Frequently Asked Questions
How much insurance do I need?
While every family's situation is unique, the following guidelines may help to assess your life insurance needs:
STEP 1: CALCULATION OF GROSS INSURANCE
What about beneficiary designations?
As plan administrators, we are frequently asked about beneficiary designations. It is important to plan how you want your life insurance proceeds distributed. Planning ahead can minimize costs and inconvenience for your survivors. For example, on a recent death claim, a beneficiary had been dead for two years. On another, much to the widow's dismay, the beneficiary was listed as the estate. A probated will was then required which delayed payment for more than a year. In some cases, this would cause considerable financial hardship for the survivors.
Some guidelines to consider in designating your beneficiaries:
- If your beneficiary is a minor (under 18 years in Alberta, Saskatchewan and Manitoba, 19 in BC) you must also designate a trustee
- You may need special legal advice if you:
- want to name someone who is mentally or physically incapable
- wish to make your designation in a will
- have a complex or very detailed designation
- intend to designate a non-resident
- intend to use a life insurance trust
The wording of the beneficiary designation is very important, especially if there is more than one beneficiary. How do you wish the proceeds to be split if one of the beneficiaries dies? Will the proceeds go to the surviving beneficiary or to the estate of the deceased?
If you wish to designate your estate:
- Be sure to address the distribution of the insurance proceeds in your will (and keep it up-to-date)
- There may be a significant delay, as the insurance company will likely require a probated will
- The proceeds may be subject to probate or administrative fees
- Generally only designations to an individual are protected from creditors
- A divorce or remarriage does not automatically change or revoke a previous designation
- It is important to review your beneficiary appointments annually, and especially when your personal circumstances change.
When is the insurance in force?
It depends on several factors such as your age, the amount of insurance requested, and your medical history. Your insurance is not in force until our underwriter, Great-West Life, has sufficient medical information to approve your application. If additional medical information is required, such as a medical and blood/urine tests, it will probably take 3-4 weeks.
How much will it cost?
Like calculators and computers, the cost of life insurance has dropped in the last 10 years. Increasing life spans and more concern with good health has resulted in lower insurance costs. For example, CAIPW's annual premium for $100,000 of term life insurance for a male, non-smoker, age 38, cost $155 in 1981 and only $60 in 2009 - a savings of 60%!
Rates for term life insurance are based on age, sex and non-smoker status, and are quoted in the brochure. Rates for long-term disability insurance are based on age, sex, and the waiting period, which is the period of time between becoming disabled and receipt of benefits.
Why are CAIPW's life and disability insurance premiums so low?
Members frequently compliment us on our life and disability insurance premiums, which are often only a fraction of comparable products purchased on an individual basis. Several factors account for these low rates and excellent coverage:
- There is a significantly higher percentage of non-smokers (over 90%) among CAs than in the general population. Smoking is a factor in many serious illnesses, which is then reflected in higher premiums.
- CAs are successful, highly motivated individuals who want to return to work as soon as possible after an illness or accident. Shorter periods of absence from work significantly reduce disability claims costs.
- CAIPW is a non-profit association. No commissions are paid and the benefit of group purchasing power is passed on to YOU.
- A reasonable price. Since term insurance costs only a fraction of a whole life plan, you can afford the amount of protection you need, particularly when you have a young family. As they get older, most people build enough assets to make insurance less necessary.
- All you buy is protection, so you are not locked into an investment that pays a low rate of return.
Will my life insurance be canceled if I become ill?
No. To maintain your life insurance, all you must do is pay your premiums and remain a member of one of the participating Institutes. If you develop a serious, prolonged illness, you may be eligible to have the premium payment waived.
Shouldn't I buy a whole life policy, after all I am going to die someday?
Whole life insurance stays in force until the policyholder dies or cancels the policy. It involves an investment element that builds a cash value or that can be used to pay the premiums. But, by mixing insurance and savings, you dilute both and often end up with too little protection and a weak investment. Most experts advise consumers to buy term life insurance, which provides protection for a specified period of time, and to invest elsewhere. The advantages of term life include:
