it is a day out of the province or a year out of country, make sure you’re protected with travel insurance.

Adam Myers

Financial Advisor

Professionals for Independent Planning

Email: adam@pfip.ca

Phone: 613-224-5511   X108

www.pfip.ca

Five reasons you should be nice to your insurance agent

By TIM CESTNICK

00:00 EDT Thursday, July 23, 2009 Page B10

Special to The Globe and Mail

A good friend of mine, Greg, works in a high-stress job on Bay Street. In the summers, he and his wife like to get out of the city to go camping in their motorhome. He finds it very relaxing, but this summer they have found their peace and quiet disturbed by well-meaning, but unwelcome, visits from other campers. Greg has devised a plan that pretty much guarantees they will have privacy. Now, whenever they set up camp, Greg places a sign on the door of their RV that reads: “Insurance agent. Ask about our new term life package.”

That does it – every time.

I know that insurance advisers get a bad rap sometimes. But let me say out of the gate that there are some characteristics of life insurance that make it useful as a tax and estate planning tool, namely: Benefits are paid out completely tax free when the insured individual dies.

Further, it’s possible to accumulate investments inside an insurance policy on a tax-sheltered basis – not quite like your registered retirement savings plan, but similar.

Next, if a corporation is the beneficiary of a policy on a life, a portion (often 100 per cent) of the benefits paid out upon the death of the insured individual will be credited to the company’s “capital dividend account” (CDA). Amounts in the CDA can be paid out as tax-free dividends to shareholders of the company. It’s primarily this combination of characteristics that creates many uses for insurance.

The key to buying insurance prudently is understanding three things very clearly: First, what is the purpose of the life insurance you are buying? Second, how much is the right amount of coverage? Finally, what is the right type of life insurance to buy? If you can wrap your mind around the answers to these three questions, you should have confidence in the investment you’ve made in insurance.

Let’s address the first question. There are many reasons why you might consider buying life insurance. These will generally fall into one of five categories:

Provide for Others

If you have dependants who will otherwise face hardship financially if you pass away, it will be important to buy insurance on your life to provide the capital necessary to generate an income for those dependants. In addition, you might want to leave money to others who have needs, such as your favourite charities.

Cover Final Disbursements

When you pass away, there will be costs and debts to pay. Who is going to pay for these? Think about the following types of disbursements: Funeral costs, legal and accounting fees, income taxes, executor fees and probate fees, as well as outstanding mortgages, credit card balances, lines of credit and other loans. You could leave your spouse or others in a bind if you saddle them with the requirement to pay for these things out of their own pockets.

Provide Equitable

or Larger Bequests

If it’s your desire to treat your kids equally, life insurance can make that possible. For example, suppose you leave your cottage to your daughter who uses it, and your investments of equal value to your son. Suppose also that the cottage gives rise to a tax bill on your death. Where will the cash come from to pay the taxes? Potentially from your son’s share of the estate. This could leave him shortchanged. Life insurance can provide the cash to equalize the estate.

Alternatively, perhaps you just want to leave your kids more than you could otherwise without insurance.

Shelter Income From Tax

As I mentioned, life insurance policies can provide tax-sheltered growth. You won’t be taxed annually on income earned inside the policy. Now, there are relatively low provincial income taxes paid by the insurance company on investment income inside the policy, but you won’t see that tax – or feel it much.

You can expect slightly lower returns inside an insurance policy because of this tax, fees and administrative costs, but historically the returns in some of the whole life insurance policies have been quite stable – and tax sheltered. Speak to an insurance adviser about the performance of participating whole life policies.

Maintain Business Health

As a business owner, consider insurance to provide cash for a surviving partner to buy out the estate of a deceased partner, maintain stability in the business if a key person dies, pay off debts of the business if a key person dies, or repay the business for any significant costs incurred (such as pension contributions).

© The Globe and Mail

Mortgage Insurance VS Life Insurance

Consider your options…

When buying a home or renewing a mortgage, many people think they are obligated to sign up for their banks mortgage life insurance. Don’t rush into buying your bank’s insurance policy until you’ve looked at all the possibilities. You could end up saving money and get added life insurance coverage at the same time by considering a life insurance policy instead.

What is mortgage insurance?
Mortgage life insurance or creditor insurance is offered by most banks and lending institutions. It is a life insurance policy that pays the balance of your mortgage to the lending institution if a person on the mortgage passes away.

How does life insurance cover your mortgage?

Life insurance covers you the same way mortgage insurance covers you.  If a life insured passes away, you use the death benefit to pay down the mortgage.  There are several benefits to life insurance for your mortgage, why don’t we compare……

Extra coverage with life insurance
Life insurance policies give you added coverage and flexibility over a mortgage life insurance policy;

• One of the major disadvantages of insurance purchased through the bank is the ownership of the policy. The bank owns “your” policy and has total control over it. The bank also happens to be the beneficiary of your life insurance policy. That means you have no say in who gets the death benefit or what the death benefit is used for. When you die the bank is going to use the proceeds to pay off your mortgage. However with life insurance your family receives the payout from your life policy directly. It may be more advantageous for your surviving spouse or children to use the proceeds to invest and simply continue to pay the monthly mortgage payments. (This would be most appropriate if the current mortgage interest rate is much lower than current investment rates of return. They could simply invest the proceeds and use the investment income to the mortgage payments on a monthly basis.)
• Mortgage insurance policies only cover you for the amount of your mortgage you owe to the bank. As you pay down your mortgage, your coverage amount decreases with it. This is called a reducing balance. With a life insurance policy, you have a constant level of coverage for the whole term and are getting better value for your monthly payments.
• With mortgage life insurance, you have to reapply any time you switch lending institutions. But with life insurance, unless you want to increase your coverage or terminate your plan, your policy is stays in force with no medical questions asked in the future years (when some are unable to be covered due to health issues).

Shop, compare and save
Depending on circumstances such as age and health, the premiums on mortgage life insurance can be much higher than what you would pay for a life insurance policy. Compare the cost of a life insurance policy to a mortgage insurance policy. Chances are you’ll find a life insurance policy will have lower yearly premiums and offer more coverage and flexibility than a mortgage insurance policy.

*All amounts shown are based on a fixed annual premium rate. Does not include

Provincial Sales Tax – Ontario (8%) and Quebec (9%). * The Lenders’ group life

mortgage insurance premium shown is based on the average rate quoted in a survey of

Scotiabank, Bank of Montreal, TD Canada Trust, Royal Bank of Canada, and CIBC conducted

December 30th, 2008 by Empire Life.

While getting mortgage insurance through your lender is convenient, a life insurance policy might be the way to go if you’re looking to save money.  I believe it’s an easy choice, so whether you’re looking to save premium dollars or cover more than just your mortgage, a life insurance policy may be the right choice for you.  Dare to compare? I can get you an instant quote today.

Adam Myers

Independent Planning Group

202-223 Colonnade Road South

Ottawa Ontario, K2E 7K3

Phone: (613) 224-5511 x 108

Email: adam@pfip.ca

Estate Planning is a comprehensive process put in place to ensure your loved ones are well cared for after your death.  This includes creation of a will, the transfer of assets to your intended beneficiaries and minimizing taxes.

The actions you take now can ensure a smooth transition.  The concept of estate planning is not just for the wealthy, as everyone can benefit from a well thought out plan.  Some important things to consider are the structuring of asset ownership and the decreasing of probate fees, as well as legacy and charitable donation wishes.

A will is a legal document completed to communicate the deceased wishes relative to the distribution of the estate.  Legal guardians for children are also appointed as well as instructions for your own personal care should you become unable to care for yourself.  When creating a will, be sure you understand the three types of Power of Attorney.  There is the basic Power of Attorney, Power of Attorney for property and Power of Attorney for personal care.  All are very important and cover different aspects of life.   An executor should be named as well to ensure a person you trust is responsible for the distribution of the estate.

Some people may not realize that creditors and taxes must be paid before any beneficiaries can receive distributions.  This can be an issue if there is a lot of debt or probate fees to pay.  A good way to avoid problems is threw a life insurance policy with named beneficiaries.  Creditors have no right to the assets and they pass to your loved ones tax and probate free.  Also careful planning should be in place to ensure any money that can roll over to a spouse does, as it avoids the fees and can save you considerable amounts of tax money.

As you can see, estate planning is a complicated matter but leaving these issues unattended can make life far more complicated.  The best defence is a good offence, and I believe this holds true with estate planning. A little thinking now can go along way in the future for both you and your loved ones.

Adam Myers

Independent Planning Group

202-223 Colonnade Road South

Ottawa Ontario, K2E 7K3

Phone: (613) 224-5511 x 108

Email: adam@pfip.ca