D&O Coverage Belongs in Your Company’s Insurance Portfolio

Does your current insurance portfolio adequately protect your company and its most key people against significant financial losses? All companies understand the importance of a general liability policy, for example, to cover customers’ injuries that occur on the business premises. And every business knows it’s important to protect the business premises and its contents against the risks of fire, flooding, vandalism, etc., through a comprehensive property and casualty policy. But an area of potential liability and loss resulting in claims based on the actions of its directors and officers, may be overlooked.

Directors and officers (D&O) liability insurance protects against financial losses resulting from claims based on allegations of wrongdoing by these individuals when acting in their corporate capacities.

What kinds of claims fall under the scope of such policies? Consider these-

• Claims by shareholders/investors alleging misrepresentations, inadequate disclosures, conflicts of interest, misdealing and mismanagement.

• Claims by competitors alleging bad faith in business dealings, appropriation of trade secrets, and unfair or deceptive trade practices.

• Claims by customers based on dishonesty, sales disputes, and the like.

• Employment practices liability claims, including failure to hire, termination, discrimination and sexual harassment.

• Suits by government agencies, including those involving tax laws, securities laws, labor laws, violation of applicable business regulations, etc.

When claims such as these include allegations of a company director’s or officer’s wrongdoing, that can bring them within the coverage of a D&O policy. Think of the well-publicized cases involving corporate giants like Enron and Worldcom, which alleged financial misdealing and cover-ups by corporate officers.

Private companies can also be hit by shareholder lawsuits. But a key reason these firms need D&O coverage is the increasing number of employment practices lawsuits, brought by employees, alleging claims such as sexual harassment, discrimination, or wrongful discharge. A policy that couples D&O and employment practices liability insurance (EPLI) works well for these firms.

Today’s insurers offer D&O coverage at affordable rates. Given the financial loss potential, it’s a coverage that any company should consider adding to its insurance portfolio.

Critical Illness Insurance – An Idea Whose Time has Come!

Medical breakthroughs, and advances in patient care mean that most people have a greater chance of surviving a critical illness. In most cases life, health, and disability insurance do not cover all the income lost recovering from a critical illness, and cannot protect RRSPs, retirement and other savings, or your business.

If you develop a critical illness you may be faced with unexpected expenses like:

* private home nursing;
* home renovations; or
* medical care not covered by your provincial health care plan.

As well, your income may be reduced as a result of having to work fewer hours or making a career change due to your illness. Struggling to meet these additional expenses combined with meeting your everyday financial obligations could create a stressful situation and may even affect your recovery.

Critical illness insurance is designed to protect you from these financial risks. The proceeds from a critical illness policy are paid in a lump sum, usually 30 days after you have been diagnosed with a covered illness.

Proceeds from a critical illness policy can be used as you wish. Unlike traditional disability insurance, when you make a claim under a critical illness policy, your benefit is not based on a reduction in your income, but is paid in full according to the terms of the insurance policy.

For example, you may wish to use the proceeds to:

* pay off outstanding liabilities such as a mortgage or line of credit;
* provide an emergency fund for home care; or
* supplement your income while you are unable to work.

Right now you can get a two months’ premium holiday. That’s the equivalent of two months of coverage in the first year at no charge.

I look forward to meeting with you soon to discuss how critical illness insurance can make a difference and how you can take advantage of this special premium offer.

Insurance Solutions

If you’ve looked at life insurance before, look again…

It used to be that people bought life insurance for one of two reasons:
* to cover final expenses;
* to provide income for their family after death.

While life insurance still does these things, today it has also become an important tool in estate planning and reducing taxes. There are a variety of products on the market, such as Universal Life insurance that provides innovative solutions to fit your needs. Here are two situations where a life insurance policy can really pay off.

Example 1: The Family Cottage
If you own a cottage, you may wish to pass it on to family members so future generations can continue to enjoy it. However, you will have to pay tax on any increase in the value of that property before family members take possession of it. This is where life insurance can help: the insurance benefit will be paid to the recipients (if they are the designated beneficiary (ies)) upon the death of the last deeded owner and the benefit can then be used to pay any capital gains taxes due on the property. The advantage of getting a life insurance policy for this type of situation is that the insurance premiums will be much less expensive than using savings or other forms of financing. Premiums could be as low as 1% or 2% of the amount of insurance.

Example 2: Your Retirement Nest Egg
Many people contribute to an RRSP every year to save for retirement and reduce their taxes. Down the road, they must cash their RRSP or convert it to either an immediate annuity or a registered retirement income fund (RRIF). You must start withdrawing income from your RRSP by the end of the year in which you turn age 71.

If you’ve planned well, you may find that the money in your RRIF continues to grow. You may never spend all of the funds you’ve accumulated and you may want to leave that money to your loved ones. . . But, what happens when you die? The government would treat the remaining funds in your RRIF as if they had been cashed in on the day you died and would tax your estate accordingly. This could mean as much as 50% of the value of your RRIF going to taxes. This is why many people purchase life insurance. Its benefits, purchased for pennies on the dollar, can be used to pay the taxes.

Ten Critical Financial Questions for Mom and Dad

As your parents grow older, you may notice that the tables are starting to turn. You might find that your folks now rely on you to stop by and repair things around the house, drive them from point A to point B or care for them when they’re sick. You may begin to feel more like the parent as mom and dad become increasingly dependent on you.

However, as part of your newfound parental role, one of the most important things you can do is discuss mom and dad’s finances. Here are ten questions you should ask:

1. How much money do you have all together? Help mom and dad add up all of their cash, savings and investments. If your parents are not yet retired, ask them how much they expect to collect each year in Social Security, pension or dividend payments.

2. Are you concerned that you may not have enough? Once you’ve tallied up all of your parent’s projected retirement income, ask them if they think it’s enough to fund their retirement years. You should also ask if they may need additional financial support from you, and if so how much. If they don’t think they have enough and you’re not in a position to support them financially, your parents should meet with a financial advisor. A professional may be able to help them invest and budget their money more wisely.

3. What kind of medical insurance do you have? Ask your parents if they have enough medical insurance to cover their needs. If not, find out how they plan to pay for health care expenses.

4. Do you have a long-term care plan? Statistics show that one in every five people who reach the age of 65 will eventually require some form of long-term care, which can cost between $25,000 and $95,000 a year. Your parents can plan ahead by purchasing long-term care insurance (LTCI). If they don’t have a long-term care plan, you may end up caring for them if they suffer from a long-term illness. Either way, it’s important to plan ahead so that everyone is financially and emotionally prepared.

5. Can you give me all your financial account information? Ask your parents for a comprehensive list of all their accounts, passwords, financial institution information and the phone numbers of any financial advisors, lawyers, insurance agents and accountants they have used. This information would be vital to you should your parents eventually pass away.

6. Have you signed a power of attorney and a health care directive? If your parents were to become incapacitated, these documents would be critical. Explain that a durable power of attorney will allow them to choose the most reliable person to manage their assets if they become incapacitated. A health care directive allows them to specify their health care preferences in such an event. If your parents haven’t completed these legal documents, encourage them to do so.

7. Where do you keep your estate-planning documents? Find out the location of your parents’ estate-planning documents, including the original signed copy of their will. Ask if they have a safety deposit box, and if so, find out where they keep the key.

8. Speaking of wills, is yours up to date? First of all, make sure that your parents actually have a will. Even if their estate isn’t worth much, they should at least specify what family heirlooms or trinkets they wish to leave to each loved one. This will prevent family squabbles after their death. Once they have a will, they need to update it regularly to reflect any changes.

9. Have you selected beneficiaries for all of your financial accounts? Make sure that your parents have designated beneficiaries for all of their accounts, including RRSPs, life insurance policies, annuities, etc. They should also check these beneficiary designations regularly to make sure they still have the proper beneficiaries on each account. After all, things can change over the years—events like divorce, death and even family arguments could greatly affect their beneficiary choices.

10. Have you protected your estate from taxes? Depending on the value of your parents’ estate, your family could face significant dollars in estate taxes after they die. If mom and dad haven’t already done so, encourage them to meet with a professional estate planner who can help arrange their finances in such a way so their heirs won’t be burdened with estate taxes.

Of course, your parents may not be thrilled to share all this information with you—not to mention they may be offended that their own child is giving them financial advice. If they resist your efforts to discuss these issues, explain that you’re just trying to make sure there will be no financial troubles in their future. After all, these problems could ultimately affect your finances as well.

Unclutter Your Financial Life

Canadians ponder about clutters in their personal lives. Things like junk mail and spam sometimes make it hard to keep track of what is really important. What many people don’t realize is that you can also have a cluttered financial life. It can very easily get bogged down with numerous bank accounts, investments, and retirement savings plans. That’s why it is so important to find a way to keep things simple so you can keep a closer eye on your money.

Here are three simple steps you can take to get your financial house in order:

1. Know your goals – When you’re trying to decide on your objectives, it’s a good idea to think both short- and long-term. Your short-term goals should be what you want to accomplish over the next 12 months, like buying a new car, or taking a vacation. Next, think about goals that you would like to achieve in the next 4-5 years, like buying a second home. Finally, list the objectives that you wish to accomplish in the next 6-10 years, like early retirement. Creating this kind of specific plan will prevent you from leaving your future to chance. Keep in mind that a financial plan is a work-in-progress; review it annually to be sure these are still the goals you think are important.

2. Consolidate the number of financial institutions you use – If you’re spreading your accounts around to a number of different financial institutions, you may actually be doing yourself more harm than good. You can reduce paperwork, and probably save money on fees and service charges by keeping all of accounts in just a few institutions.

3. Eliminate unnecessary credit cards – Over the course of time, most people collect credit cards from stores and gas stations in addition to the major cards. If you have one too many credit cards unused, they can damage your credit score because lenders feel you will eventually be tempted to use all of that credit and get yourself into a financial black hole. If you are using all your cards, it can be assumed that you are making far too many minimum payments each month, and carrying a huge load of debt. Keep two major credit cards and use them only for purchases you can pay off each month.

It takes time for you to proceed with these three steps…. why not start today?

Protection from Poor Health or Disability Risks

According to statistics, Canadians are “in the pink”: in fact, almost two out of three adults feel they are in very good or excellent health. Life expectancy in Canada has reached a new high: 75.7 years for men and 81.4 years for women. A new peak that reflects one of the highest indices of all the industrialized countries.

Still a concern

However, illness and disability are still a concern. Will you be able to keep working? Will you be able to live independently and meet your financial obligations? Are you and your family protected from the financial repercussions of death, disability and illness?

Some facts and figures

The ‘Toward a Healthy Future’ report published by the Federal, Provincial and Territorial Advisory Committee on Population Health contains a number of observations that give food for thought.

For example, men are more likely than women to pass away before age 70. This can be explained essentially by gender-related differences due to heart disease, cancer, and other causes.

However, even though women live longer than men, they are more likely to suffer from long-term disabilities and chronic conditions such as osteoporosis, arthritis, and migraine headaches.

Quality of life is as important as length of life. Cardiovascular disease, including severe myocardial infarction (or heart attack) and strokes are the main causes of death in Canada, followed by cancer in all its forms.

How are you protected in case of illness or disability?

Public plans
Provincial health insurance plans cover medical and paramedical care and services, as well as hospital costs.

Your group insurance and individual insurance
A review of your group insurance plan and individual insurance portfolio will also help you determine the scope of your life, accident, illness and disability insurance.

To ensure that you and your family are safe from all related financial concerns, we can help you establish the insurance coverage you need, evaluate the loss of income and costs that could result from a critical illness: modifications to your home, the purchase of a specially adapted vehicle or wheelchair, home care, etc.

You can also determine the amount of replacement income you’ll need in case of a disability, especially if you are self-employed. It is important to plan for your future and the financial well being of you and your family.

Health Insurance for Your Financial Well-being

The illness of a family member or co-worker can’t help but make you review plans for your own financial security. You’ll want to make sure that you and your family can avoid financial problems if one of you becomes ill or disabled.

Health Insurance includes a range of coverage that provides security based on your needs. Some types of coverage can be taken out individually; others are offered by group insurance plans.

Individual Coverage

Individual insurance coverage includes the following: critical illness insurance, complementary healthcare insurance, disability insurance, universal life insurance (financial security portfolio), and accident insurance.

Complementary Healthcare Insurance generally provides for the reimbursement of hospital fees, as well as medical and paramedical equipment and services not covered by provincial health insurance plans. They guarantee reimbursement for prescription drugs and dental care. This coverage is usually combined with other life and health insurance plans, but can also be taken out separately.

Disability Insurance is designed to offset loss of income if you find yourself unable to work following an illness or injury. Another type of coverage is also available to help you cope with monthly expenses should you become disabled.

Universal Life Insurance (Financial Security Portfolio) combines the aspects of life insurance, investment and health insurance-allowing you, for example, to take up critical illness or other health-related coverage. As such, you can progressively build your financial security in keeping with your personal priorities, financial resources and family situation. You can change the amount of your health insurance, add coverage, and even cancel your contract at any time during the life of the policy.

Accident Insurance products provide a fine complement to provincial health insurance plans. Certain stand-alone products include coverage for accidental fractures, dismemberment and loss of use (e.g. loss of a limb, paralysis) and accidental death, and also provide for the payment of benefits in the event of disability. Some can be combined with other life and health insurance products.

Group insurance

Your group insurance plan may also include health-related products such as disability and critical illness insurance. These may be combined with accident/illness and dental care coverage.

Accident/illness insurance offers protection in the case of illness or injury. Under a group plan, this coverage may provide for reimbursement of hospital fees (e.g. private or semi-private room), prescription drugs (which may vary from one contract to another), fees for medical and paramedical services supplied by healthcare practitioners such as physiotherapists and rehabilitation medicine specialists, as well as other healthcare services and equipment (e.g. orthopedic prostheses, wheelchairs) not covered by public plans.

This protection may also include vision care (e.g. glasses, contact lenses) and travel insurance, for expenses incurred following an accident or illness during a trip outside your province of residence.

Dental insurance covers costs for dental and preventive care, with provisions for periodic measures such as examinations and fillings and special procedures such as crowns and prostheses. Coverage varies from one plan to the next. Most contracts specify a maximum amount per calendar year per insured party.

Bouncing Back After Serious Illness

Canadians count on their provincial health insurance plan to pay the expenses associated with most medical treatments they receive. However, since other expenses are often involved, it is important to be covered with a critical illness insurance plan.

No one wants to fall victim to an illness like heart disease, cancer or stroke that would alter his or her life. Such a situation could force you to rethink certain life plans, leisure activities or even retirement because of certain limitations caused by the illness.

For these reasons, health is an important element to consider when planning your financial security.

What is Critical Illness Insurance?

Critical illness insurance, as its name implies, offers coverage that lets you face the financial consequences of serious illness.

It provides a lump-sum payment the insured person can use to cover expenses related to illness or as he or she sees fit. Payment is received in the thirty days following a critical illness diagnosis, without having to prove ability to work or expenses incurred as a result of serious illness.

Critical illness insurance thus helps an insured person maintain his or her financial security and offers the possibility of seeing his or her future in a different way. You can use the one-time payment to take early retirement, go back to school or compensate the loss of your spouse’s salary because he or she must remain at home to look after the ill person.

Critical Illness Insurance is becoming more and more popular. It covers the insured person for twenty or so illnesses, conditions or surgical procedures for up to $2,000,000. It also provides for the total reimbursement of premiums paid by the insured upon his or her death, if no claim of any critical illness benefits during lifetime.

Combined with Life Insurance

Many insurance companies also offers coverage that combines life insurance with critical illness insurance.

The insured person purchases a ten-year term or whole life insurance policy and at the same time has a critical illness rider on the plan. He or she would receive the lump sum cash benefit in the event of a critical illness. The remainder of the insurance policy is paid to beneficiaries upon his or her death.

“The only way to predict the future is to create it now.”

Last week, I received a phone call from my client’s wife. Four years ago, I had the privilege of helping him set up a half million life insurance policy. Little did we know he would be claiming it, today.

Life has its ways and it is important to plan for the ones we love…….

Why is life insurance so important? It helps to protect our dependents, as well as the ones we love. Not having sufficient life insurance can cause serious financial issues that your family will have to face if the unexpected happens.

Life insurance creates a “Safety Net” that will help to preserve your family’s lifestyle, dreams, & aspirations in the event that the unexpected happens.

Two reasons why you should buy life insurance:

1. To pay off any outstanding bills.
2. To ensure that your family can continue to make ends meet.

Ask yourself this question:

If the unexpected were to happen to you today, could your family afford to pay the bills without your income? If you answered “Yes”, additional life insurance coverage may not be necessary.

But if you answered “No”, then you definitely consider additional life insurance coverage!

Unfortunately, over 80% of all families do not have enough life insurance coverage to protect them financially if the unexpected were to happen.

Figuring Out Your Worth

Most of us like to believe that life is priceless—but in some cases, it’s important to figure out just how much your life is worth. Why would you do such a thing? Because calculating your worth will help you determine how much life insurance you need.

Everyone’s a millionaire

Believe it or not, most people earn more than $1 million throughout their entire lifetime. Think of it this way: If you earn $50,000 a year, you’ll make $1 million within the next 20 years. Of course, most of this money goes toward supporting your family and paying day-to-day expenses like groceries, the mortgage, and utility bills.

If something were to happen to you, your income stream would come to a halt. What would your family do without the money they need to pay the bills and buy necessities? This is why it’s crucial not only to purchase life insurance, but to make sure you have enough insurance to cover all of your family’s needs.

How much do you need?

One way to figure out how much you’re worth to your family is to consider how much income you bring home each month. Then, you can buy a life insurance policy that will pay your family a monthly income that is comparable to what you currently earn.

For example, if you buy a $500,000 life insurance policy and the death benefit proceeds earned 4% annually, your family would receive a monthly payment of about $5,137 for the next 10 years. If you want your family to receive more money each month or payments for a longer period of time, you’ll need to buy more life insurance.

Other considerations

Unfortunately, figuring out how much life insurance you need isn’t as simple as calculating your monthly income. In addition to replacing your income, you’ll need to think about other expenses your family may face if you passed away. For example, they may have to pay medical bills, hospital expenses, and attorney fees and make funeral arrangements. They will also have to pay off any outstanding debts you may have as well as taxes.

On top of that, you should consider your family’s long-term expenses. Not only will your family be left to pay the mortgage and the bills, but how will your family afford your children’s college tuition or wedding costs? Be sure to factor in any other sources of income your family earns—your spouse’s salary, Social Security survivor’s benefits, and investments—and the cost of inflation. Things become more expensive every year. You want to get a true picture of how much money your family will need in the coming years to accurately determine how much life insurance to buy.

A unique number

Obviously, each family’s life insurance needs will vary significantly. It all comes down to your income, your expenses, and your goals for your family. Finding the “magic number” is a challenge because it’s somewhat of a balancing act. You want to own enough life insurance to adequately protect your family if something happens to you, but you don’t want to buy so much insurance that there’s no money left over to enjoy your life in the present.

The goal is to have enough life insurance to safeguard your family without breaking your budget. If you want to pinpoint just how much life insurance you need to protect your family, meet with a financial advisor. A professional who can help determine how much you need to buy and what you can realistically afford in your budget.