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What’s in your life insurance broker’s wallet? Part III of IV

April 3, 2013

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Posted by: glenn

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Category: Life Insurance

Today we’re going to interview 3 actual Canadian life insurance brokers to see what type of insurance they have. All three brokers have many years of experience in the business, all three have dealt with thousands of clients through the years, all three are professionals looking after the best interests of their clients. Two of the life insurance brokers have also discussed other types of insurance coverage.

But before we talk about specifics, I’d like to take a page from my grade 13 English class and engage in some foreshadowing. Our first broker interviewed responded with this as his very first line:

I believe in what I sell.

I believe you’ll see that statement reflected in his insurance coverage, as well as the other brokers interviewed here. Looking at what coverage your insurance broker has can provide an interesting glimpse into their approach towards life insurance.

Insurance Direct Canada

First up, I interviewed Russ, owner of Insurance Direct Canada. Russ is old enough to have grandchildren and maintains a very active national life insurance brokerage. While I’ve paraphrased other’s responses, Russ’s response is superb as it stands – I’ve simply quoted exactly what he sent me. Here’s what he had to say:

I believe in what I sell.

I have $200,000 funded UL to top up my wife’s pension or provide for grandchildren when I pass if she does not require it which is most likely.

$75,000 critical illness for me and my wife. It went through a policy renewal a couple of years ago – I would recommend a 20 year term or longer now to clients as it is expensive. This is to enable me to take time off work or hire someone to fill in for me if either one of us gets a critical illness as I would want to concentrate on getting better or help my wife get better and also to cover the hidden costs like travel and parking and medicine that is not covered by our plans.

$1.0 million to fund a “buy” agreement in the event of my death. Additional corporate owned insurance to cover any debts and pay the balance out through the CDA to my wife.

Long Term Care Insurance – $100 per day for each of us for home care or institutional care. We had my wife’s parents come to live with us for 8 years and while we would not have had it any other way, it was a strain particularly for the last two years of failing health. We want to have the insurance so that the question of living with our kids when in poor health will not be an issue. We will be able to go to the care home of our choice and it will be a matter of claiming on our insurance policy not a snub by our kids. Frankly, I think we can find a care home that would be better than living with kids and the “at home” care benefit should enable us to live at home longer than usual with daily help.

I also have an excellent group insurance plan that goes to age 80 with no pre-existing conditions for the travel component – all I need is a letter from my doctor saying I am approved to travel and the time is up to 90 days. It is also a large pool so no surprises if we have a bad year for claims and the prescription coverage is unlimited if we have a need for that. It was designed by an older person for what he felt he would need but it is for groups of two or more.

Term Canada

Chris from Term Canada is also an independent life insurance broker. He’s married, no kids, and in many respects similiar to Mark from our post yesterday on financial bloggers.

Chris maintains $500,000 of 20 year term life insurance to cover his mortgage plus some. In addition he has a $100,000 permanent life insurance policy that he’s had for a number of years. He purchased that policy simply because he expected he would want it in the future, and wanted to lock in rates when he was younger.

And while we didn’t specifically ask for this, both insurance brokers we interviewed went on to discuss other insurance policies that they own. Chris has a disability insurance policy that he purchased when his business first started to take off. And lastly, Chris has $150,000 of critical illness he purchased years ago back before the insurance companies realized they had underpriced these policies. His critical illness policy has premiums level to age 75 instead of the more common 10 year level rates.

 Life Insurance Canada.com

Glenn of Life Insurance Canada.com – that’s me. I’m an independent life insurance broker. I focus my practice on education rather than specific products. Most of my clients have term insurance, in direct contrast to the insurance that I carry. I’m married, we have two children in their mid to late teens, both are still in school.

Coverage:

  • $1,000,000 20 year term insurance.
  • $250,000 minimum funded universal life insurance – basically a term to 100 policy.
  • $200,000 joint last to die policy with my spouse.
  • Spouse has roughly $600,000 term life insurance coverage.
  • $250,000 minimum funded universal life insurance on each child.
  • Disability policy.

The $1,000,000 of coverage is simply income protection, to cover income replacement for my family should I pass. The joint last to die policy I purchased in order to create an estate for my children. The basic decision was that no matter how our finances ended up, when both my wife and I passed away we would have an estate of $100,000 for each of our children.

The minimum funded universal life policy was purchased in order to leave my wife an amount of money upon my death. Again, the consideration was that no matter how business or investments go over the long long term, I’ve guaranteed $250,000 to her upon my death.

My wife’s coverage is again income replacement. We expect to shortly replace $100,000 of her term life insurance coverage with a permanent life insurance policy.

We purchased the admittedly fairly large policy on our children for two reasons. First, I wanted to ensure that no matter what happens to them medically, that they always have some type of coverage, and hopefully enough to cover a small mortgage. Secondly, with permanent insurance premiums on the rise I locked in the policy for their lifetime at premiums I don’t believe we’ll ever see again. Once they’re older and have their own families I expect to transfer ownership of the policy to them. At that point I expect they’ll find the coverage a screaming deal.

And lastly, I have a disability insurance policy to cover my income. The policy is an older policy from the 90’s and is deficient in that it doesn’t cover my current level of income. Unfortunately because my business is all non-face to face and we work from a separate home office, the insurance companies have decided that I am now uninsurable for disability insurance. This isn’t for medical reasons, it’s simply because if I’m working from my office and not visiting clients, the insurance company can’t tell if I’m actually working or not. And that’s understandable because according to my wife, some days she can’t tell if I’m working or not either.

I’d like to thank Russ and Chris for being so willing to share their personal insurance coverage details so openly.

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