In Dec 2010, The Globe and Mail ran two articles about how insurance advisors lack supervision and how conflicts of interest affect their recommendations. You’ll find links at http://bit.ly/InsLoophole, including a link back to this informative thread.

I hope you and your husband have stopped arguing and will soon get peace of mind by putting suitable insurance in place

In Canada, the usual term products are Term 10 and Term 20. That’s where companies focus on being competitive. If you are picking an unusual term, how can you compare with the market? There are comparison services like http://www.winquote.ca/ (for Health Risk, pick Regular). See how few sell Term 25? That’s a red flag — or at least a yellow one

An insurance policy is a promise and corporate governance is a measure of how well companies keep their promises. The Globe and Mail released the 2011 rankings of 250+ companies mere days ago (http://bit.ly/RANK2011). The top three insurers are Manulife (#2), Sun Life (#7) and Industrial Alliance (#12). In contrast, RBC is #23 (still respectable). Where does the company you’re considering rank?

You may wish to deal with an independent advisor who answers your questions to your satisfaction and who sells products from a range of major companies with high corporate governance.

PS What if your insurance policy has already been issued? Don’t worry. Insurance policies come with a money-back guarantee (commonly 10 days). If you aren’t satisfied, you are entitled to return the policy without penalty. You need not feel any obligation to your salesperson either.

I think there is some great companies out there, I own RBC, Canada Life, Transamerica and Equitable! Yes, I am nuts, but over time what you believe to be true is not. I have personally converted most of my term to permanent. Why? As you know interest rates are low and are expect to be low for years. So all insurance companies are repricing their permanent life policies higher in order to still
make money on the money they collect. Again, don’t take my word for it call RBC or Canada Life or others.

The Financial Post had an article on this in Jan/2011 and also MoneyVille (Toronto Star)Aug/2011

The interesting thing is term which I own, and permanent which I also own really do different things. Term is great because is cheap when you are young and goes up to the point which the insurance company will have you drop the coverage.

Permanent is good if you have good cash flow and understand that you have more options like annuities later in life. See my post regarding Million Dollar Journey or Gail Vaz-Oxlade on annuities.

Cheers,

Brian

We went with the cooperators initially because of the 25 year term vs the 20 year that RBC offers, but now I am wondering if that is worthwhile. We haven’t committed to anything yet, but I suppose it is pending.

We are the first of our friends to look into life insurance, so are sort of paving the way ourselves.

In any case, this is supposed to be term, but what you just said makes it seem like perhaps the cooperators have their own fee system, as you’re right added fees would make sense for other than pure–which is not what we want. The agent we were dealing with just keeps saying, yes, it is a policy fee. But she also told us that we would be saving a lot by filing together but hasn’t really explained what is being saved–and worse, the language on the illustration suggests that we are considered at the oldest age of the two filing (“based on the oldest proposed life insured”), and my husband is several years younger than me, and is being insured for twice as much as me. She said that this did not occur, but can’t explain why the language would say it was so. Essentially, I am not getting the most satisfactory answers. Sigh.

Thanks again! Love your blog! I feel smarter just being subscribed! Told all my friends!

The $75 fee you are talking about is a an administrative fee which is part of most life insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular monthly, quarterly, semi-annual or annual payment that you make for your policy.

Term or permanent, you are going to pay this type of fee. Since I own an RBC Critical Illness policy I pay this every year. Feel free to call RBC and ask them about this fee.

Cheers,

Brian

Permanent insurance covers your back for as long as you live, and comes in three variations: whole life, universal life, and term-to-100. Whole life and universal life can accumulate investments inside the policy, while a term-to-100 policy is more like term insurance in that there is no investment portion.

The policy you describe does not sound like term life, hence all the extras and added fees. I would suggest getting another quote for pure term life insurance just to see the difference. http://www.rbcinsurance.com/lifeinsurance/index-term-life.html

So two questions: is the extra policy fee normal, and does a 10 dollar discrepancy make up for an extra 5 years on a term. I just want to make sure that we are getting what we should get, not necessarily a deal. I made a mistake once in not asking enough questions, and I don’t want to make that mistake again.

Please help!

I wrote a guest blog on Million dollar journey awhile ago showing how someone using life insurance (male 65) could get a guaranteed flow of money for life and have that money passed to his beneficiaries. It is called an insured annuity. In a nutshell one needs to get a 6% or better GIC to do better.

Lots of things one can do if they want better protection, less risk and pay less taxes in the future usin life insurance.