Life and Mortgage Insurance
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Life and Mortgage Insurance



Detailed analysis of the different types of insurance and a comparison of mortgage and life insurance

Detailed analysis of the different types of insurance and a comparison of mortgage and life insurance



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Life and Mortgage Insurance Presentation Transcript

  • 1. MULTI INSURANCE Retirement & Financial PlanningLife and Mortgage InsuranceBy: Aleem Visram, HBA, MBA, IFIC, LLQPCo-Owner & Financial 986-9163
  • 2. AGENDA Introduction & Background Why do you need insurance? Life Insurance or Mortgage Insurance? Types of Insurance Advantages and Disadvantages comparison Cost Comparison
  • 3. Multi Insurance Retirement & FinancialPlanningHolistic approach to include a customized plan with a broad range offinancial planning strategies to cover all your financial needs, including: Wealth Building – This involves monitoring accounts on an ongoing basis totake advantage of opportunities as they arise, and changing market conditions. Retirement Planning – A solid plan can make the difference between acomfortable retirement and one that is inadequately financed Tax Planning – Looking for investment opportunities to help reduce taxliabilities Estate Planning – Ensuring that you have greater control of your assets duringyour lifetime and preserve assets from unnecessary legal and tax costs Insurance- Ensuring that you and your family have adequate life, critical illnessand disability coverage to provide you with sufficient funds in the event of anillness or death
  • 4. Multi Insurance Retirement andFinancial Planning Proven track record of success with over 40 years in thebusiness and over 1,000 clients Aleem Visram has an HBA & MBA from the RichardIvey School of Business and is a certified FinancialAdvisor by the Investment Funds Institute of Canada(IFIC) and Life Licence Qualification Program (LLQP) Bahadur Visram is among the top performing financialadvisors with Chartered Life Underwriter (CLU),Certified Financial Planner (CFP) and CharteredFinancial Consultant (CHFC) designations Independent Advisors that work with ALL MutualFunds, Banks and Life Insurance companies in Canada
  • 5. Multi Insurance Retirement & FinancialPlanningAs Independent Advisors we work with all these companies:We will provide you with the best rates available in Canada
  • 6. Why do you need Life Insurance?What would you do if something happens to you, how would you protect orcover the following costs? Mortgage & Debts: You need insurance to protect your mortgage and debts,otherwise the bank or creditors can seize your assets Monthly expenses: How will your family cover ongoing monthly expenses(rent, electricity, food, housing , entertainment, clothing,, etc)? Income: How will your family support themselves without your income? Youneed insurance for 10 times your annual income to support your family Dependent children: how will your family cover the costs of daycare (average$10,000 per year), school, activities/ sports, toys/ gifts, healthcare , etc? Education: the average cost per child for a post secondary education will beover $100,000 by 2015 Final Expenses, Probate & Executor Fees: average funeral costs are over$10,000 and probate & Executor fees are 3%-7% of your asset value
  • 7. Why do you need Life Insurance?Life Insurance gives you and your family protection and piece ofmind in the event of your death For a low monthly or annual fee, you can protect your family andensure that they have enough money to survive when you’re gonewithout having to change their lifestyle or dip into their savings Death benefits are paid TAX FREE in a lump sum to the beneficiary With Permanent Insurance, you can accumulate Retirement Savingstax free and borrow against your insurance policy cash valueAssume you have an income of $60,000 per year ($5,000 per month),how much insurance would you need just to cover your income? At a 10% rate of return, you would need $600,000 of insurance, but ata 5% rate of return you would need $1.2 million of insurance to coveryour $60,000 annual income
  • 8. Mortgage vs. Life InsuranceExample: $500,000 Insurance CoverageThe value of mortgage insurance declines as the mortgage is paid, whileLife Insurance coverage remains the same over the period of insuranceInsurance Value over 25 Years$-$200,000$400,000$600,000YearsMortgage LifeMortgage $500,000 $400,000 $300,000 $200,000 $100,000 $-Life $500,000 $500,000 $500,000 $500,000 $500,000 $500,0001 5 10 15 20 25
  • 9. Mortgage vs. Life InsuranceItem Mortgage Insurance Life InsuranceCoverage value Amortized over the period ofinsurance (e.g. 25 years) anddecreases as mortgage is paidRemains the same throughout theinsurance period, regardless ofhome valueInsurance Rates Only standard smoker/ non-smoker rate optionsPreferred and elite rates make terminsurance up to 33% cheaper thanmortgage insuranceOptions Limited options with banks asthey only use one carrierAbility to shop around with multiplecarriers for cheaper ratesSelling property/buying a newhomeInsurance ends once house issold. Need a new mortgageinsurance for a new home.Insurance coverage remains onceproperty is sold. The owner gets thevalue of the house sold PLUS theinsurance premiumDeath benefit Insurance used to pay offremaining mortgage with nobalance left for beneficiaries.Joint first to die coverage.Full insurance goes to beneficiariesto allocate at their discretion, theycan keep the house, sell it or rent.Individual or joint coverage options.
  • 10. Mortgage vs. Life InsuranceItem Mortgage Insurance Life InsuranceInsurance Value Insurance value is ONLY for themortgage value (i.e. $300,000)Unlimited insurance valueup to $2 million per personSelling property John will lose the $300,000mortgage insurance once theproperty is soldJohn will sell the house andmake the $300,000 PLUSkeep the insurance value(e.g. $500,000)Buying property John must reapply for a newmortgage for $500,000 to coverthe house cost. Since he has aheart problem, he will not getapproved or his annualpremiums will be very high.$500,000 Life Insurancecontinues for the period ofinsurance (i.e. life) and thepremiums will not increase.John will not need to applyfor extra coverage.Example: John is a 63 year old who is retiring and has a property worth $300,000that he wants to sell to buy a house for his children and grandchildren worth$500,000. He was recently diagnosed with a heart problem.
  • 11. Risk Management: Insurance ProtectionLife Insurance• Term Insurance – temporary need; cheaper/ cost effective;can be used to cover liabilities (mortgage), but no savings andincreasing cost with older age• Permanent Insurance – coverage for life; cash values, taxadvantage investment vehicle and tax free savings plus deathbenefitCritical Illness Insurance lump sum insurance benefit for16-24 life threatening illnessessuch as cancer, stroke, heart attackDisability Insurance Monthly benefit; designed to provide replacement income shouldyou become disabled from work.10
  • 12. Life Insurance 101TERM INSURANCE:Insurance coverage for a fixed period of time (e.g. 10, 20 or 30years) as a low cost option to cover a specific need ( INSURANCE1. Whole Life: insurer pays a fixed guaranteed premium for theirwhole life of the insured with some guaranteed cash values andpaid-up insurance.2. Universal Life: fixed or variable premiums to provide insurancefor life. Additional flexibility to manage the premiums, coverageand investment component for retirement planning.
  • 13. Life Insurance 101Item Term Whole Life Universal LifePros Cheaper option for younger ageOption to covert to PermanentInsurance with no additionalmedicalGuaranteed premium for life.Higher guaranteed cash valuesLifetime coverage with tax freesavings and dividendsIf insurance is cancelled, youcan get cash values or paid-upinsuranceOption to pay for limited periodor lifetimeCan use dividends to pay forinsurance premiumsLarge saving component andinvestment optionLifetime coverage withcumulative interest and savingstax freeOption to pay for limited periodor lifetimeFlexibility in amount of premiums(none to max) so can be prepaidor paid in a shorter periodInsurance doesn’t cancel ifpayments missedLow cost of borrowing againstcash value (2%)Cons No coverage once term endsIncreasing cost with ageNo cash valueCancelled if payments aremissedExpires at age 80 when chancesof illness and death are higherMore Expensive than TermLimited cash valueCancelled if payments aremissedHigh cost of borrowing cashvalue (7-8%)More expensive at a higher age
  • 14. 19671754462,24010,28731,33663,45110 Year Term20 Year Term28 6,75620331,16045,803UniversalLife (UL) MinPay647,693 15,386 23,079 30,772 43,081UL 20 Pay10926,253Cash Value 15,400 34,100 58,300COMPARING INSURANCE METHODSMale Non Smoker Age 44 $100,000 InsuranceAGE 44 54 64 74 80 1003,381Monthly Cost Total Cost
  • 15. For a FREE Consultation, contact:Aleem Visram, HBA, MBA, IFICCo-Owner & Financial AdvisorCell: (647) 986-9163E-Mail: avisram@mirfp.comWebsite: