Conexus are a Trusted SASKATOON INSURANCE expert
Here they answer Trustedsaskatoon.com Faceboook fans questions othat were asked for the November TrustedSaskatoon.com show about personal finances
Part 1 :
1. Rachelle Nieman :How can I estimate/calculate best when determining how much extra life insurance to get on top of what is given by my employer?
A:In order to determine the amount of life insurance required by any individual a needs analysis should be done. This entails looking at things such as all of your debt, final expenses, estate administration costs, saving for children’s education and income replacement. What assets you have should also be considered. However if you are single, a quick rule of thumb would be to add up all your debt, add additional insurance for final expenses and estate costs then subtract your assets. If you have dependants, add up all your debt, funeral expenses and estate administration costs and also add 10 times your income.
2. Erin Leigh Cumming: Every time I see a commercial for Gerber life insurance, I have to ask: Why does a baby need life insurance? I get that it would pay for funeral costs, but beyond that... who really needs life insurance, and who can go without?
A: Whether or not to insure babies or children is a common debate in the life insurance industry. Some advisors agree that it is important and some do not. I definitely do. The most important reason to insure a child isn’t to make sure there is cash for funeral expenses, although that is important, but to guarantee insurability. Many people have the misconception that money buys life insurance when in fact it is HEALTH that buys life insurance, money only pays the premiums. No one knows what the future holds. Insuring a child as young as possible before any health concerns exist is a wise idea. It secures coverage for them so that if they are diagnosed with a health condition during their childhood years that makes them uninsurable, they will have coverage as adults when they may have a spouse or family to support. For children you can also add something called a guaranteed insurability option. This allows a person to buy additional insurance numerous times during their lifetime without providing any medical evidence. There are many things that can affect our ability to qualify for life insurance. Purchasing a plan for your child or grandchild is one of the best gifts you could ever give them.
3. Mike Maille: Do I need special insurance when I am traveling out of Country and how important is it if so?
A:Absolutely. You should never leave Canada without travel insurance that covers you for emergency hospital and medical expenses. Even a quick weekend trip across the border to shop should include a travel insurance policy. There is no free healthcare when you are travelling. A doctor’s visit alone can cost hundreds of dollars and hospitalization involving tests or surgery can run into the tens of thousands to hundreds of thousands depending on the severity. The few dollars spent for a travel insurance policy is well worth it. There are actually some countries that require visitors to show proof of travel health insurance before allowing you to enter. We see this in Cuba, a common vacation destination for many Canadians.
4. Brandon Lesperance : What type of life insurance policies should I look at getting I'm just 21 and most people my age don't think about this ?
A: Which type of life insurance to purchase at age 21 depends on a few factors. The first question you should ask is why am I buying the insurance, what am I protecting? Another important question is what can I afford? Everyone’s situation is different. This is something that you should discuss with a financial advisor knowledgeable about life insurance and the various types available. I am a true believer in applying for life insurance while you are young and healthy. Permanent insurance plans are a good idea at a young age if you can afford them. You are able to lock in the premium at a low cost and perhaps have the policy paid up in 10 or 20 years. An advisor can help you determine how much of this type you need. There are many reasons to also purchase term insurance which allows you buy a much larger amount of insurance at very reasonable rates. Again this should be discussed and decided upon with the help of an advisor.
5. Stephanie Nicholson: How much life insurance should a couple have? If you have a child and want more and a house?
A: That is a very open question. Every couple is different and situations vary. A proper needs analysis done by a financial advisor will help determine the right amount. But a quick rule of thumb would be to add up all debt, including the mortgage, and at least 10 times your income.
6. Irma Kidd Johnson: when you have a premium return rider, just how much do you get back when it terminates ? everything that has been paid in premiums, or a percentage ?
A: In order to determine how much you would get back you would have to check with your policy wording. There are different policies that include return of premium riders. We usually see this with either disability or critical illness insurance policies. Some policies will return the premium you paid to cover the cost of the insurance but not return the premiums paid for the rider. Others will return all premiums paid. It should be outlined in the policy.
7. Jennifer Sparks: I have a daughter with epilepsy. What do I need to know about insurance for her when she is no longer covered as a dependent. Also, how much life insurance should a single parent have with 2 children who just entered their teens?
A: That is a good question. As with many health conditions the severity of the illness needs to be determined. Many people with epilepsy CAN get insurance. The underwriters want to know the age of diagnosis or how long she has had it as well as the severity or how well controlled it is. If the epilepsy is well-controlled and your daughter has had no seizures in at least 2 years she should have no trouble qualifying for life insurance. Depending again on the control there could be a slight rating or additional cost added to the premium. If the epilepsy is poorly controlled with frequent seizures she most likely will be unable to qualify. Now that is for life insurance. Health benefits may be something else you are concerned with. While your daughter is a dependant she is most likely covered by your health benefit plan if you have one. Once she is no longer a student and independent her epilepsy could affect her ability to qualify for her own plan. If she works as an employee with a group benefits plan she won’t have any problem joining the plan. If she needs to get her own personal plan she may have difficulty finding a plan that will cover her pre-existing condition and any medications she is taking OR find that it is very expensive to have the pre-existing medications covered. Regarding life insurance, again a needs analysis should be done. There are many variables. Who would the teens live with in the event of your death? Could that person afford to support the kids? You need to consider eliminating any debt that may be present when you die and of course providing enough income to support the kids until they are old enough to be on their own. Add your debt and at least 75 to 80% of your income x 10 years.