AN iNdepeNdeNt SUppLeMeNt froM MediApLANet

The Independent Order of Foresters is a fraternal benefits company that is making sure Canada’s kids have a place to play

A different kind of insurAnce compAny

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No.1/September 2010

iNSuriNg your future

Auto insurance reforms Changes that affect you

Life insurance don’t let the unexpected catch you off guard

3TIps

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANet2 · SepteMber 2010

challeNgeS

insuring your life makes living possible

Our day to day lives are made possible by insurance. Without this safety net, we wouldn’t be able to afford life’s necessities–like buying a house, or driving a car.

take a look around. What do you see? Most likely, you see your home and everything it contains–fur-nishings, appli-

ances, clothing. Outside the win-dow at work, you may see of-fice buildings, commercial areas and restaurants. Further beyond, you see roads and highways, on which all sorts of vehicles transport people and goods. What you are looking at is a far-reaching network of people, amenities and technology that make up modern Canadian life. This life would not be possible without the safety net that Can-ada’s home, car and business insur-ers provide.

Without insurance, houses and the infrastructure we all depend on would never be built because mortgages would be impossible to obtain without insurance against fire, severe weather and other

calamities. Roads would be most-ly empty because drivers and transport companies could not af-ford to absorb the potentially mas-sive liabilities from road collisions that happen every day.

Property and casualty insu-rance allows us to get on with the daily business of life by removing the risk that a single disastrous event–like a fire, an accident or a storm–could financially ruin us. Insurance underpins our economy and supports the very workings of society.

Insurance and the economyThe property and casualty insurance industry, including brokers and agents, employs over 42,700 Ontarians and pays more than $5.9 billion in taxes to the federal, provincial and municipal governments, with a total pre-mium base of $37 billion in Ontario.

Insurers and preventionIn addition to paying for loss-

es, insurers also work hard to pre-vent them. For decades, the prop-erty and casualty insurance industry and its trade association, Insurance Bureau of Canada, have worked in partnership with com-munities and officials on road safety, fire prevention, anti-theft campaigns and many other pro-jects. Most recently, the indus-try has encouraged govern-ments nationwide to develop a comprehensive strategy to deal with the effects of the in-creasing number of severe weather events resulting from climate change.

Insurance is more than a pre-mium that is paid every year. The property and casualty insurance industry always works behind the scenes to help home, car and business owners pursue their am-bitions and protect their assets. Insurance is not top-of-mind for most people, but it sustains our economy by being there to help when we need it the most.

Mary Lou O’Reillyvice-president, public Affairs and Marketing, insurance bureau of Canada

■■ If you were to die prematurely, how would your survivor(s) get by, especially dependent children?

■■ Does anyone else depend on you financially, such as a parent, brot-her or sister?

■■ If you are a single parent, what level of support payments are you making or getting? How would these be kept up in the event of un-expected death?

source: CLhiA

do you need Life insurAnCe?

“Many home-based business owners mis-takenly believe that their current home-owner’s or tenant’s in-surance policy will cov-er their new business enterprise.”

We reCommend

pAge 4

Critical illness p. 8No one ever expects to come down with a serious disease.

Retirement insurance p. 10Make sure your golden years are financially sustainable.

When asked about life and health insurance, most Canadians will likely say that it’s where you buy life insurance, and some will also know that the health plans where they work are provided by the industry.

Almost 10 million Ontario residents, or about 77 percent of Ontario’s population, are protected by the in-dustry’s products. About 7.7 million Ontario residents own $1.4 trillion of life insurance alone, providing their families with financial protection in the event of death.

While OHIP covers basic physici-an and hospital expenses, the majo-rity are also protected by health co-

verage provided by life and health in-surance companies and other health plan providers. This supplementary health insurance takes over where government coverage ends. These types of plans provide 10.2 million Ontarians with extended health ca-re coverage (e.g., prescription drugs, vision care) and 6 million with reim-bursements for dental care.

In recent years, the industry has also introduced new products in-cluding critical illness insurance. This type of insurance is designed to help provide relief from the eco-nomic hardship resulting from a variety of life threatening illnesses such as heart attack and cancer. Over 900,000 Canadians are covered un-der such plans.

The life and health insurance in-dustry also plays a significant role in assisting Canadians in planning for their retirement. The industry ad-ministers more than 70 percent of Canada’s pension plans and the vast majority of group RRSPs.

Contributing to our economic well-beingCanadian life and health insur-ers have a long history of financial strength and a reputation for a pru-dent and long-term approach to in-vesting.

The industry is a major investor in Canada’s economy with total assets of $411 billion, including $175 billi-on invested in Ontario. This pool of capital is one of the country’s most

important sources of long-term in-vestment capital, supporting such things as green technology and in-frastructure projects.

The industry is one of Canada’s greatest success stories. Canadian insurance companies are present in more than 21 countries around the globe and nearly half of their premi-ums are generated from outside of Canada.

Three of the world’s top-15 life and health insurance companies are Ca-nadian and two have their headqu-arters in Ontario. The industry em-ploys roughly 60,600 working in On-tario and 132,000 nationally.

canada’s health and life insurance industry: more than meets the eye

insurAnCe sAfety initiAtives

Be smart. Be safe

1 These community outreach tours deliver safety and in-

jury-prevention tips at summer fairs and festivals throughout On-tario, as well as in Alberta and At-lantic Canada.

TIps Line

2 This line, as well as investiga-tive efforts, help to deter

insurance crime. Adaptation to climate change initiatives

2 These provide expertise on many levels–from research

about the use of rain barrels to de-velopment of an infrastructure risk assessment tool for municipal governments.

Source: inSurance bureau of canada

Ralph palumboexplains how to insure your home and your business when they are under the same roof.

Wendy Hope

vp, external relations, Canadian Life and

Health insurance Association

iNSUriNg yoUr fUtUre1St editioN, SepteMber 2010

Country Manager: Gustav Aspegrengustav.aspegren@mediaplanet.comEditorial Manager: Jackie mcdermott jackie.mcdermott@mediaplanet.com

responsible for this issue:publisher: taebah Khantaebah.khan@mediaplanet.comDesigner: penelope Grahampenelope.graham@mediaplanet.com Contributors:Wendy hope, marjo Johne, Christopher r. Klah, John moore, mary Lou o’reilly, ralph palumbo, Cathy preston, Kevin strain, mark tateishi

Distributed within:toronto star, september 2010this section was created by mediaplanet and did not involve the toronto star or its editorial departments.

Mediaplanet’s business is to create new customers for our advertisers by providing readers with high-quality editorial contentthat motivates them to act.

InsuRAnCE pROTECTIOn CAn gIvE yOu

pEACE OF MInD

1TIp

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANet

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANet4 · SepteMber 2010

home business can’t shelter under house coverage

Who hasn’t dreamed of working from home? The prospect of being your own boss, setting your own hours and doing it all in the com-fort of your own home is attractive to many people, particularly in these changing economic times. Yet, run-ning a home-based business with-out adequate insurance can turn that dream into a nightmare.

Know what your coverage includesMany home-based business owners mistakenly believe that their cur-rent homeowner’s or tenant’s insur-ance policy will cover their new busi-ness enterprise. But a homeowner’s policy is designed and priced only to cover the contents and risks as-

sociated with a residential dwelling. Regardless of the product or servi-ces you’re selling–whether it is food storage containers or financial plan-ning–wwrunning a home-based business exposes you to certain risks. Your inventory, computer and other equipment as well as any cli-ents or couriers visiting your home are not covered under your home-owner’s policy. For example, if your business-related inventory is stolen or destroyed by a house fire, it will not be covered by homeowner’s in-surance alone. Moreover, you should take into account the risk of taking business-related equipment, such as laptops or product samples, outside of your home. If they are damaged or stolen, a regular homeowner’s policy will not cover the loss.

The unexpected riskLiability is perhaps the greatest risk associated with your home-based business. What if a client falls while walking up to your home? What if you are sued because of problems

with the product or service you pro-vided? Failing to account for this when running your home-based business could have disastrous re-sults. The reality is that the legal system is increasingly being used to settle business disputes and you leave yourself very vulnerable by not having adequate business insur-ance. What you think you’re saving by not paying for an additional in-surance policy is nothing compared to what you stand to lose.

To minimize potential losses, cre-ate a comprehensive risk manage-ment plan for your home-based bu-siness. The risk management pro-cess provides a clear and structured approach to identifying risks. It doesn’t need to be complicated, but should cover these three questions:

■■ What can go wrong?■■ What will you do to prevent the

harm from occurring and in respon-se to the harm or loss?

■■ If something happens, how will you pay for it?

From keeping all walkways in and

around your home clear to keeping your business-related inventory and computers protected from theft and viruses, managing risk is critical to the success of your home-based bu-siness. It will not only provide pro-tection against direct financial loss but also help to safeguard the repu-tation and public image of your en-deavour.

The best course of action is to speak to your insurance representa-tive. Let him or her know about your home-based business and ask what kind of coverage you need to protect both your business and your home. Proper insurance coverage for your home-based business can help you to minimize the risk and maximize the excitement of being your own boss.

pROTECT yOuR pOssEssIOnsMake sure all home business equipment has its own coverage.Photo: courtesy of sunlife

ralpH palumboVice-preSident, ontario,

inSurance bureau of canada

editorial@mediaplanet.com

■■ Question: How can you protect your business when you work from home?

■■ Answer: don’t assume your home insurance will provide the coverage your business needs.

NewS

New reforms bring stabilization to ontario’s auto insurance system

Why do I need insurance?

In the case of an accident or illness, your family may re-

quire funds to cover loss of in-come and expenses. Regular costs such as education, mort-gage payments and day to day liv-ing expenses will still need to be paid. Sudden expenses such as medical bills and funeral expens-es could also arise.

What types of insurance are available?

The insurance that first comes to mind for most

people is life insurance which pays a benefit on the death of the insured. The main choices for life insurance are whole life or term. Whole life insurance premiums are higher and remain level. A cash value may be available and these values increase tax-free within the policy. Whole life in-surance, as the name suggests, provides coverage for life. Term insurance premiums start out lower than whole life but they often increase periodically, for ex-ample every 5 or 10 years. Term insurance coverage terminates at a predefined point in time such as 20 years or at age 75 or 80.

There are other insurance pro-ducts called disability income and critical illness. Respectively, these pay a monthly benefit upon disability or pay a lump sum upon the occurrence of a serious med-ical condition. As you can ima-gine, there is a significant need for insurance in these situations where life insurance will not pro-vide a benefit.

If you’re interested in control-ling how the excess funds in a po-licy are invested, there are whole life insurance products called Uni-versal Life.

What factors determine my insurance needs?

Your insurance need de-pends on your estate plan-

ning goals as well as your current stage in life. For example a young-er person, with more years to re-tirement and with a generally heavier debt load, will require more insurance. If you have chil-dren, the insurance needs will be greater and even more so if a child is disabled. Your spouse should also have insurance in case he or she is unable to work or take care of the home. In general, as the years pass, the outstanding mort-gage is smaller and children will complete their education and begin to earn a living. These fac-tors will reduce your insurance needs.

How much insurance do I need to protect my family?

Your insurance need chan-ges over time depending on

your stage in life. For example, if there were 15 years to go on your mortgage, $150,000 would be re-quired today in order to fund each $1000 of future monthly mort-gage payments. If your house is paid off, then a mortgage doesn’t come into play. Insurance advis-ors have insurance needs analy-sis software to help with these calculations. One such example can be found here... www.cpp.ca/calculator/pages/quote_calcula-tor.html

How much will it cost?Insurance premiums vary widely depending on your

age, gender, health and the type of insurance you’re buying. An in-surance broker or advisor will guide you through the process.

Source: canada protection plan

the insurAnCe questionnAire

neWs

Ontario drivers currently pay more for their auto insurance than do any other Canadians. One of the reasons the Ontario system is so expensive is continually escalating claims costs, particularly those associated with

the treatment of minor injuries (e.g., strains, sprains and whiplash), which represent the vast majority of traffic injuries.

In fact, between 2004 and 2009, average accident benefits claims costs increased a staggering 102%, from $26,339 to $53,371. For similar injuries sustained in collisions in Alberta, claims costs totaled on-ly $3,700 on average. Clearly, so-mething is wrong in Ontario.

With claims costs increasing significantly over the years, in-surance companies have found themselves paying out more in claims than what premiums cover. In response to this unsustainable position, the provincial regulator (the Financial Services Commission of Ontario or FSCO) approved succes-sive auto insurance rate increases. Finally, in order to help stabilize the system and shield Ontarians from

further price hikes, the provinci-al government introduced much-needed reforms to the system.

Ontario’s new standard auto in-surance policy continues to offer the most generous Accident Bene-fits coverage in Canada. Under the new rules, a standard auto insuran-ce package will be available provi-ding up to $50,000 in medical and rehabilitation benefits, and up to $36,000 in attendant care benefits. Consumers will have the choice to increase these and other benefits limits and tailor their policies ac-cording to their needs. As before, all medically necessary (acute) care col-lision victims may require is provi-ded by OHIP and paid for by insurers who collectively pay an annual le-vy of approximately $150 million to OHIP to cover these costs.

Some things aren’t changing. All auto insurance policies will conti-

nue to include Third-Party Liabili-ty, Uninsured Auto coverage, Direct Compensation-Property Damage and Statutory Accidents Benefits. Further, all optional coverages (Col-lision or Upset, Comprehensive, Spe-cified Perils and All Perils) will re-main the same and will be automati-cally renewed for policyholders who currently have them.

The changes will take effect for in-dividual policyholders when they renew their auto insurance on or after September 1. Because consu-mers will have more choice to cus-tomize their auto insurance, it’s important that they be well in-formed about the reforms. Insu-rance Bureau of Canada (IBC) en-courages all Ontarians to speak with their insurance represen-tatives before making decisions concerning their auto insurance policies.

Ralph palumbovice-president, ontario, insurance bureau of Canada

ChAnGe

Reforms to Ontario’s auto insurance system came into effect on september 1, 2010. The provincial government introduced these reforms to help stabilize the sys-tem and to give consumers more choice.

InsuRE yOuR HOME OFFICE EQuIpMEnT sEpERATELy

2TIp

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANet

Certain conditions, restrictions and exclusions may apply. Services are not available in Saskatchewan or Newfoundland. The BIP logo is a registered trademark of the Insurance Brokers Association of Canada (IBAC) used with permission. All other trademarks are properties of Intact Financial Corporation used under license. © 2010, Intact Insurance Company. All rights reserved.

HOME • AUTO • BUSINE S S

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www.cpp.ca

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANet6 · SepteMber 2010

Question: How does Independent Order of Foresters stand out from other types of life insurance companies?Answer: More than just paying claims, they also volunteer to improve communities.

fraternal benefits lend a hand

profiLe

Independant Order of Foresters

■■ In business: since 1875

■■ position: a non-profit life in-surance provider that invests in its members, their families and com-munities.

■■ Membership: foresters also owns unity Life of Canada,and has about 675,000 members world-wide.

■■ Charitable donation: invests about 20 per-cent of their target earnings back in-to the community being built.

Even on cool autumn days, many of the children who live in the Toronto Com-munity Housing complex at Victoria Park and Sheppard Avenue enjoy swinging on swings and sliding down the spiral slide in their brand new neighbourhood play-ground.

The 2,700-square foot outdoor play cen-tre–a huge improvement from the old, run-down facility that could accommodate on-ly a few kids and didn’t even have swings –was made possible largely due to funding and elbow grease provided by the Indepen-dent Order of Foresters, a non-profit frater-nal benefits society that provides financi-al services and community support to its 675,000 members in Canada, the United States and the United Kingdom.

Formed 135 years ago by people who sha-re common values rooted in the wellbe-ing of families, Foresters is a life insurance company with a difference. In addition to selling insurance products, Foresters pro-vides its members with value-added bene-fits that range from scholarships and orp-han benefits for children who lose both

parents, to family social events and opp-ortunities for volunteer work in Foresters-sponsored community activities.

The Victoria Park and Sheppard Avenue project is part of a $1.5 million-commit-ment by Foresters to build 20 playgrounds across North America in 2010. Foresters also supports the Children’s Miracle Net-work and SickKids Foundation, both orga-nizations that focus on improving health care and support for children.

“We take about 20 percent of our target earnings and reinvest it back into the com-munity,” explains George Mohacsi, pre-sident and chief executive officer of Fo-resters in Canada. “We’ve evolved over 135 years but our purpose remains the same: to help families and communities.”

Indeed, this common desire to help each other and contribute to the community is at the heart of most fraternal benefit socie-ties in Canada. Dating back to medieval ti-mes, the concept of the fraternal benefit society – also known as a mutual aid socie-ty – is based on lending a hand to members and their families during difficult times.

Members typically share a common in-terest, ethnic background, or work in the

same industry.Not all fraternal benefit societi-

es provide insurance. But in Canada, the ones that do include companies such as Actra Fraternal Benefit Society, whose members include primarily ac-tors and writers, and Teachers Life In-surance Company, which serves edu-cators.

While philanthropic and volunte-er work may not be a considered a di-rect financial benefit for fraternal be-nefit society members, Mohacsi says being able to give back to society is im-portant for Foresters’ members. In fact, between 150 to 250 members will typi-cally show up to pitch in during acti-vities such as building neighbourhood playgrounds.

Foresters members came out in dro-ves for the Victoria Park and Sheppard Avenue playground project. Dozens al-so turned up for another playground project last July at Thorn Lodge Public School in Mississauga, just west of To-ronto.

“They had over 100 volunteers who helped with set up, registration table,

side projects and construction,” recalls Soni Gill, acting principal at Thorn Lodge.

The benefits of the new playground go beyond better playtime for kids, says Gill.

“We will see many more families around the schools – families interac-ting and connecting, children run-ning, smiling and playing together.”

Membership in a fraternal benefit society also opens the doors to buil-ding relationships with other mem-bers, thanks to society-sponsored so-cial activities such as picnics, sports events and parties.

“One year, about 350 of our members got together and organized an Alaska cruise,” Mohacsi says. “Many of our members, especially the ones who ha-ve been with us for a while, know each other. It’s really like having an exten-ded family.”

iNSpiratioN

marjo joHne

editorial@mediaplanet.com

hoW We did it

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANetA SpeCiAL AdvertiSiNg feAtUre by MediA pLANet SepteMber 2010 · 7

2

The right advice

1You work hard for your money. So it makes sense that you’d want to hang

on to and grow your earnings, whatever your financial situation might be. The right advice can help you do just that.

A network of experts

2Sun Life Financial advis-ors undergo extensive training and develop-

ment, are equipped with the lead-ing financial tools and are sup-ported by a team of specialists to ensure they have the expertise you need. With a network of over 3,000 advisors in over 750 com-munities across Canada, you can connect with an advisor who can give you sound advice.

specialist consideration

3Sunlife’s advisors are uniquely positioned to provide broad-based

wealth management and protec-tion solutions. For instance, all ad-visors have access to Sun Life Fi-nancial’s Estate & Financial Plan-ning Services (EFPS) specialists. These EFPS specialists go beyond investments to also consider es-tate and retirement planning, and taxation.

Eliminating uncertainty

4Put simply, EFPS is about eliminating uncertainty and getting the most from

your estate, via professional, com-prehensive advice from your fi-nancial advisor. For more infor-mation on EFPS and other advisor services, visit sunlife.ca.

revieW: sunLife finAnCiAL Advisors

Traditionaly, benefit programs for small to mid-size employers have been provided through in-surance companies on an insured basis.

Self-funding, which was reserved for larger companies, is now avail-able for small to mid sized employ-ers through a variety of providers.

A self-funded group benefits plan is where the employer chang-es the method of funding, primar-ily health and dental benefits, for its employees. The plan is adminis-

tered in the same way as an insured plan, through a third party, with booklets, a robust claims adjudica-tion process and the advantages of electronic interface.

Insurance can generally be split into two distinct categories. The first generates infrequent but sig-nificant claims, with benefits like Life Insurance and Long Term Dis-ability falling into this category. These benefits cover specific events that cannot be predicted.

Health, Dental and even Short Term Disability benefits fall into a second category, where claims oc-

cur more frequently, but at small-er dollar amounts. The cost of these benefits can be more accurately predicted, since they are based on a definable demographic group–your employees.

It is this second category of ben-efits where employers can realize cost-savings through the estab-lishment of a Self-funded Plan. Ad-vantages of this funding arrange-ment includes:

■■ Cost control■■ Plan Flexibility, and ■■ Improved Cash FlowTo limit the ultimate risk an em-

ployer must assume, Self-funded Plans generally include low priced insurance products such as Stop Loss and Travel Health coverage, which mitigates any potential high dollar claims that could arise.

Low priced insurance products mitigate any potential risk from out of country claims or high drug costs. This limits the ultimate risk an employer must take while at the same time giving control over health and dental plan costs.

Self funding can be an ideal fit for small companies

joHn moore

vp business development , Johnston group

vOLunTEER spIRITForesters members build community playgrounds.Photo: courtesy of

indePendent order of

foresters

iNSpiratioN

A SpeCiAL AdvertiSiNg feAtUre by MediA pLANet8 · SepteMber 2010

NewS

changing needs mean changing plans

pLAn AHEADin case something unex-pected happens to you or your spose.Photo: courtesy of

sunlife financial

Life is constantly changing and as it does, so do your life insurance needs. Life insurance is an essential part of any financial plan so it’s im-portant to take the time to review your life insurance requirements once a year to help ensure your fam-ily is protected. It’s a fact that about half of all Canadians would have trouble meeting everyday living expenses if a primary wage earner died*.

The need for life insurance is of-ten triggered by a marriage, the pur-chase of a new home or the birth of a child. However, there are many other life events that should also prompt a review of one’s life insur-ance needs. Here are a few that are often overlooked.

Caring for a special needs family member or aging parent

If you are caring for a special needs family member or an aging parent, it’s critical to plan ahead for the costs associated with providing

special care for that person, in the event something unexpected hap-pened to you and/or your spouse.

Life insurance can help cover the cost of replacing the care you cur-rently provide with professional home care, or a move to a special needs facility. It can also cover items such as special medical equipment and supplies. If you’re the caregiv-er for a special needs child, it’s im-portant to take into consideration how much you would need in order to cover the costs of managing their care now, as well as when they be-come older, and adjust your current life insurance coverage.

going through a divorceLife insurance can also be an essen-tial part of a divorce or separation settlement, since it could be a guar-antee for alimony or child support payments. For example, if your ex-spouse passes away and has no life insurance, any incoming child sup-port payments could immediately cease.

Changing jobs Many Canadians today have group life and health insurance through their employer. Unfortunately, group plans don’t often move with you to your next job and there can be a waiting period before you can apply for group coverage with your new employer, provided they even offer group benefits.

Supplementing your group cover-age with an individual life insurance policy is important for two reasons. First, you ensure you have enough life insurance coverage to protect your family. And secondly, since pre-

miums become more expensive as you age, you avoid the difficulty of having to obtain affordable coverage in the future, if you ever find yourself no longer covered by a group policy.

Life insurance may be the last thing on your mind every time your life takes a new turn, but protecting your family shouldn’t be. A licensed insurance advisor can help you plan and evaluate your specific situa-tion to determine whether you have enough, and the right type of, insur-ance to help protect your family.

* According to LIMRA International.

“if you are caring for a special needs family member... it is critical to plan ahead.”Cathy prestonvice president, Life and Health, rbC insurance

Whether they’re underwrit-ing farm operations or provi-ding a wide range of cover-age products for truckers, specialty insurance compa-nies offer the advantage of industry-specific knowledge and experience.

In Canada, businesses and consum-ers have access to a diverse range of specialty insurance. For instance, Chubb Insurance Company of Can-ada’s specialty products include er-rors and omissions liability for law-yers and property loss protection for energy companies. In British Col-umbia, Axis Insurance Managers,

which sells home and auto insur-ance, also offers medical and hospi-tal insurance for international stu-dents in Canada.

In addition to companies that of-fer specialty insurance as part of a broader menu of products, there are insurance providers that focus on a specific market. Teachers Life Insu-rance Company, for instance, provi-des products designed especially for people in education.

Based in Toronto, Teachers Life provides group benefits to school boards as well as life insurance poli-cies sold directly to individual mem-bers.

“Our members get the benefit of

our comprehensive knowledge of in-surance products and services and our in-depth understanding of the needs of educators,” says Doug Ba-ker, president and CEO of Teachers Life. “And the dynamics in a school setting are certainly unique.”

Intuitive InsuranceUnderstanding a particular indus-try and work environment is espe-cially important in handling disabil-ity issues, Baker says. For example, in the world of education, it’s critic-al for insurance providers to under-stand the potential for interperson-al conflict between the various par-ties–teachers, administrators, custo-

dial staff and students–and how this can create debilitating stress.

Understanding the work en-vironment and structure in the school system makes it easier for an insurance provider to help stres-sed workers recover and return to work,Baker says.

“We understand the situation and work with unions and employers to support the individual.”

Specialty insurance means niche coverage for all industries

marjo joHne

editorial@mediaplanet.com

pArtiCipAtion insurAnCe

■■ Don’t wing it. get advice from an insurance or financial advisor.

■■ understand how participating whole life insurance fits into your overall financial plan. What need are you trying to meet–for example, estate preservation, easy access to cash for your loved ones, or cash resource for your business?

■■ Consider the strength, stability and investment management capability of the insurance company. Does it do a good job of balancing risk and return? Does it have a strong risk management culture?

“Participating whole life insurance products provide lifetime insur-ance protection and offer the po-tential for tax-deferred savings,” explains Paul Fryer, vice-president, Individual Insurance at Sun Life Financial Canada, which recently launched two participating life in-surance products: Sun Par Protect-or and Sun Par Accumulator. “These savings can then be used to supple-ment a child’s education fund, pro-vide additional funds for retire-ment, or provide higher estate val-ues.”

With a participating life insuran-ce plan, policyholders typically sha-re or “participate” in the earnings of the insurance company through dividend payments. The amount of these dividends, which are usual-ly paid out annually, is determined by a number of factors including in-vestment returns, the company’s expenses and the amount of claim it has paid during the year.

Policyholders can recei-ve these dividends as cash payments, or they can choose to put the dividends towards additio-nal insurance coverage, apply them against their annual insurance pre-mium or leave them on deposit to continue earning interest.

So how do you determine if par-ticipating life insurance is right for you? There are many situations where participating life insurance is the best solution, Fryer says. As an important first step, he suggests working with an advisor to figure out the best solution for your insu-rance and savings needs.

pArtiCipAtion insurAnCe pLAnninG

marjo joHne

editorial@mediaplanet.com

CritiCAL iLLness

What is Critical Illness Insurance?

1 This type of insurance pro-vides additional funds to

cover your expenses when ser-ious, life-threatening illnesses occur. It is paid out in a lump sum and you can use the money for anything, for example, to pay off debts, to finance home care, to pay for child care, or even to change careers.

Why is it important to have while traveling?

2 Travel health insurance saves families or individuals

thousands of dollars in unfore-seen expenses such as for hospi-talization and special transporta-tion back to their country or prov-ince of residence. Provincial health plans provide very limited emergency coverage when travel-ling abroad or out of province.

Investigate options

3 Know and understand the details of your current cover-

age and investigate additional coverage options.

neWs

Wendy Hope

vp, external relations, Canadian Life and

Health insurance Association

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a life plan for every age

For every stage of life, you will experience different financial needs. Determining what your priorities are can be a challenge, but tools are available to help plan for your needs, whatever your life stage.

like most things, what you want or need from a financial plan at 45 will be different than what you wanted or needed at 25, and will be different again at 65. At every age,

or life stage, different financial pri-orities rise to the top of the list. We move from building our savings to income protection for retirement. So how do you get a plan that fits your personal needs, whatever your stage in life?

The answer is to identify several key factors – including age, marital status, dependants, type of employ-ment, your health and your savings – and then build a financial plan based on those factors.

One way to learn more about your needs by life stage is by using an on-line tool like Sun Life Financial’s Life Stage Planner. The tool asks a few ba-sic questions, and then provides an outline of the financial priorities you should consider for your particular situation.

With this background informa-tion, a financial advisor can help you take action. You can even choo-se the advisor you want. Through Sun Life’s online tool, Advisor Match, you answer questions that will help

match you to an advisor who will meet your needs.

As your life situations change, your financial needs change; diffe-rent life stages mean evolution is re-quired for a typical financial plan.

Lifetime financial security: what you need to consider.

20-30During this phase, you may start a family and make major purchases such as buying a home and a car. If you borrow, then managing debts, including student loan debt, is a key consideration. It’s also important to be able to provide income if you’re unable to work, and to protect de-pendants from an unexpected death, sickness, or injury; consider life in-surance and health insurance.

30-40During this decade saving for retire-ment accelerates and you may begin to save for your children’s educa-tion; it’s important to have a savings plan in place. You’ll want to protect these savings from market volatility. A well-diversified portfolio and pro-tection products can help to meet these needs. The plans you put in place now will have a significant im-pact on your plans in retirement.

40-50In this period it’s time to have a re-tirement plan in place. Health in-surance also becomes a priority. Your plans are beginning to shape what type of retirement you will have.

50-60Buying a second home, saving for a grandchild’s education, manag-ing a wealth inheritance, and con-sidering an early retirement are all possibilities for this age bracket. Retirement planning continues to be a big part of your financial strat-egy. There’s also the possibility of supporting aging parents, which creates additional costs and time commitments.

60-80Retirement, travel, and post-retirement employment are considerations for this phase, as well as smoothly passing on your assets. You’ll want to protect your retirement income from a major health setback that could involve additional costs for assisted liv-ing. Long-term care insurance is one way. Estate planning and an in-come management plan can also be valuable financial strategies.

“At every age or life stage, different financial priorities rise to the top of the list.”

If you’re like most people, it takes a significant life event to nudge you into looking into your own plans.With the birth of a child or the purchase of a new home, you’ve probably thought about your fi-nancial obligations and how your family would manage if you died prematurely. This is where life and disability insurance comes in. You may have personal cover-age, or coverage through an em-ployer or union, or coverage that would pay off a loan such as a mortgage, or some combination of all of those.

Assess your needsDo you know how much you need, how much you have and how it would be affected if you changed jobs, were laid off or renegotiated a loan? A licensed life insurance agent or broker can help you as-sess your needs and provide ad-vice on the most appropriate so-lutions.

As for retirement, what income sources will you have if you live to be 90? Ninety five? One hundred? With baby boomers on the cusp of retirement, there is more focus on planning for retirement, as well as evolving public policy to make pension plans more wide-ly available. There are also re-tirement–government plans like the CPP/QPP and OAS, workplace pension plans, personal RRSPs and other personal investments.

Know your optionsDo you contribute to an RRSP or participate in a workplace pen-sion plan? Do you know what in-come to expect from that? Maybe you don’t have a workplace pen-sion plan. There are other op-tions, for example, guaranteed products like annuities, or guar-anteed features in segregated fund contracts. An agent or bro-ker can help assess your situa-tion. The life and health insur-ance industry is also urging gov-ernments to change pension leg-islation to allow for multi-em-ployer pension plans, where self employed or small businesses could join a large plan adminis-tered by a financial institution and benefit from its associated efficiencies.

retirement insurAnCe

Kevin strainSenior vice-president, individual insurance and investments, Sunlife financial

Wendy HopeVp, external relationS, canadian

life and HealtH inSurance aSSociation

editorial@mediaplanet.com

MAKE suRE yOu’LL BE

supORTED As yOu AgE

3TIp

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Why does one need insurance?Insurance was originally a way for merchants to grow their businesses by offering others the chance to ‘share the risk’ of pro-tecting their goods in the event a

ship was lost at sea. Today, insur-ance is the means for individuals to protect themselves from the un-expected. In order to improve our lifestyles and invest in high-val-ue items, insurance allows us to transfer some of the financial risk associated with owning a car or home to others who make that risk affordable: today’s home and automobile insurance companies.

Buying a home or car is among the largest purchases people can make. A home is more than bricks and mortar; it is usually our haven with strong emotional ties to fam-ily and friends. When bad things happen, the cost to replace person-al property or pay medical bills is financially crippling for most peo-ple and difficult to think about when experiencing loss. Insur-

ance provides the reassurance you need to get back on your feet dur-ing tough times. Insurers don’t just finance recovery, they provide sup-port and resources to rebuild your home, pay medical bills, repair your vehicle or replace valuable belong-ings like appliances and clothing.

How would you define insurance and its purpose?I often tell people to think about insurance as a large pool that is filled by premium paid in exchange for peace of mind that your home or car is protected. Insurance gives people comfort in knowing that they don’t have to worry about be-ing financially devastated should an unexpected event occur. Insurance’s real purpose is to pro-vide a sense of relief and confi-

dence that recovery is possible. When a customer has a claim re-

sulting from damage to their home, or as a result of an automobile ac-cident, money collected in the pool is used to pay for those losses. Insurance provides stability by spreading risk and sharing the losses of the few among the many.

Home insurance protects your house itself and contents. It also provides legal protection if some-one is injured on your property; or if you accidentally injure some-one or cause damage to another person’s property. Mandatory au-to insurance in Ontario provides benefits that help people recover from injuries sustained in an ac-cident and financial protection for the person who caused the acci-dent in the event they are sued for

additional costs and damages.

Can some types of insur-ance be considered as an investment? When you buy home or auto insurance you are investing in protection and peace of mind. However what I think you mean by this question, is whether insurance is a method to save or opportunity to earn a return on contributed funds. Home and au-to insurance does not fall into this category of investment, however some products offered by life insur-ance companies offer investment potential. If this is something of interest, I would suggest consult-ing with your agent to discuss your investment strategies and how they might involve insurance.

Christopher R. Kiahpresident & Ceo, Allstate insurance Company of Canada

Why does one need insurance? Life and health insurance is an im-portant part of planning for the fu-ture and protecting those who de-pend on you financially. General-

ly speaking, insurance provides fi-nancial protection and security in the event of death, a life-threaten-ing illness or accident, or disabil-ity. Some types of insurance, such as supplementary health coverage, also provide assistance with ex-penses related to, for example, pre-scription drugs, vision care, dental needs and long-term care servic-es. Some 26 million Canadians are covered by products offered by the life and health insurance industry either on a group (through an em-ployer, union, association, etc.) and an individual basis.

How would you define insurance and its purpose? Life and health insurance is typi-

cally viewed as a form of short (e.g., travel health insurance) to long-term (e.g., life insurance) person-al risk management. For a mod-est fee paid over a pre-determined time frame, you can obtain finan-cial security in the event of death, disability, critical illness or acci-dent. The insurance policy would provide your beneficiaries with a lump-sum payment or an alterna-tive source of income under such circumstances. However, insur-ance can also be defined, not only in this more traditional way but it can also be viewed as meeting the long-term investment needs of Ca-nadians. Life and health insurance companies also offer consumers the ability to plan for their retire-

ments through such things as seg-regated funds and annuities, the management of employer pension plans, group RRSPs and long-term care insurance.

Can some types of insur-ance be considered an investment? Yes, a number of products can. For example, universal and whole life insurance can have significant savings components. In addition, a segregated fund contract pro-vides a variety of investment op-tions and guarantees on the mon-ey invested and, in some cases, in-come guarantees. The client pays money (i.e., premiums) into the contract and the life insurance

company invests this money in the segregated funds that the cli-ent selects. The client can receive the market value of the invest-ments whenever he or she wants. The client’s investment is also protected by death and maturity benefits that will pay out 75 or 100 per cent of the amount invested if the client dies, or on a date spec-ified in the contract. Some con-tracts also offer the choice of an income guarantee that pays out a guaranteed amount for either a specific number of years or the life of the client. Because segregat-ed funds are issued only by life in-surance companies, they are only available through financial advi-sors who are life-licensed.

Wendy Hopevp, external relations, Canadian Life and health insurance Association

Why does one need insurance?There are a number of compel-ling reasons for an individual to be insured. Insurance can provide protection from the immense fi-nancial burdens that arise when a death occurs or when an individual is no longer able to work or when a serious illness strikes.

Life insurance pays a lump sum benefit as we all know. Disabil-

ity insurance, on the other hand, pays a monthly income benefit to help cover ongoing expenses while one is unable to work. And Critical Illness insurance provides a lump sum payment to cover expens-es incurred as a result of a serious illness.

There is peace of mind in know-ing that the death or disability of a primary income earner doesn’t have to spell financial disaster. The payout from an insurance pol-icy can be used to pay off debts, cover medical expenses, fund a child’s education, and generally allow the family to maintain their standard of living. And keep in mind that events leading up to a death can significantly increase debt due to reduced income and large medical expenses.

These are just a few of the many reasons every individual should have insurance.

How would you define

insurance and its purpose?Insurance can be defined as a

contract between Insured and insurance company whereby the Insured pays a specified premi-um and the insurance company agrees to pay a defined benefit if an insured event occurs.

Insurance provides protection against the financial impact that can result from the death, injury, or illness of a family’s primary in-come earner. For example, a per-son will likely consider life insur-ance to protect his or her family from the financial burden that may occur in the event that he or she dies. Similarly, a person may take out disability or critical illness insur-ance to ensure that they and their family are able to continue meeting their financial obligations should they become seriously ill or un-able to work. And travel insurance covers potentially expensive medi-cal bills should they get injured or fall ill while away from home.

These are just a few examples of how insurance can protect individuals and their families. In-surance protection can be the most valuable gift an individu-al might ever give to their fam-ily; a gift that could make the monthly premiums paid seem insignificant by comparison. Everyone should speak to their ad-visor to find the right insurance to meet their specific needs.

Can some types of insur-ance be considered as an investment?The simple answer to this question is “yes”, regardless of how one de-fines the word “investment.” The payment of premiums to ensure a large payout in the event of a trag-edy, when that money is needed most, is a valuable investment–in fact, it can be the most valuable investment the insured makes in their family’s future financial security.

That said, there are some life in-surance products that set aside a portion of the insurance premium to be invested in building a tax-sheltered cash value within the policy. For example, Universal life insurance builds cash value and, subject to a minimum, allows flex-ibility in the amount of the premi-um payments. Under this type of policy, the policyholder has con-trol over how the cash value is in-vested. Traditional whole life in-surance policies, on the other hand, leave the investment decisions to the insurance company, have guar-anteed increases in cash value and may include participation in com-pany dividends.

One big advantage of life insurance policies is that death benefits are received tax free. In addition, life insurance policies are, under certain circumstances, protected from seizure by credi-tors. This additional benefit may be particularly valuable to some.

Mark Tateishivp, Business development,Canada protection plan

expert opinion