Frequently Asked Questions

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1. What is insurance, more specifically, what is health risk insurance and is it the same as home and auto insurance?
2. Wouldn’t it be smarter to save or invest money in a financial instrument that generates interest rather than pay premiums into health risk insurance?
3. When is a good time in my life to purchase health risk insurance?
4. What is the value in buying private health risk insurance when I have similar coverage in my employee health benefits?
5. What is the difference in buying health risk insurance through my bank or a licensed insurance agent?
6. What is the best type of term insurance to buy?
7. Which is the best type of insurance to buy at my age?
8. I hear that term insurance is like renting and whole life insurance is like owning, what does this mean?
9. Will my premiums go up even though I haven’t made a claim, like auto insurance?
10. How do I know that the insurance company will pay when I need it or my family needs it?

1. Answer (What is insurance, more specifically, what is health risk insurance and is it the same as home and auto insurance?)

Insurance is a financial instrument used to manage financial risk. Health risk insurance(s) (accidental death, critical illness, disability, life, and long-term care) provide financial benefits as a result of encountering a stated “health risk”. HRI’s are legal contracts that ask detailed health questions as well as financial questions during the application period. HRI’s are a different form of insurance than home and auto insurance or property and casualty insurance(s). A major difference being HRI’s cannot offer a discount for “bundling” multiple products together such as P&C insurance(s).

2. Answer (Wouldn’t it be smarter to save or invest money in a financial instrument that generates interest rather than pay premiums into health risk insurance?)

Financial planning experts agree that HRI’s are the foundation of any financial portfolio. HRI’s manage financial risk (in the form of income replacement) should you not be able to return to work in full capacity due to an illness or disability. In the case of death, HRI’s replace lost income to the survivors or offset tax burdens for existing assets, probate, and winding down an estate.

HRI’s provide a tax free benefit when and if you need to make a claim. Traditional investments are valuable to own in an overall financial portfolio but are a second step in financial planning.

3. Answer (When is a good time in my life to purchase health risk insurance?)

The short answer, when you are healthy and understand the role insurance plays over your lifetime. Health risk insurance(s) ask detailed health and financial questions during the application process. To qualify an applicant must be healthy and have a means to pay for the insurance protection they desire. Three main factors determine the price and approval of your application. A general rule of thumb is that the younger you are the lower the premiums will be and the less likely you will encounter a rating or decline to your application.

1. Premiums are based on your age and how much coverage you are applying for.
2. Your ability to pay the premiums and financially jusityf them.
3. Your personal health status (whether you smoke or not) and depending on the HRI – your immediate family health history.

4. Answer (What is the value in buying private health risk insurance when I have similar coverage in my employee health benefits?)

Health risk insurance(s) included in your employee health benefits are limited in coverage amounts and are typically non-portable should you leave your employer. Further you don’t have choices in the product that is offered to you. Privately owned health risk insurance(s) offer choice in product type, coverage amounts and are non-taxable.

5. Answer (What is the difference in buying health risk insurance through my bank or a licensed insurance agent?)

Health risk insurance products offered at and through the bank are owned by a master policy for the bank. Changes or cancellation to the coverage can happen at any time, out of your control. Banks offer HRI products that don’t require medical underwriting at the time of the application, a significant disadvantage to the consumer. Banks are the first and only to be paid should a claim be approved. HRI’s through the bank offer premiums that are level with decreasing coverage (that means the consumer pays more for less). Licensed insurance agents offer entire market surveys of products and pricing, and ask all the detailed questions at the time of application so when it comes to claim time, the process is quick and easy with no questions to answer.

6. Answer (What is the best type of term insurance to buy?)

In short, the one that will be in force when you die. This will be the one that you can’t outlive; term 100. You can have it with cash values, without cash values, pay as you go or a quick pay.

7. Answer (Which is the best type of insurance to buy at my age?)

In short, the one you will most likely need and claim on. Most people don’t know statistically which health risk insurance, product or terms, are more significant during the life-cycle.

8. Answer (I hear that term insurance is like renting and whole life insurance is like owning, what does this mean?)

Term insurance (with the exception of term 100 with cash values) is like renting because unless you claim on the policy (which means your passed on) there is no cash value to enjoy while you are alive. Term insurance expires or can’t be renewed around age 75. Whole life insurance is akin to owning as coverage lasts until age 100 and offers cash values to use while you are alive. Once your WL policy is paid for (even though premiums are no longer required) it cannot be cancelled, unless you choose to.

9. Answer (Will my premiums go up even though I haven’t made a claim, like auto insurance?)

Term insurance (with the exception of term 100) have rate increases every consecutive term. For example if you own a 10 year term at 20 years of age, you are paying premiums based on age 20. At age 30 when the policy renews it does at your new age, an increase of premium.

10. Answer (How do I know that the insurance company will pay when I need it or my family needs it?)

Health risk insurance(s) are legal contracts recognized by our financial institutions and government. Claims are denied for false information given during the application process. In Canada, life insurance pay outs are approximately 100 million per month.