Credit Crunch

Many Canadians move to Canada in hopes of a better future for their family. While the cold is always a challenge to get use to for new Canadians, there are other challenges they must also face. New Canadians do not realize is how important a credit history is. A good credit history will allow you the option to borrow money in the event of an emergency. But for those without a credit history, what to do in an emergency? 

When people immigrate to Canada, they underestimate the amount of money they will spend in their first year - which may leave them cash strapped during emergency times. For newcomers, buying a term insurance and critical illness is important as their resources and access to resources may be more limited without borrowing options. In the event of an accident or critical illness, having accidental or critical illness insurance to help pay for costs is a need for new Canadians. Without a credit history, new immigrants will definitely face a credit crunch when trying to obtain a loan. Planning ahead is the key to success in a new land.

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Celebrate Financial Literacy Month!

Did you know, in a recent poll, 50% of Canadians (Insurance Bureau of Canada) responded that they want to better understand insurance?

Why understand insurance? Through understanding how insurance works, and how insurance can benefit your family, you will be better able to plan for your families future. We often get caught up with balancing our pay with our bills, that we neglect one of our biggest responsibilities in financial planning – building our safety net. Insurance provides us with that pillow of comfort, which will allow us with breathing and resting room when we need it.

Can I afford insurance? Many people think that insurance is too expensive, and that they will not need it. But the truth is, you need insurance. Many Canadians are not prepared for a financial crisis. In fact, the average Canadian owes $27,131! Holding such heavy debt loads may make it much more difficult to obtain a loan or borrow money in the event of an emergency. How will you pay for an emergency if you do not have insurance and cannot get a loan?

What should I ask my insurance agent? – Speak to an insurance agent to help see what options are available to you. Some questions to ask: What will my policy cover? Should I get a family plan or individual plan? Who will be responsible for my finances in a crisis? How can I keep my premium down?

This month, make it your priority to educate yourself about ways to protect your family.

The Number 1 Reason Why Couples Argue

Did you know that money is number 1 on the top reasons why couples argue? The lack of money can cause a strain on even the best of relationships. One of the biggest factors that result in money difficulties is the lack of planning ahead. If couples are faced with an unexpected event and cost without the resources to deal with it, it causes a strain in the relationship.

Couples can help reduce the tension brought on by money problems by planning ahead - getting a health and dental insurance plan help pay for prescriptions and emergency dental treatment when needed. There is no need to argue about how to come up with money for prescriptions and dental treatment if you have a plan in place. Having disability insurance can pay for costs associated with an unexpected injury or accident – which will allow your spouse to help take care of you and not worry about how to pay for the bills during your recovery. While health issues and other major illnesses can put a couple back financially, having insurance in place that can pay for these unexpected costs can surely help make sure that your spouse and you are always covered and are on the same page.

Choosing Life Insurance

There was once a father, he loved his children dearly. He vowed that he would do anything for them, and protect them. As a father, he believed it was responsibility to make sure that he would provide everything they needed and would always make sure he gave them the world. And he did love them, care for them and protect them – up until his passing. He was always certain that he would be there to care for his children that he failed to plan for what would become of his children in the event of a tragedy. Death is something that happens to everyone – it is inevitable. Protecting our family is a responsibility we owe to our family. Dealing with the loss of a family member is difficult enough, if one had to also deal with the financial hardship, it can become difficult to cope.

One of the main reasons people cite as to why they do not choose a policy is because they believe choosing a policy can be overwhelming. Insurance really is not that tricky – choosing a life insurance plan may be easier than you think.

Generally speaking, there are 3 types of plans to choose from. All plans will be some form of these types:

Term: Think of this as your phone plan, it is a pay-as-you go plan. Your insurance term can be a 5, 10 or 20 year term and you pay monthly for it for the term. You are able to renew the plan upon the completion of a term (or up to age 65). The younger you are, the cheaper the premiums you can get – the older you are, the more expensive premiums are. If you choose to end the policy while you are still alive, this type of policy will not give you your money back.

Term to 100: A term to 100 is a similar to the term plan, but it covers you until age 100. As the term is longer, your premium will be less, and you will have coverage after 65 years. Again, there is no cash surrender value for this plan, so if you end the policy or past the policy coverage term, there is no money back guarantee.

Permanent: You may have heard of this as universal or whole life insurance. Your monthly payments depend on a variety of factors – age, job, health, wealth, etc, regardless, the premiums will much higher than term or term 100 policies. Your premiums will not change, and coverage is for your entire life regardless of age. With this policy, if you give up the liability for death benefit, you can cash the money that has built up in the plan (although it may take anywhere from at least 10 years to have a decent amount).

The coverage you need really depends on you – some financial planners say that anywhere from 5 to 7 times your current income is enough, while others suggest that the amount can be lower if you have mortgage insurance in place. Really look at the options available and choose a plan that suits you. An insurance agent will be happy to discuss options with you. Everyone has different needs and need to choose a plan that suits them. But remember – be honest with your insurance agents. Hiding an illness can be a cause for the term to be voided, so be honest and help choose a plan that will protect your loved ones. Insurance does not have to be that tricky, with the right tools and guidance, you can make sure your family will always be cared for. 

In Sickness and in Health: Are you prepared?

Dealing with a major health issue is difficult on many levels - emotionally, physically and financially. 40% of Canadians who suffer from a major health crisis also suffer financially. In Ontario, we are fortunate that OHIP covers many of our health expenses, including doctor visits, hospital visits, select exams, etc. However, OHIP has its limitations, and therefore cannot cover prescription drugs, medical supplies, disability insurance, etc. The costs associated with dealing with a health issue can be unaffordable to many. People are constantly having to rely on credit, savings, retirement funds and mortgages to pay for health care costs when hit with a major health issue if available. Others, have to rely on the goodwill of their family and friends for financial support.

There is never a 'good' time, and no one is ever fully prepared for dealing with a crisis, however, we should always be aware that this is a possibility. Recovering and recuperating should be the only thing one should deal with when suffering from a major health issue. This is where health insurance plans, and critical illness insurance plays a pivotal role. Having health insurance and critical illness insurance allows you in many times to have your financial costs associated with your illness covered. This will allow you to take the care your body needs, without adding other stressors to your life. A critical illness plan will help cover costs that can allow you to take time off work in the event of a critical illness. For many, this time is a much needed gift.

While we can never know what will come our way, for our sake, and our families sake, it is always good to insure that we have provisions in place in the event of a crisis. Having an extended health insurance and critical illness insurance can go along way in ensuring that we protect our loved ones and ourselves at all times. In times of sickness, will you be prepared?

Individual or Family Plan?

When starting an RESP, families have the choice of setting up an individual plan or a family plan. For most families, a family RESP plan may be your best bet.

A family RESP plan allows you to set up more than one child in an RESP. You still list the children, and decide on the monthly contribution the same way as an individual plan. The good thing with this is that if one child decides they are not interested in post-secondary education, the cash and grants are then allocated to the other child/children, and the money is not lost. Some children may decide to go into trades, and forgo post-secondary, and may not end up using their RESP or full RESP amount. With individual plans, if the child decides to take another route and does not want to enroll in post-secondary, that money is essentially lost. With family plans, you also end up have fewer administration fees than if you were to set-up multiple individual plans.

Grandparents can also set up family RESP plans. With a family plan, they can set this up for their grandchildren, and if one grandchild does not use it, the other ones can easily use the remaining money. You do however, need to decide on the beneficiaries and how much to allocate to each child.

When setting up the family plan, although you can contribute to each child equally, when you have children of different ages, it may be wise to contribute more towards the older children, so that when they are ready to go to university, they have a nice nest waiting (with the younger children, this can be built in time). With the money you put aside for them, and the 20% of your contribution the government matches, there will be financial assistance for your children available when they are ready to make the next journey in their lives.

It’s always wise to assess your family situation, and make a decision that suits the needs of your family situation.