There is actually a very simple way to compare different plans from the different travel insurance companies. In the “old” days (10+ years ago), booking airfare was a very different process than it is today? People typically used a travel agency, or spent hours on the phone with customer service representatives from United Airlines, Northwest Airlines, TWA, and others. You would writing down the different times, connections, and fares. Then you would compare all the prices; and figure out when you wanted to leave, when to return, etc. Sound familiar?
Then along came Expedia, Travelocity, and the other online travel sites. They took the role of travel agent, and made it easy for us to look at all the available airfares from several airlines, and compare prices side-by-side. Much easier, right?
The same thing exists for the travel insurance companies. Instead of using an agency, or calling the individual companies, you can go to comparison websites and see all the different plans, compare the coverage, and even compare quotes (NOTE: in the travel insurance industry, you are able to get instant, accurate quotes for your travel insurance premium. You don’t need to submit your information and wait for an email or call; you can get a quote for travel insurance in less than a minute.)
The other nice thing is that you can instantly purchase and bind coverage, right online. Using a credit card, travelers can get a quote and purchase their policy instantly. The companies generally mail the policy out to you, but you will also receive an email with all the important policy information. You can print this out and get right on the plane.
Wednesday, January 9, 2008
Thursday, November 30, 2006
Using Life Insurance To Shelter Income
In a nutshell, a tax shelter allows your investments to grow free of tax. Many people think tax shelters are only for the rich but the biggest users of tax shelter is the middle class. When you buy a RRSP (IRA or 401K in the US), you are in fact buying a tax shelter. The money made inside the RRSP is allow to grow tax free until it’s taken out.
There are a few problems with a RRSP. The first is the Canadian government won’t allow you to put more than 18% of your income or $16,500, whichever is less, into a RRSP. The second problem is the money is subject to income tax when it’s taken out.
Another way to shelter income is by using life insurance. Life insurance proceeds are passed tax free to your beneficiaries. That’s good for your beneficiaries but what if you want the money? All whole life and universal life insurance policies have a cash surrender value that you get if you give up the insurance. If you take the cash, your beneficiaries get nothing and the money taken out gets taxed. Not a good deal. However, there is a way around this.
With the exception of term insurance, all other life insurance policies are made up of two components, the insurance component and an investment component. The key here is the investment component. While the money is inside the policy, its allowed to grow tax free, just like a RRSP. Knowing this, many investors put way more money than they have to into their policy. For example, a 37 year old non smoking female has to pay $622.50 a year to get $1 million of life insurance. If all she does is put $622.50 into her plan, all she’ll have is insurance. Anything above that amount goes into the investment component.
To prevent people from dumping in their life savings, the government sets limits on the maximum premium you can pay into a policy and still keep its tax shelter status. In the above example, the maximum is $41,847.61 a year. The higher your insurance needs, the higher the limit. Let’s assume that the above put $41,000 a year into her policy for 3 years and then stops after that. After paying for insurance cost the rest will go into the investment component, where it will grow tax free. If we assume an 8% yearly rate of return the policy will have a cash value of $1.3 million and death benefit of $2.15 million when our 37 year old female reaches 65. If she takes the cash, it gets taxed and she loses the death benefit. How can she take cash out, keep the death benefit and not pay taxes? By borrowing against the cash value.
A bank will lend up to 90% of the cash value on an insurance policy. So our investor can borrow up to $1.17 million from the bank to spend as she feels like. The money would not be taxed because it’s not income. The bank would capitalize the loan so she doesn’t have to make any payments. How does the bank get its money back? When she dies, the death benefit will pay off the bank loan plus accrue interest and any money left over will go to her beneficiary tax free.
So here you have an investment strategy that is completely sheltered from tax, allows you to take money out of the plan tax free, and allows you to transfer your estate to your heirs’ tax free. As with all investments, you should seek out the advice of an experience financial planner before proceeding.
There are a few problems with a RRSP. The first is the Canadian government won’t allow you to put more than 18% of your income or $16,500, whichever is less, into a RRSP. The second problem is the money is subject to income tax when it’s taken out.
Another way to shelter income is by using life insurance. Life insurance proceeds are passed tax free to your beneficiaries. That’s good for your beneficiaries but what if you want the money? All whole life and universal life insurance policies have a cash surrender value that you get if you give up the insurance. If you take the cash, your beneficiaries get nothing and the money taken out gets taxed. Not a good deal. However, there is a way around this.
With the exception of term insurance, all other life insurance policies are made up of two components, the insurance component and an investment component. The key here is the investment component. While the money is inside the policy, its allowed to grow tax free, just like a RRSP. Knowing this, many investors put way more money than they have to into their policy. For example, a 37 year old non smoking female has to pay $622.50 a year to get $1 million of life insurance. If all she does is put $622.50 into her plan, all she’ll have is insurance. Anything above that amount goes into the investment component.
To prevent people from dumping in their life savings, the government sets limits on the maximum premium you can pay into a policy and still keep its tax shelter status. In the above example, the maximum is $41,847.61 a year. The higher your insurance needs, the higher the limit. Let’s assume that the above put $41,000 a year into her policy for 3 years and then stops after that. After paying for insurance cost the rest will go into the investment component, where it will grow tax free. If we assume an 8% yearly rate of return the policy will have a cash value of $1.3 million and death benefit of $2.15 million when our 37 year old female reaches 65. If she takes the cash, it gets taxed and she loses the death benefit. How can she take cash out, keep the death benefit and not pay taxes? By borrowing against the cash value.
A bank will lend up to 90% of the cash value on an insurance policy. So our investor can borrow up to $1.17 million from the bank to spend as she feels like. The money would not be taxed because it’s not income. The bank would capitalize the loan so she doesn’t have to make any payments. How does the bank get its money back? When she dies, the death benefit will pay off the bank loan plus accrue interest and any money left over will go to her beneficiary tax free.
So here you have an investment strategy that is completely sheltered from tax, allows you to take money out of the plan tax free, and allows you to transfer your estate to your heirs’ tax free. As with all investments, you should seek out the advice of an experience financial planner before proceeding.
Tuesday, November 21, 2006
Travellers: Make your health policy work for you
The purchase of travel health insurance is a sensible idea for anyone taking trips outside Canada. If you get sick unexpectedly or have an accident while you are away, the health services in other countries are generally much more costly than those which OHIP covers. When buying your insurance however, it is important to take all the time needed to fully understand the coverage as well as the limitations of the policy. Be sure to determine your own needs first, say industry specialists, then read the policy thoroughly to be sure those needs are covered.
The Financial Services Commission of Ontario (FSCO) reminds the travelling consumer that it is not enough to simply buy travel health insurance; travellers must also know how the policy works and how to use it. FSCO is an agency of the Ministry of Finance that regulates Ontario's insurance industry. Its suggestions in this regard are based on records of what went wrong for others.
It is important for example, to compare the policies offered by different companies, not just for price, but also for the amount of coverage, pre-existing conditions, deductibles, limitations and exclusions. Your health, age, the medication you take, the length of your trip and the destination are all factors that affect the price of a policy and the types of medical costs your insurer will cover. In some cases you may have to find an insurer willing to write a policy tailored to your circumstances.
To better compare each policy before purchase, take a look at the Travel Health Insurance Policy Checklist, posted on the FSCO Web site. Here's a sample:
• Compare the maximum each policy will pay above Ontario health plan limits.• Look for age limits or medical criteria that might apply to you.
• Compare how the policies define terms such as pre-existing condition, or a medical exclusion. Do they affect your coverage?
• Compare deductibles and/or co-payment clauses to understand your own obligation.
• Compare payment procedures. Do you pay for the medical services first, followed by a reimbursement, or is the payment made directly from the insurer to the facility?
• Check if policies require you to use "preferred" doctors and hospitals.• Are you covered for participation in the sports and activities you have planned, or are they excluded?
• Can you buy extra coverage if you extend your trip?
• What is the full package cost of each policy?Don't forget, says FSCO, you may already have sufficient coverage from your credit card company or employee benefits plan. Don't buy more insurance if you are covered. Additional information on this subject is available online at www.fsco.gov.on.ca. Or, for a copy of their booklet Shopping for Travel Health Insurance phone (416) 590-7298 (Toll Free: 1-800-668-0128).
The Financial Services Commission of Ontario (FSCO) reminds the travelling consumer that it is not enough to simply buy travel health insurance; travellers must also know how the policy works and how to use it. FSCO is an agency of the Ministry of Finance that regulates Ontario's insurance industry. Its suggestions in this regard are based on records of what went wrong for others.
It is important for example, to compare the policies offered by different companies, not just for price, but also for the amount of coverage, pre-existing conditions, deductibles, limitations and exclusions. Your health, age, the medication you take, the length of your trip and the destination are all factors that affect the price of a policy and the types of medical costs your insurer will cover. In some cases you may have to find an insurer willing to write a policy tailored to your circumstances.
To better compare each policy before purchase, take a look at the Travel Health Insurance Policy Checklist, posted on the FSCO Web site. Here's a sample:
• Compare the maximum each policy will pay above Ontario health plan limits.• Look for age limits or medical criteria that might apply to you.
• Compare how the policies define terms such as pre-existing condition, or a medical exclusion. Do they affect your coverage?
• Compare deductibles and/or co-payment clauses to understand your own obligation.
• Compare payment procedures. Do you pay for the medical services first, followed by a reimbursement, or is the payment made directly from the insurer to the facility?
• Check if policies require you to use "preferred" doctors and hospitals.• Are you covered for participation in the sports and activities you have planned, or are they excluded?
• Can you buy extra coverage if you extend your trip?
• What is the full package cost of each policy?Don't forget, says FSCO, you may already have sufficient coverage from your credit card company or employee benefits plan. Don't buy more insurance if you are covered. Additional information on this subject is available online at www.fsco.gov.on.ca. Or, for a copy of their booklet Shopping for Travel Health Insurance phone (416) 590-7298 (Toll Free: 1-800-668-0128).
International Travel Insurance
If you're travelling within the UK you probably don't need insurance, but if you're travelling abroad then international travel insurance is a good idea. It covers you for everything from delays and cancellations to more serious things such as hijacking, kidnapping and muggings, and while even the most unlucky traveller isn't likely to need such cover you're also protected against more likely occurrences such as losing your passport.
When you're buying international travel insurance the premium will depend on where you're going. Most insurers split the world into several parts: Europe, which normally includes the Canary Islands and non-European Mediterranean countries; the US and Canada; Australia and New Zealand; and the rest of the world.
One thing to watch with international travel insurance policies is that some insurers won't cover certain countries at all: for example, at the moment you'll find it difficult to get cover for the Middle East, so that budget holiday in Baghdad is probably a bad idea.
Getting internation travel insurance is simple enough: simply head for the site of an insurer, from cheap firms such as Insure & Go to more established names such as Direct Line. Enter a few details, tell the site where you're planning to go, and the site will tell you how much your premium will cost.
When you're buying international travel insurance the premium will depend on where you're going. Most insurers split the world into several parts: Europe, which normally includes the Canary Islands and non-European Mediterranean countries; the US and Canada; Australia and New Zealand; and the rest of the world.
One thing to watch with international travel insurance policies is that some insurers won't cover certain countries at all: for example, at the moment you'll find it difficult to get cover for the Middle East, so that budget holiday in Baghdad is probably a bad idea.
Getting internation travel insurance is simple enough: simply head for the site of an insurer, from cheap firms such as Insure & Go to more established names such as Direct Line. Enter a few details, tell the site where you're planning to go, and the site will tell you how much your premium will cost.
Family Travel Insurance
If you're travelling alone then the odd problem isn't a big deal – but if you've got kids in tow, it can be a disaster. Whether it's flight delays, lost property, hijacking or just breaking down on the way to the airport and missing your flight, a family travel insurance policy can help you out if you get into trouble or compensate you if things go wrong.
When it comes to choosing a family travel insurance policy, not all policies are created equal. Most insurers include infants for free, but others such as Worldwide Travel Insurance also provide free cover for older children. Some insurers go one step further: the Post Office's family policy covers dependants, who can include grandchildren and nieces, and Nationwide's definition of "children" goes up to the age of 23.
Family travel insurance isn't just for the traditional mum and dad with 2.4 kids: many insurers have policies specifically designed for single parents, and you'll find them from firms such as Nationwide or Norwich Union.
If your children are slightly older, consider annual family travel insurance: many such policies cover your kids if they travel without you, which is handy if they want to go on holiday with their friends.
When it comes to choosing a family travel insurance policy, not all policies are created equal. Most insurers include infants for free, but others such as Worldwide Travel Insurance also provide free cover for older children. Some insurers go one step further: the Post Office's family policy covers dependants, who can include grandchildren and nieces, and Nationwide's definition of "children" goes up to the age of 23.
Family travel insurance isn't just for the traditional mum and dad with 2.4 kids: many insurers have policies specifically designed for single parents, and you'll find them from firms such as Nationwide or Norwich Union.
If your children are slightly older, consider annual family travel insurance: many such policies cover your kids if they travel without you, which is handy if they want to go on holiday with their friends.
Holiday Travel Insurance
You probably won't be hijacked or kidnapped by mercenaries during a fortnight in Majorca, but there are still plenty of reasons why holiday travel insurance could save your bacon.
Holiday travel insurance is a great way to stop problems from ruining your holiday. If your flight is delayed, you can get compensation; if it's really delayed, your insurance could cover the cost of hotel accommodation. Then there are big problems, such as cancelling your holiday or having to fly back early because your mum's ill. Without insurance, you won't get any money back. And then there's the health insurance that's included in your policy, which pays for emergency medical treatment and puts you in touch with expert help 24 hours a day.
You can get holiday travel insurance in two main forms: single trip, for when you're only going away once, and multi-trip, for when you expect to make lots of foreign trips in a year. There's a wide range of policies for individuals, couples, families and single parents too.
Holiday travel insurance is cheaper than you think: for two weeks in Europe, a single traveller will pay £10-£20 while a family can expect to pay £40-£50. When you consider what it would cost you if everything goes wrong, it's a small price to pay for peace of mind.
Holiday travel insurance is a great way to stop problems from ruining your holiday. If your flight is delayed, you can get compensation; if it's really delayed, your insurance could cover the cost of hotel accommodation. Then there are big problems, such as cancelling your holiday or having to fly back early because your mum's ill. Without insurance, you won't get any money back. And then there's the health insurance that's included in your policy, which pays for emergency medical treatment and puts you in touch with expert help 24 hours a day.
You can get holiday travel insurance in two main forms: single trip, for when you're only going away once, and multi-trip, for when you expect to make lots of foreign trips in a year. There's a wide range of policies for individuals, couples, families and single parents too.
Holiday travel insurance is cheaper than you think: for two weeks in Europe, a single traveller will pay £10-£20 while a family can expect to pay £40-£50. When you consider what it would cost you if everything goes wrong, it's a small price to pay for peace of mind.
Cheap Insurance
Insurance is a form of contract whereby periodic payments (also known as insurance premiums) are made to an insurance company, in order to provide an individual or business compensation in the event of property loss or damage.
The main purpose of insurance is to protect yourself or your family against the financial impact of a tragedy. In general, it is contract in which one party agrees to pay for another party’s financial loss resulting from a specified event. Insurance mainly consist of three things - insurer, insured and policy. An entity seeking to transfer risk (an individual, corporation, or association of any type) becomes the ‘insured’ party once risk is assumed by an ‘insurer’, the insuring party, by means of a contract, defined as an insurance ‘policy’.
There are two main ways to buy insurance. The first one is directly through an agent and the second one is to do it yourself. The main advantage of buying insurance from other is that an honest and competent insurer will decide according to the situation and make suggestions. The advantage of going on your own is that less money is needed for it. While buying any type of insurance, a person will save money by paying annually or semi-annually. Sometimes buying several types of insurance from the same company will save money.
There are different types of insurance available in the market. Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured covered in the policy. There are main two types of life insurance that are term insurance and permanent insurance.
The medical insurance policy is a non-life insurance policy, which covers the expenses incurred by an individual in case of an injury or hospitalization. Individuals have to pay a minimal premium for buying medical insurance. Its main types are indemnity plan, preferred provider organization and health maintenance organization.
Homeowner insurance policy covers property and contents. There are two kinds of Homeowners Insurance policies and these policies can be divided into two categories named-Peril Insurance and all-risk insurance.
Auto insurance is the insurance against loss due to theft or traffic accidents. It can be purchased for cars, trucks and other vehicles. Its primary use is to provide protection against losses incurred as a result of car. Its main types are general liability, no-fault insurance, uninsured auto coverage and medical payments.
Car insurance is the insurance against loss due to theft or traffic accidents. Its main types are fully comprehensive auto insurance, third party insurance, fire and theft insurance, third party insurance, specialized car insurance.
Term life insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Term life insurance comes in two basic varieties term life policies and cash value policies.
There are numerous insurance providers that designs and markets insurance services for individuals, families, groups and businesses worldwide. Now, there are also online insurance facilities that help a person to select insurance just by clicking. After fulfilling the basic requirements of the insurance company, person is eligible for it.
The main purpose of insurance is to protect yourself or your family against the financial impact of a tragedy. In general, it is contract in which one party agrees to pay for another party’s financial loss resulting from a specified event. Insurance mainly consist of three things - insurer, insured and policy. An entity seeking to transfer risk (an individual, corporation, or association of any type) becomes the ‘insured’ party once risk is assumed by an ‘insurer’, the insuring party, by means of a contract, defined as an insurance ‘policy’.
There are two main ways to buy insurance. The first one is directly through an agent and the second one is to do it yourself. The main advantage of buying insurance from other is that an honest and competent insurer will decide according to the situation and make suggestions. The advantage of going on your own is that less money is needed for it. While buying any type of insurance, a person will save money by paying annually or semi-annually. Sometimes buying several types of insurance from the same company will save money.
There are different types of insurance available in the market. Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured covered in the policy. There are main two types of life insurance that are term insurance and permanent insurance.
The medical insurance policy is a non-life insurance policy, which covers the expenses incurred by an individual in case of an injury or hospitalization. Individuals have to pay a minimal premium for buying medical insurance. Its main types are indemnity plan, preferred provider organization and health maintenance organization.
Homeowner insurance policy covers property and contents. There are two kinds of Homeowners Insurance policies and these policies can be divided into two categories named-Peril Insurance and all-risk insurance.
Auto insurance is the insurance against loss due to theft or traffic accidents. It can be purchased for cars, trucks and other vehicles. Its primary use is to provide protection against losses incurred as a result of car. Its main types are general liability, no-fault insurance, uninsured auto coverage and medical payments.
Car insurance is the insurance against loss due to theft or traffic accidents. Its main types are fully comprehensive auto insurance, third party insurance, fire and theft insurance, third party insurance, specialized car insurance.
Term life insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Term life insurance comes in two basic varieties term life policies and cash value policies.
There are numerous insurance providers that designs and markets insurance services for individuals, families, groups and businesses worldwide. Now, there are also online insurance facilities that help a person to select insurance just by clicking. After fulfilling the basic requirements of the insurance company, person is eligible for it.
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