| Money Sense
Having a mortgage doesn’t necessarily mean you need life insurance coverage equal to the amount you owe on it.
Q. We are non-residents who recently purchased property in Ontario for $550,000. We will be using this as a vacation home and want to know whether it would be a wise idea to buy term insurance to cover the mortgage in the event of death—or is there any other low-cost insurance product we can purchase? The aim for the coverage to pay off the mortgage if anything happened to either of us.
A. Before purchasing any insurance product, it is important to assess why you are buying it. Anyone who owns a home should have home insurance that protects against personal liability, the home contents and the dwelling itself. As far as life insurance for real estate, there are a few different considerations.
One common solution is to opt into mortgage insurance when you secure your mortgage. Generally, mortgage life insurance will pay off the balance of your mortgage in the event you die—this is the life insurance component—as well as make your mortgage payments if you are disabled and cannot work. This latter component is a form of disability insurance. It is important to read and understand the terms of your mortgage insurance, or any insurance policy, so you’re clear on exactly what is covered.
However, despite the availability of mortgage insurance, most people would be better off with separate life and disability insurance. Mortgage insurance tends to be expensive relative to the cost of securing the same level of coverage independently, and the terms of a separate insurance policy may also be more favourable.
In your case, Di, the fact that you are non-residents may or may not matter. That is not to say you should not purchase insurance, but your non-residency should not be the primary decision impacting an insurance purchase, nor the fact there is a mortgage.
I do not believe that people should buy insurance simply because they have a debt. For example, a single homeowner with a mortgage and no dependents may not need life insurance at all, because if they died, the house would likely be sold, and the mortgage paid off by the beneficiaries of their will. But they may need disability insurance. Disability insurance replaces your income if you are unable to work, but still alive. Life insurance may not be as important a consideration for a single person, while disability insurance is very important for anyone who is working and not financially independent.
Di, if you have dependents—whether a spouse, or dependent children, or other family members—you should consider life insurance. The life insurance coverage you choose may be more or less than the amount of your mortgage: It should be based on how much money your dependents would need to maintain their standard of living and be OK financially if you died. Would the Ontario home be sold if you died? Or could they comfortably maintain the mortgage payments? If this is an income property, for example, the death of the owner would not necessarily stop the tenants’ ongoing rent payments from being used to pay the mortgage.
Often, for someone who is young, or whose dependents are young, the life insurance needed would be considerably more than their home’s mortgage principal. You may need to pay off a mortgage and provide a lump sum of money to replace your income and contribute to your dependents’ future expenses.
Remember to consider the tax payable in the event of your death. As a non-resident, you may have Canadian capital gains tax payable on the property in the event you die. You may or may not have tax payable in your country of residence, depending on that country’s taxation of foreign income or of capital gains.
A life insurance needs analysis can help assess a family’s coverage requirements. You should consider this potential insurance holistically: I think you need to look at all your assets and all your liabilities, Di. You need to look at your dependents’ expenses in the event you died, and their future income-earning ability. There may be a life insurance need.
And as for your disability insurance needs, the options in Canada and abroad all seek to replace a percentage or monthly dollar amount of your income. You may not be able to secure insurance in Canada if you are a non-resident, as many insurance companies will not provide Canadian insurance policies to non-residents. You may be able to obtain mortgage insurance as part of the bank financing, even now after you have already taken ownership Inquire with the lender if this option interests you.
Still, you may find you can obtain better and cheaper coverage in your country of residence. It may not literally be attached to the mortgage or even in Canadian dollars, but that is OK. Again, I would be inclined to consider your life and disability insurance needs overall, and not necessarily base them on the fact that you have a mortgage.
As a non-resident owning real estate in Canada, you should consider a Canadian will, as it may be preferable to a foreign will. As your property is in Ontario, you may also want to consider an Ontario power of attorney for property that would appoint someone to make decisions about the home if you were sick, injured or disabled.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.
QUEBEC CITY, July 15, 2019 /CNW Telbec/ – Already a leader in instant acceptance with its EVO platform, iA Financial Group continues to innovate to make underwriting its individual life insurance products easier and quicker.
iA Financial Group today announced that medical requirements, like a blood profile, vital signs or urine test, will no longer be systematically required for clients 50 and under who buy up to one million dollars in life insurance.
This simplification to the underwriting process is possible thanks to technological advances, such as the use of predictive analytics models to evaluate applications. Going forward, advisors can confirm instant acceptance for most clients after completing a simple medical questionnaire.
“Constant innovation in our underwriting processes and instant acceptance at the point of sale consolidate our long-term relationship with our advisors and is a part of our commitment to make it quicker and easier to do business with us,” confirms Valérie Lelièvre, Vice-President, Business Solutions, Distribution and Marketing. “The news announced today calls on the newest technologies to offer our clients and advisors an unrivalled underwriting experience.”
About iA Financial Group
iA Financial Group is one of the largest insurance and wealth management groups in Canada, with operations in the United States. Founded in 1892, it is one of Canada’s largest public companies and is listed on the Toronto Stock Exchange under the ticker symbols IAG (common shares) and IAF (preferred shares).
iA Financial Group is a trademark and business name of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.
SOURCE Industrial Alliance Insurance and Financial Services Inc.
WINNIPEG _ Great-West Lifeco Inc. has signed a deal to acquire a strategic investment in Invesco Ltd. (Ireland), an employee benefit consulting and private wealth management firm.
Financial terms of the deal done by Great-West’s subsidiary Irish Life Group Ltd. were not immediately available.
Invesco is expected to continue to operate independently under its existing brand and with the same senior leadership team.
Established in 1991, Invesco has more than 125 employees and manages the corporate pension plans of over 275 large corporations in Ireland, along with over 500 small and medium companies.
The acquisition is subject to regulatory approval and customary closing conditions. It’s expected to close in the third quarter of this year.
Great-West says the deal is expected to be accretive to earnings, although not material to its financial results.
Excerpted article was written By Darren Bernhardt, CBC News
Great-West Life’s roots date back to 1891, when the company was founded in Winnipeg and a man named Jeffrey Hall Brock had a dream that many called impossible.
At the time, there were 40 insurance companies in Canada and 31 of those were foreign-owned. None of the nine Canadian ones were based in Western Canada, according to George Siamandas, a Winnipeg historian who runs The Winnipeg Time Machine blogsite.
Brock was a local insurance agent who promoted the idea of a Winnipeg-based insurance company, thinking a local company would be more sensitive to the needs of westerners, Siamandas wrote.
Brock was scoffed at and told that his dream would not fly, that it was impossible. But he persevered and the company was incorporated on Aug. 28, 1891, and had leading citizens like hardware magnate James Ashdown on its board. Brock’s goal was to take in $1 million worth of premiums in the first year, Siamandas wrote.
At the board’s first annual meeting, he reported they sold $2.7 million.
The company’s first death claim was in 1893 for $1,000, and in 1912 two policyholders who died on the Titanic were covered.
By 1896, the company served clients across Canada and in 1906 it opened its first office in the U.S. in Fargo, N.D. The next year, it was the largest insurance company in Canada and had 100 employees in Winnipeg and 600 agents across the country.
In 1911, the company built its head office in Winnipeg’s Exchange District, on the corner of Rorie Street and Lombard Avenue.
In 1942, GWL became the first Canadian company to enter the accident and health insurance business.
In 1960, the company moved to a new building on Osborne Street — constructed on the site of the old Osborne Stadium — across from the legislative building, and in 1983 it expanded into another new building at Broadway and Osborne.
Still headquartered on Osborne and a publicly-traded company, Great-West Lifeco (GWL) is now one of North America’s largest financial holding companies.
Indirectly controlled by Montreal billionaire Paul Desmarais, through his stake in the Power Corporation of Canada — a Canadian holding company — GWL now serves more than 13 million people across Canada, offering insurance as well as investment, savings and retirement income plans and annuities.
In 1997, it took over the then-123-year-old London Life and in 2003, GWL acquired another one of the country’s oldest insurance companies, paying $7.3 billion CDN for the then-156-year-old Canada Life Financial.
The company’s network includes The Great-West Life Assurance Company, London Life Insurance Company, Canada Life Financial, Great-West Life & Annuity Insurance Co., Irish Life, and Putnam Investments.
The decision by Canada’s life insurers to stop requiring genetic testing for the vast majority of new policy holders is being dismissed as a pre-emptive strike against pending federal legislation that the industry strongly opposes.
Supporters of a Liberal private member’s bill that would explicitly forbid discrimination on the grounds of genetic test results say the Wednesday, January 11, 2016 industry announcement is little more than an 11th-hour stalling attempt that will wind up being redundant if the bill becomes law.
The Canadian Life and Health Insurance Association announced that they will soon bar insurers from requesting or using genetic test results for policies valued at up to $250,000.
That threshold represents about 85 per cent of all policies, the association said, adding the new rules would go into effect on Jan. 1, 2018.
Bev Heim-Myers, chair of the Canadian Coalition for Genetic Fairness, said the association’s voluntary move should not be seen as a substitute for the legislation that’s set to undergo third reading in the House of Commons in the coming weeks.
“For years and years, the insurance industry has had an opportunity to embargo the use of genetic test information, and they have chosen not to,” she said. “So now, in the 11th hour, when we have legislation on the table, …they have come forward with this? It seems that the timing is to discourage the legislation from going through.”
Bill S-201, which received unanimous support from the senate last May, features legislation that would make it illegal to request or use genetic information against somebody’s will.
The bill would also add genetic characteristics as a prohibited ground of discrimination under the Canadian Human Rights Act, enshrining it alongside race, religion and other long-standing civil rights.
Insurance Association President Frank Swedlove did not deny that the organization has opposed the bill and would not lament any potential failure in the House of Commons.
He argued that banning genetic testing would drive the cost of insurance higher, since Canadians would be relatively free to apply for higher-value policies if there were fewer restrictions in place.
The industry has spoken up against the bill in order to try and keep the cost down for consumers, he said.
Swedlove said the new rules around genetic testing are a way to address their concerns with the bill while acknowledging Canadians’ fears about the way their genetic material could be used.
“If the issue is to ensure that the average Canadian family can continue to buy insurance, then this commitment does provide that,” he said. “What Bill S-201 would do is have the impact of increasing, significantly, the cost of insurance and making it unaffordable for a lot of people. So if this action discourages Bill S-201 from being passed, then I would see that as being positive.”
Heim-Myers said the new rules are discriminatory, since they still require people seeking coverage of more than $250,000 to undergo testing. This, she said, could marginalize those with more complex health needs or chronic conditions who frequently need more extensive coverage.
The office of the federal privacy commissioner has also questioned the use of genetic testing results in the insurance industry.
A 2014 report on the issue noted privacy implications that can arise from the collection and use of genetic information.
“Based on our analysis, it is not clear that the collection and use of genetic test results by insurance companies is demonstrably necessary, effective, proportionate or the least intrusive means of achieving the industry’s objectives at this time,” the report said.
There are now hundreds of genetic tests available to help spot genes known to increase a person’s risk of developing certain medical conditions.
But some people may decline tests for fear a positive result may mean they could face discrimination from insurance companies or their employers.
Heim-Myers argues that privacy laws would have the added benefit of advancing scientific research, since more Canadians may be willing to agree to genetic testing if they felt their information was secure and could not be used against them.