OmbudService for Life & Health Insurance reports on record numbers

 Canada’s OmbudService for Life & Health Insurance (OLHI) held its annual general meeting and released its annual report for 2016/17, reporting on a year of record numbers and renewed priorities.

Highlights:

  • Complaint volumes increase by 23.2% across Canada, marking a historic high
  • Increase in complaints from Quebec (+36.2%), Prairie provinces (+25.6%) and British Columbia (+ 24.4%)
  • Public contacts exceed 87,000
  • Edmonton office established as a part of western expansion strategy

“We discovered many things about ourselves this past year: we are small yet influential; we are experts in our field; we are strategic; and we are ready to redefine our future,” said Chair Dr. Janice MacKinnon at the meeting on September 14, 2017. “The launch of OLHI’s new case management and reporting system (CMRS) and website provides us with an opportunity to take a fresh look at how we do business today and moving forward.”

Among OLHI’s business plans for the future is increasing visibility outside Central Canada. This past year, complaint volumes rose in ManitobaSaskatchewanAlberta and British Columbia. To build on this momentum, OLHI established a physical presence in Edmonton in Q4 with a new office.

For fiscal 2016/17, OLHI received 2,632 complaints, with 57.5% of these relating to denied claims. Disability, life and employee healthcare & dental, together, made up 83.9% of all product complaints. Web visits rose by 19.1% over last year, reaching nearly 85,000.

“OLHI is successful because of stakeholder support and the respect we receive as an independent, impartial organization,” said Brigitte Kent, Acting Executive Director. “This allows us to meet our benchmark of closing 80% of all complaints within 120 days.”

Looking ahead, OLHI will continue to measure effectiveness and efficiency, identifying best ways to utilize the CMRS and accelerate service without sacrificing quality. OLHI will also complete its third Independent Review and begin work on ensuing recommendations.

For more detail on OLHI’s operations, including case studies and statistics, the full 2016/2017 Annual Report is available at http://olhi.ca/news-publications/annual-report/.

About the OmbudService for Life & Health Insurance
The OmbudService for Life & Health Insurance (OLHI) is Canada’s only independent complaint resolution service for consumers of Canadian life and health insurance. Canadians trust OLHI to review their insurance complaints about life, disability, employee health benefits, travel, and insurance investment products such as annuities and segregated funds. OLHI’s free bilingual services are available to any consumer whose insurance company is an OLHI member – and, currently, 99% of Canadian life and health insurers are. OLHI also offers general information online about life and health insurance. To ensure impartiality, OLHI’s operations are overseen by the Canadian Council of Insurance Regulators (CCIR). For more information, visit www.olhi.ca.

SOURCE OmbudService for Life & Health Insurance

Life insurance: the ultimate in financial #adulting?

Life insurance: the ultimate in financial #adulting?

Millennials have plenty to worry about when it comes to financial #adulting. From paying off student debt and managing day-to-day expenses to buying a house and starting a family, these new financial responsibilities can be overwhelming.

A recent survey by TD revealed another gap in millennials’ financial picture: life insurance. According to the survey, more than half (55%) of millennials do not have any life insurance, although one-third have thought about it, particularly when it comes to ensuring their loved ones are taken care of should the worst happen.

“As millennials are in the midst of this new life stage, it’s clear that they want to protect their families and loved ones,” says Mark Hardy, Senior Manager of Direct Life & Health, TD Insurance. “But with so many other financial responsibilities it can be daunting to know where to start.”

The survey revealed that these other financial priorities, including paying down their debt (25%) and saving for a house (21%), were much higher on the ‘to do’ list with life insurance lowest on the list.

While millennials said the top barrier to purchasing life insurance was the cost (55%), more than a third (37%) said they haven’t purchased life insurance because they don’t have any dependents.

“There’s no doubt that getting married or becoming a parent is a key life event when people realize the importance of having life insurance,” adds Hardy. “Less understood is that the younger you are when you buy life insurance, the less you’ll pay for your coverage and your premiums will not increase for the term you choose.”

What millennials might also find surprising is that the cost of life insurance breaks down to less than a cup of coffee a day, over a 10-year period.

“For folks starting a family – or those who already have young families or dependents – who don’t yet have life insurance, now is the time to make it a priority because this is the period when your financial obligations are really growing and you need that peace of mind,” says Hardy.

The survey also revealed that while most millennials said that life insurance is best to cover one-time costs, such as funerals (68%), many don’t realize that it can assist with so much more. Day-to-day living expenses, mortgage payments, lost income, and student loans are all areas where having life insurance can help relieve the financial pressure on those left behind.

Figuring out how much life insurance one needs is also easy with TD’s Right Fit Coverage Assessment tool.

“Before making any decisions about life insurance, it’s important to start by researching your options and speaking to an insurance advisor to learn what insurance will best fit your unique situation,” says Hardy. “That way you can be assured peace of mind for you and your family.”

About the TD Survey

Results are based on an online survey of 1,000 Canadian adults (aged 18yrs+), conducted May 8 – 12, 2017, by Environics Research Group.

About TD Insurance

TD Insurance offers a wide range of products to help protect customers including credit protection, auto, home, health, life, and travel insurance. With more than 4.5 million customers, TD Insurance authorized products and services are available through a network of more than 1,150 TD Canada Trust branches, the Internet, and telephone. TD Insurance represents all of the personal lines insurance entities within TD Bank Group. For more information, visit www.tdinsurance.com.

SOURCE TD Bank Group

IIROC & Life Insurance Council of Saskatchewan to share information on investigations & discipline

A new agreement between the Investment Industry Regulatory Organization of Canada (IIROC) and the Life Insurance Council of Saskatchewan (LICS) will provide stronger protection for investors and consumers by preventing rule breakers from moving from the jurisdiction of one regulator to another without close scrutiny. When necessary the agreement allows the two regulatory organizations to co-ordinate investigations.

As part of a Memorandum of Understanding announced today, IIROC and LICS will share information on investigations and discipline, including names of individuals refused registration or licensing, names of individuals under investigation and names of licensees who have had terms and conditions imposed on their registration or licensing.

The agreement also enables joint investigations when the same individual is under investigation by both regulatory organizations.

IIROC has information sharing agreements with insurance regulators in Alberta, British Columbia, Ontario and Quebec.

“As a public interest regulator, it is important to ensure that rule-breakers cannot simply switch designations without unsuspecting new clients or other regulators being aware of their transgressions,” said IIROC President and CEO Andrew J. Kriegler. “This agreement helps to close gaps and enables both our organizations to strengthen consumer protection.”

“This is a great example of regulatory agencies working together to enhance consumer protection in our province,” said Gordon Wyant, Saskatchewan Minister of Justice and Attorney General. “We applaud both IIROC and LICS for demonstrating leadership and encourage continued co-operation.”

“This agreement not only provides strong consumer protection, it sends an important message in both the securities and insurance sectors, that if you are one of the few who harm clients, you will be held accountable,” said Roger Sobotkiewicz, Chair and CEO of the Financial and Consumer Affairs Authority of Saskatchewan.

IIROC investigates and prosecutes investment advisors who breach the regulator’s rules by, for example, misappropriating funds from clients, falsely endorsing client signatures and/or making unsuitable recommendations to investors, commonly seniors and vulnerable investors who suffer significant financial losses. In 2016, IIROC completed 138 investigations across Canada with 46 completed prosecutions and more than $3.5 million in sanctions imposed.

The Insurance Councils of Saskatchewan (ICS) operate under an authority delegated by the Superintendent of Insurance to license and regulate insurance agents, brokers, adjusters and agencies in the province of Saskatchewan. The Councils are committed to a fair, ethical and professional industry which ensures that consumers receive responsible, trustworthy advice and service regarding insurance and related financial matters.

A fact sheet listing IIROC’s recent MOUs is available at www.iiroc.ca.

About IIROC
IIROC is the national self-regulatory organization which oversees all investment dealers and their trading activity in Canada’s debt and equity markets. IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while supporting healthy Canadian capital markets. IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian debt and equity marketplaces.

About ICS
The Councils have the authority to conduct investigations into the conduct of insurance brokers, agents and adjusters in response to a complaint and to come to a determination as to whether there has been a breach of any of the provisions of The Saskatchewan Insurance Act, its Regulations or the Insurance Council Bylaws.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC) – General News

Why you need 3 savings accounts

Why you need 3 savings accounts

By Liz Weston

THE ASSOCIATED PRESS

Some of us hoard cash while paying 18% interest on a credit card balance. Others blow through a tax refund as if it were free money when it’s actually a return of our own hard-earned dollars.

This brain quirk has a name: mental accounting. We treat money differently depending on where it comes from and how we intend to spend it, often to our own detriment.

We can, however, leverage this illogical behaviour to help us save more.

A big pot of savings may inspire less diligence than multiple accounts with specific purposes . With multiple accounts, savings for long-term goals can grow, even as those for short-term needs are periodically raided.

Multiple savings accounts can get expensive at traditional banks that have minimum balance requirements and account fees. Many online banks, however, allow customers to set up dozens of accounts for free with no minimum balances. Most people need at least three, with regular (preferably automatic) transfers from their checking accounts into each:

_An emergency fund for job loss and other major financial setbacks

_A “needs” account to cover necessary expenses that aren’t monthly (such as property taxes or annual insurance premiums) or that are inevitable but often unpredictable (such as car repairs or medical deductibles)

_A “wants” account to pay for the fun stuff, such as vacations, holiday spending or a down payment on a new car

Multiple savings accounts are useful for budgeting in much the same way as the envelope system, where people divide cash into envelopes to cover expenses such as rent, food and entertainment.

The savings accounts, like the envelopes, tell you if you have enough to cover that specific goal, but also allow you to shift money around when required, said Rachel Schneider, a senior vice-president for the non-profit Center for Financial Services Innovation and co-author of the book “The Financial Diaries: How American Families Cope in a World of Uncertainty.”

“Knowing that you have that escape valve allows you to put more money aside in those accounts,” Schneider said.

BANKS AND APPS THAT MAKE IT EASIER

There’s some evidence that setting goals helps motivate people to save more , which has led to apps such as Tip Yourself, BoostUp and Qapital. Qapital, for example, allows people to set goals and then create rules for funding them, such as rounding up each purchase to the nearest dollar and sweeping the change toward the goal, or transferring a certain amount into savings if they buy something at Starbucks or hit 10,000 steps on their FitBit fitness tracker.

“Setting goals helps our users stay focused and motivated. That’s why we encourage users not to label their goal ‘vacation’ but to name the place they wish to go, attach a photo and share it with a friend,” says Qapital founder and CEO George Friedman . “Their aspirations become more actionable when they are visualized and said aloud.”

Getting more specific also can help you track multiple goals without wondering whether you’ll have enough money to cover your property taxes in six months if you need to pay for a car repair now.

I typically have somewhere between 10 and 12 savings accounts labeled for different goals. To cover a $1,705 annual life insurance premium, for example, I set up an automatic transfer so that $143 a month goes from our checking account at our brick-and-mortar bank into the “life insurance” account at the online bank. Repairs and maintenance for our elderly RV are less predictable, but we’ve averaged about $2,400 a year, so I put $200 a month into that fund.

Some banks and credit unions allow multiple savings accounts, but typically you’ll need to keep your balance above certain limits to avoid fees. Many online banks, by contrast, allow you to set up dozens of accounts without charge and usually offer higher interest rates to boot. Capital One 360 and Barclays Online, for example, allows users to create up to 25 savings accounts (called subaccounts) with nicknames indicating the goals, while Ally and Discover don’t limit the number.

Capital One declined to say how many savers take advantage of this function, but Ally says 11.7 per cent of its savings customers had multiple savings accounts as of March 31, averaging 2.9 accounts each. Some of the most common labels include “Emergency” ”Rainy day,“ ”Vacation,” ”Travel,“ ”Car,“ ”House,“ ”Xmas“ and ”Wedding.“

Multiple accounts may not be necessary if you’re a logical type who either doesn’t need incentives to save or is really good at tracking goals on a spreadsheet. The rest of us, though, often find that saving finally makes sense when we know what money goes where.

_______________________________________________________

This column was provided to The Associated Press by the personal finance website NerdWallet.

Liz Weston is a certified financial planner and columnist at NerdWallet

Canada: Life Insurance – Uses, Tips And Traps

Article by Crista C. Osualdini

Life insurance is a familiar product to many of us and can be an element of estate planning that should not be overlooked. It is typically used to either create or preserve wealth and can be used in a variety of ways in structuring an estate plan. For example:

Creating Liquidity to Pay Debts –

When completing your estate plan, an analysis should be done of the nature and extent of anticipated debt and expenses upon death. In Canada, upon death we are notionally deemed to have disposed of all our assets for tax purposes. This means that any unrealized capital gains at the time of death will be taxed. This can often result in a significant tax bill – family cottages often being a prime example. Life insurance can create the necessary liquidity so that assets do not need to be sold in order to pay associated tax debt or any other forms of debt.

Creating Wealth Outside the Estate –

When developing an estate plan, the law requires you to ensure that certain persons are properly provided for. These people include, but are not limited to, spouses, minor children and dependent adult children. This can become problematic, especially in blended family situations, where there is a need to provide for a second spouse, but also a desire to provide for non-dependent adult children of the first marriage. Life insurance can be used to create wealth and increase the “size the pie” that is available for persons you would like to provide for.

Funding Buy/Sell Agreements in Privately Held Corporations – It is typical that in a small business upon the death of a shareholder, either the remaining shareholders or the corporation will purchase the deceased shareholder’s shares. This can be a substantial cost. The expense could interfere with the company’s ability to carry on business with the added cost of new financing or reduced capital availability. Life insurance can be a tool used to fund the share purchase so that the impact of the shareholder’s death on the operation of the corporation is minimized.

When working with life insurance, the following are 10 Tips and Traps from my experience in working with individuals to develop their estate plan:

  1. In light of the aging baby boomer generation, it is anticipated that over the course of the next thirty years there will be an unprecedented inter-generational wealth transfer. It will likely follow that estate litigation will be on the rise. Consider naming beneficiary on your life insurance other than your Estate, this will assist in protecting it from claims of disappointed beneficiaries and creditors.
  2. Consider the need for life insurance earlier rather than later. Life insurance is often prohibitively expensive later in life and thus renders it an uneconomical solution.
  3. If you name your Estate as the beneficiary of your life insurance, it will be subject to probate fees. While Alberta currently has low flat rate probate fees, this may not always be the case. In certain Provinces, probate fees are calculated as a percentage of estate value.
  4. In addition, if you name your Estate as the beneficiary of your life insurance, your executors will likely need to wait for a Grant of Probate to be issued prior to the insurance provider releasing funds. At the time of writing, a Grant of Probate takes approximately three to four months to issue at the Court of Queen’s Bench.
  5. Make sure your beneficiaries are aware that you have life insurance in place. Or alternatively, provide this information in your Will. If your executor or beneficiaries do not know that you have life insurance in place, it is possible that it may go unclaimed upon your death.
  6. When life insurance is used to fund a corporate buy out of share upon death, make sure your shareholders’ agreement sets out whether those funds will be paid through the Capital Dividend Account and thus on a “tax free” basis to the estate of the deceased shareholder. If this is unclear in the agreement, it can lead to litigation as to who receives the tax benefit generated by the payment of life insurance to the corporation.
  7. Ensure that your beneficiary designations are not in violation of any existing separation or divorce agreements. If they are, this will likely lead to litigation. The result of such litigation could be that a remedial trust is imposed by the Court over the insurance proceeds for the benefit of whomever the insurance was supposed to be paid pursuant to the agreement.
  8. Make sure initial and any subsequent amendments to beneficiary designations are done correctly. The Insurance Act sets out the requirements for making a beneficiary designation  amendment and must be complied with. Far too often these designations are completed incorrectly which can lead to expensive and time consuming litigation. Make sure the designation is signed by you and specifically names the insurance policy that you are referring to and who you are naming as the beneficiary.
  9. Insurance can be a great tool to use when you are desirous of making a charitable donation upon death. There are different ways to structure such a gift, so ensure you receive tax advice on what method is best for your circumstances.
  10. For couples with young children, an important consideration in estate planning is appointing guardians for the children in the event of the death of both parents. Part of this discussion usually pertains to where the children would live. Quite often parents will want to maintain continuity for the children and for them to continue living in the family home. Do not forget about mortgage insurance and considerations as to how the Estate will be able to afford to continue to maintain the family home.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tech and regulations among 5 forces shaping life insurance in 2017

Quickly-evolving technology has emerged as a dominant force shaping the year ahead in Canada’s life insurance sector, according to EY’s 2017 Life Insurance Outlook. This is just one of the 5 forces for life insurers to rein in this year, along with increasingly complex regulations, a growing talent crunch and customer-driven innovation.

“Life insurers face difficult challenges this year that will add pressure to an industry already in a period of sustained transformation,” says Janice Deganis, EY’s Insurance Leader. “Insurance leaders should be finding ways to unlock value from tough new regulations, remain laser-focused new technologies, like robotics, and at the same time, attract new talent.”

Talent has emerged as a new force in EY’s ranking, compared to last year’s outlook.

EY has identified five external forces shaping Canada’s life insurance sector in 2017, and a roadmap to help guide insurers through the shifting landscape ahead.

Impact of external forces on the Canadian life market in 2017:
(0 = Very low impact, 10 = Very high impact)

Regulations (9) – Ever-increasing regulations and new accounting standards will challenge insurers to find ways to unfold value and get out ahead of the potential opportunities these changes represent.

Technology (9) – Digital technologies continue to redefine life insurance, from the potential for cost savings through robotics and analytics, to the growing influence of InsurTechs, to the opportunities artificial intelligence and block chain may offer.

Economic environment (8) – Continued global economic weakness, combined with stubbornly low interest rates, mediocre growth in Canada and political changes in the US and EU ratchet up the pressure on insurers’ margins.  

Customer expectations (7) – Customer expectations continue to shift towards a more digital, personalized and seamless experience. Simpler products and a holistic approach will become prerequisites of true customer centricity.

Talent (7) –Canadian insurers face a mounting talent shortfall in 2017, fueled by growing retirements among insurance professionals and the impact of digital transformation, which requires new skills in data science, cyber-risk management and blockchain innovation.

Roadmap for transformation: priorities for 2017

Leading life insurers will focus on the following path to change:

1. Focus on unlocking value from a complex regulatory environment.
2. Prepare for more economic uncertainty ahead.
3. Remain laser-focused on customer-driven innovation
4. Embrace the technologies that can improve top- and bottom-line performance
5. Rethink strategies to attract, develop and retain talent.

“Vigilance in both understanding and adapting to these emerging forces will be the key for positive transformation of Canada’s insurers,” explains Deganis. “Those who prepare for the economic uncertainty ahead and push ahead with thoughtful innovation will be better positioned to get ahead.”

Read the full 2017 EY Life Insurance Outlook and the 2017 EY P&C Insurance Outlook.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

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