Despite growing concern about personal debt, there is help available – It’s Your Money

Brett Millard – Jan 13, 2025 / 4:00 am | Story: 527234

Securing life insurance after a cancer diagnosis, or other serious illness, may seem like an impossible task to many Canadians.

The perception, often, is any pre-existing condition will automatically result in denied coverage or prohibitively high premiums. However, that’s not always the case. With proper planning, thorough preparation,and expert guidance, it is possible not only to get approved for life insurance but also to secure coverage at standard rates.

Understanding life insurance underwriting

Life insurance underwriting is a process where insurance companies assess the risk of insuring an individual. Factors such as age, medical history, lifestyle and family health history play a critical role in determining eligibility and premiums. For individuals with a history of cancer or other significant illnesses, underwriters look closely at the details of their condition, treatment, recovery and current health status.

Many people make the mistake of submitting a life insurance application without giving the underwriters a full picture of their situation. That can lead to automatic denials or being categorized as a higher-risk applicant, resulting in higher premiums. The key to overcoming those challenges lies in providing the underwriters with all the information they need to make an informed decision. They are typically very busy and if you want a favourable outcome you can greatly increase your odds by providing extra information at the start instead of hoping they will have time to go back and ask for it.

The importance of packaging additional information

Insurance underwriters rely heavily on medical records and questionnaires but those documents alone may not tell the full story. A successful application for someone with a medical history often involves going beyond the standard forms. That might include:

• Detailed medical records highlighting successful treatments, remission, or recovery.

• Physician statements—A letter from your doctor detailing your health progress and prognosis.

• Lifestyle improvements—Evidence of positive lifestyle changes such as quitting smoking, maintaining a healthy weight, or adopting a regular exercise routine.

• Specialist evaluations—If applicable, a report from an oncologist or other specialists affirming your current health status.

The goal is to demonstrate to the underwriter you are a manageable risk. For instance, someone who was treated for breast cancer five years ago and has been cancer-free since (and provides a report confirming this) is likely to be viewed more favourably than someone who simply submits an application with basic medical records.

Why standard rates are possible

Insurance companies’ perspectives on illnesses like cancer have evolved in recent years. Advances in medical treatments, increased survival rates and better long-term prognoses mean insurers are more willing to offer standard rates to applicants who present a compelling case. Factors that can influence their decision include:

• Time since recovery—Many insurers have a waiting period after treatment before they will consider an application.

• Type and stage of illness—Early-stage cancers or conditions with high recovery rates may be viewed more favourably.

• Comprehensive follow-ups—Regular medical check-ups and evidence of continued good health can strengthen your application.

The role of a certified financial planner

Navigating the complexities of life insurance applications after a serious illness is not something you should do alone, or with someone who is simply licensed to sell products. This is where working with an insurance-licensed certified financial planner becomes invaluable. A CFP can:

• Guide the process—Help you understand what specific documentation and evidence to gather.

• Advocate on your behalf—Present your case to insurance companies in the best possible light.

• Compare options—Work with multiple insurers to find the best policy for your unique situation.

• Provide long-term planning—Ensure your life insurance coverage fits into your broader financial plan.

Choosing the right CFP professional is crucial. Look for someone who specializes in working with individuals who have medical histories and has a track record of securing approvals at standard rates. Their expertise can make the difference between an approval and a denial, or between standard and substandard rates.

Empowering Canadians to protect their families

A history of cancer or another serious illness does not have to be a barrier to securing life insurance and protecting your family. By taking a proactive approach, you can improve your chances of not only getting approved but also obtaining coverage at rates comparable to those without medical challenges.

The key is preparation, persistence and partnering with the right expert. Life insurance is a critical component of financial planning and with the right strategy, it is possible to ensure your loved ones are protected, regardless of your medical history.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Brett Millard – Jan 6, 2025 / 4:00 am | Story: 526021

Dividends have historically been a popular way for companies to share profits with their investors and many people think getting dividends is a big reason to invest in a company.

But times have changed. Dividends might not be as important for Canadian investors as they used to be. Let’s explore why.

What are dividends?

Dividends are payments a company gives to its shareholders. The company’s board of directors decides how much to pay. For example, if you own shares in a company that pays a $1 dividend per share, and you have 100 shares, you’ll get $100.

This might sound great, but where does this money come from? It comes from the company’s cash or profits. When the company pays a dividend, its value goes down by the same amount. This is important to understand.

How dividends reduce a company’s value

When a company issues a dividend, it lowers the company’s total assets. Imagine a company is worth $1 billion and it pays out $100 million in dividends. Now, the company is worth $900 million. So while you get some cash in your pocket, the company’s value has decreased.

Some investors don’t realize this and think dividends are like free money. But they’re not. The company is just giving back some of the money it already has.

Tax benefits are not what they used to be

One reason dividends used to be popular was the tax break. In Canada, there are special rules for dividends, like the Dividend Tax Credit. This made dividends a tax-efficient way to get investment returns.

However, these tax benefits have become less valuable. Over the years, changes to tax laws and rates mean there’s often no big advantage to getting dividends compared to other types of income or investment returns. For many investors, it might be better to focus on overall growth rather than just dividends.

Some investors also don’t want the income and trigger unnecessary taxation when the dividends are issued.

Dividends can be misleading

Some companies try hard to pay steady or rising dividends because they think it makes investors happy. But this can lead to problems. A company might pay more in dividends than it can afford, hurting its ability to grow. Boards of directors also control dividends, so the amount paid can be somewhat arbitrary—it doesn’t always reflect how well the company is really doing but instead is often a tool used to mislead less-savvy investors.

Are dividends still good for anything?

Dividends aren’t all bad. For some investors, they can be a reliable source of income. Retirees, for example, might like getting cash from dividends to help pay for living expenses. Dividends can also show that a company is stable and has strong cash flow. Companies that pay consistent dividends are often well-established businesses.

The other side: Why dividends might not matter as much

Instead of focusing on dividends, many investors now look at total returns. Total return includes both the growth in a stock’s price and any dividends. If a company doesn’t pay dividends, it can reinvest its profits to grow the business. This can lead to a higher stock price over time, which benefits investors.

For example, some of the biggest and most successful companies, like tech giants, don’t pay dividends. Instead, they use their profits to create new products, expand, or buy back shares. Share buybacks can also increase the value of the shares you own without reducing the company’s cash as much as dividends.

What should investors do?

The best approach depends on your goals. If you need regular income, dividends might still work for you. But if you’re looking for long-term growth, focusing on the company’s overall performance and strategy might be better.

Dividends are not free money. They reduce the value of the company when they’re paid. And in today’s world, the tax advantages aren’t as strong as they used to be. It’s worth thinking about whether dividends really fit your investment plan.

By understanding both sides of the argument, you can make smarter choices for your financial future.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Brett Millard – Dec 30, 2024 / 4:00 am | Story: 525035

When it comes to estate planning, Canadians without children might assume it’s less relevant to their lives.

Without heirs, questions about who will inherit your wealth or manage your estate may not feel pressing. However, estate planning is just as crucial for individuals and couples without children, as it ensures your assets are distributed according to your wishes, prevents unnecessary legal complications, and helps define your legacy.

Here are key reasons estate planning is essential for childless Canadians and the options they should consider:

Why estate planning matters for childless Canadians?

1. Control over asset distribution—Without a will, your estate is distributed based on provincial laws. In most provinces, this means assets are passed to your closest relatives, which could be parents, siblings, nieces, or nephews. If you’re estranged from your family or have specific wishes, failing to have a will could mean your assets end up in unintended hands.

2. Reducing taxes and fees—Proper estate planning allows you to minimize taxes and administrative fees, ensuring more of your wealth goes to the beneficiaries or causes you care about. Often you get to choose, would you like your leftover assets to go to the government or a charity that is near to your heart?

3. Avoiding family disputes—Even in families with close relationships, unclear intentions can lead to misunderstandings and legal battles. For those without children, it often becomes even less clear. An estate plan ensures transparency and reduces the risk of conflicts.

4. Creating a meaningful legacy—Estate planning enables you to leave a lasting impact through charitable donations, support for loved ones, or other means that reflect your values and priorities.

Key Estate planning steps for childless Canadians

1. Draft a will—A will is the cornerstone of any estate plan. Without children, you have more flexibility to allocate your assets, whether to family, friends, charities, or other organizations. Be specific about your wishes to avoid ambiguity.

2. Choose an executor carefully—The executor of your estate will manage your affairs after you pass. This person should be trustworthy, organized and capable of handling financial and legal responsibilities. If you don’t have a family member or friend who fits the bill, consider appointing a professional executor, such as a trust company.

3. Set up powers of attorney—Powers of attorney for property and personal care ensure someone you trust can make financial and health decisions on your behalf if you become incapacitated. Without these documents, the court may appoint someone to act on your behalf, which may not align with your preferences.

4. Consider charitable giving—Many childless individuals use their estate to support causes they care about. Charitable bequests can be included in your will, and setting up a charitable foundation or endowment fund can create a lasting impact.

5. Establish a trust – Trusts can provide a flexible way to manage and distribute your assets, especially if you have complex financial situations or specific wishes. For example, a trust can provide ongoing support to a loved one or fund scholarships in your name.

6. Plan for digital assets—In today’s digital age, your estate plan should include instructions for handling online accounts, social media profiles and digital files. Designate someone to manage these assets and provide access details.

7. Communicate your wishes—Once you have an estate plan, share your intentions with your executor and key beneficiaries. While the contents of your will remain private until your passing, discussing your general goals can prevent surprises and conflicts.

8. Review and update regularly—Life circumstances change, and your estate plan should evolve accordingly. Review your will and other documents every few years or after major life events to ensure they reflect your current situation and wishes.

Why start now?

Procrastination is a common barrier to estate planning but the risks of delay are significant. Without a plan, your estate could face higher taxes, lengthy legal processes and outcomes contrary to your desires. Starting early gives you the time and clarity to make informed decisions and adjust as needed.

For Canadians without children, estate planning is an opportunity to take control of your financial legacy, support the people and causes that matter most, and avoid leaving behind legal and financial challenges.

By taking proactive steps, you can ensure your wealth and values are preserved according to your wishes.

Don’t wait, consult a financial planner or estate lawyer to start building your plan today.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.