5 Benefits on How to Protect Your Mortgage With Life Insurance

For potential homebuyers and current homeowners, a home is a costly investment with a long-term commitment. That's why every homeowner carrying a mortgage needs to get life insurance. Life insurance that covers a mortgage is called mortgage life insurance or mortgage protection insurance. This kind of insurance is designed to protect the lender, just in case they are unable to pay for their monthly mortgage fees. In this article, let's highlight five benefits on how to protect your mortgage with life insurance.

1. May protect homeowners due to sudden unemployment

With Canada's unemployment rate fluctuating every year, sometimes homeowners might face unexpected job loss due to termination or disability. The benefit of having mortgage life insurance alleviates the stress and financial burden related to unemployment by covering the period when the homeowner is out of work. At Northwood Mortgage, we offer a series of mortgage life insurance options that target the specific time frame if a homeowner loses their job, falls ill, or becomes physically disabled, causing unemployment.

2. May protect homeowners due to unexpected death

If the homeowner dies, the mortgage life insurance will cover the remaining amount left on the mortgage. Along with unemployment, death in the family can cause financial strain, especially when the homeowner passes away. Mortgage life insurance is a great benefit because homeowners are assured that after death, the mortgage will not become their family's responsibility.

3. Mortgage life insurance frees up your budget

When it comes to having mortgage life insurance, homeowners can free up their budget by the funds they get from other insurance policies. For example, the funds received from a personal life insurance or employer benefits could be used for payments on other financial obligations such as car payments, other bills, and university tuition. What would usually go towards the mortgage can be spent wisely on other expenses because the homeowner has mortgage life insurance.

4. Mortgage life insurance is convenient

Another benefit that mortgage life insurance offers is convenience. By covering unemployment, death, and other bills, it is an added layer of security in case unexpected circumstances should occur. With all its benefits, it is also easy to qualify. To purchase a mortgage life insurance policy, homeowners do not require to submit to a life insurance medical exam. This is a very convenient benefit to have for sickly individuals. In case the homeowner is denied life insurance due to medical illness, the homeowner with mortgage life insurance is financially protected.

5.Mortgage life insurance accommodates new homebuyers

For potential first-time homebuyers who can only afford a small down payment, getting mortgage life insurance can secure the home of their dreams. They can use mortgage life insurance through the Canada Mortgage Housing Corporation, which requires a 5% downpayment.

Northwood Mortgage
As you can see, choosing a mortgage insurance policy should be decided carefully. However, investing in mortgage insurance can safeguard you and your family's future in the long run.

At Northwood Mortgage, we have an expert staff of mortgage agents specializing in life insurance and mortgages in Toronto, Brampton, Mississauga, and the GTA. We take the time to listen to your needs, and we cater our services to each client.

If you would like more information on mortgage insurance coverage and protection in Toronto and the GTA, we invite you to book a FREE consultation with one of our Northwood Mortgage agents by calling 416-969-8130 ext. 111, toll-free at 888-492-3690, or contact us here. Once we receive your request, one of our mortgage agents will contact you within 24-48 hours to arrange an appointment.

northwoodmortgage.com

Can I Buy an Annuity Online or Without an Agent?

The internet has become the primary channel for consumers to obtain goods and services over the past twenty years, with the population as a whole becoming increasingly comfortable shopping online. You can now just as easily buy a car or your groceries via the internet as you can a bestselling book. 

The convenience of e-commerce is what draws many of us in, allowing for a seemingly endless selection of goods while saving valuable time and money. The internet has even developed into the channel of choice for purchasing financial products, including stocks, bonds, and life insurance. And there has been growing demand by investors to buy annuities online. 


And it’s no wonder that consumers look online for income planning products like annuities. Most savvy investors are well aware of their benefits, but many advisors fail to include them as a significant aspect of financial and retirement plans. According to one survey, 72 percent of advisors did not mention annuities with lifetime income as a strategy for retirement planning, showcasing not only why an investor may turn to their own online research for guidance, but also why individuals must find a trusted financial advisor that specializes in wealth concepts beyond stocks and bonds.

However, one thing that we’ve learned about the convenience of shopping online is that just because you can buy it online, doesn’t mean that you should. The more significant the purchase, the more difficult it is to guarantee you are making the right choice with your hard earned money. If you consider the complexity of a financial solution like an annuity, the question to consider is not, “Can I buy an annuity online without an agent?” but whether or not you should buy online as the most appropriate avenue for purchase. Let’s explore the many things a wise investor should first consider.


Can I Successfully Buy an Annuity Online or Without an Agent?

While you may see ads for online brokerage accounts, you’re less likely to find annuities advertised online. Annuities have not yet become commoditized in the way that brokerage accounts have, so there will be more work in finding a product that meets your needs without the guidance of a qualified insurance advisor. 

So, yes, you can buy annuities online without the help of an insurance agent, but you’ll have to spend a significant amount of time on research. And, there are only two channels for direct annuity sales online:

• Life insurance companies: Life insurances companies selling direct-to-consumer, which include the many household name insurers, will be among the top results in your search, but not all of them sell directly online. You may find a familiar name, click on a link and maneuver your way through a complicated online form only to land on a page that still requires you to speak to an agent in order to make your purchase. This is not only frustrating, it is misleading.
• Online marketplaces: Online marketplaces that sell investment products, including annuities, will also be among your search results. But how do you choose from these providers? Are they legitimate? Will you still have to speak to an agent? Do they have the breadth of products to meet your particular needs? There are many questions to be asked before investing with these sometimes unknown sources—and you may find that answers are hard to come by.

Trust is a crucial element when selecting a financial provider. What started out as a search to purchase an annuity online can easily turn into a mission to ensure that you can trust the provider. If you find yourself searching the Better Business Bureau website for complaints, perhaps you should trust your instincts and reconsider whether a licensed and well-respected financial advisor that you can build a relationship with is the most reliable means to secure your retirement, as opposed to trying to tackle the job on your own.


How to Buy the Right Annuity (and Why Having an Advisor Matters)

As with any financial or retirement product, you must take the time to fully understand what it is that you are buying. A survey by the Insured Retirement Institute found that 75% of investors claimed to be familiar with annuities, but only 46% knew that annuities can provide lifetime income.

 Annuities are designed to meet your long-term needs for retirement income and to help ensure that you don’t outlive your savings. There are two types of annuities: variable and fixed. Variable annuities place your investment in stocks and bonds, making them subject to market volatility. This means that your account could be worth more or less than your initial investment when you retire. Variable annuities require special securities licenses and put your principal at risk. They also have high fees. Fixed annuities, in contrast, can offer a guaranteed rate of return and are best when seeking a fixed or increasing income at retirement without the risk of market loss. Besides variable and fixed annuities, there are also subcategories of annuities that can add up to hundreds of options that may or may not be appropriate for you, your long-term goals, and your particular financial situation. 
 
As you can clearly see, annuities are among the more complex financial products that you can purchase; the do-it-yourself route is definitely not recommended. The stakes are just too high! While you certainly can purchase an annuity online, choosing to do so will limit you to very few choices. Whatever time or upfront cost you believe to be saving in the short-term may end up costing you your financial security in retirement. Having a trusted advisor that can match you with an annuity based on your specific financial picture is essential. It is the only reliable option to help you navigate through the myriad of annuity choices on the market. 

The annuity and insurance advisors at Howard Kaye Insurance work with more than 50 highly-rated and trusted insurance carriers. Helping you meet your retirement goal with individualized attention is our primary objective. Call us at 800-DIE-RICH or reach out online. We can work with you to create a plan that ensures you don’t outlive your retirement savings.

source: howardkayeinsurance.com

The Asset Protection Against Judgments and Creditors You Gain from Life Insurance and Annuities

Creditors and judgments are a fact of life, especially if you’re wealthy. The more money you make, the more some people will try to get. A lot of our clients come to us looking to protect their assets from judgments and liens. At the same time, they want to be able to continue to grow wealth for the rest of their lives. Yield is important to them, but so is legal protection.

That’s why many of our clients use life insurance and annuities as part of their asset protection strategy. Life insurance and annuities have the rare advantage of being protected from most judgments and liens. While laws vary from state to state, often these insurance proceeds are considered uncollectible assets. As a matter of policy, they also bypass probate.

If protecting your assets from creditors is your goal, then life insurance or annuities might be the ideal financial vehicle for you.

Skipping Probate with Contractual Obligations

One of the benefits of using insurance and annuities is that they bypasses probate. Most of your assets will go through probate when you pass away, with your will determining their final disposition. However, life insurance and annuities don’t do that. These are contractual obligations between you, the insurance company, and the beneficiary. As such, the funds from those policies don’t go into your estate. 

This is important because anyone who brings a judgment or debt against your estate is going to be able to use its value to prove you have assets to pay the case. Life insurance policies, for example, aren’t considered part of that estate in probate court and are uncollectible as a result. But life insurance doesn’t just protect your money when your estate is being settled. It can also be used to protect your assets when you’re alive. 


How Life Insurance Policies Protect Your Wealth

In the case of judgments and liens, collectible assets are any assets with a cash value that aren’t protected by law. For the most part, these assets are just about anything you can sell for cash. So property, stocks, bonds, and other investments are considered collectible assets. If you were to get sued by a creditor, those assets could be claimed to satisfy the judgment. 

There are a few things that sit on the “uncollectible” end of the spectrum. Among those are insurance policies and annuities. Annuities and life insurance policies are considered protected assets in many states in the United States. Different states may protect different amounts from these policies. In some states, the cash value of the policy is protected. In others, only proceeds paid to beneficiaries are protected. Finally, in the best states, all the funds from the policies are protected. 

However, if you’re in a state where life insurance policies and annuities are considered collectible, then you may want to consider the use of a trust. The trust helps to provide an additional layer of insulation to the account by removing the funds from your name. As long as the trust is irrevocable, most states have held that the assets in those trusts can’t be used to satisfy judgments or debts. 

Of course, the key to asset protection is preparation. Life insurance is one of those products that’s best purchased when you don’t need it. Using it as a part of asset protection is no exception to that rule. 


When Do You Need Asset Protection?

The answer to when you need asset protection is the sooner the better. Just about all of our clients have assets that need to be protected, even those who are middle class. While the basics in your life, like the home you live in and the car you drive, might be safe from collection, many of your investment and cash accounts aren’t. The same goes for any vacation properties. 

The key is to use life insurance and annuities to protect these assets before you ever need to. Once you’re the subject of a lawsuit, then moving those funds around could be impossible. In some cases, if someone has enough assets, the court will prevent them from being able to move them if a judgment is imminent. 

People tend not to plan for this because they think it’s unlikely. The issue is that we live in a very litigious society. The wealthier you are, the more likely it is that people are going to try to claim you owe them money. Even something as simple as someone tripping and falling in your yard or a former business partner claiming you stole clients could cost millions. No one ever expects to be the subject of a lawsuit or creditor claim, but the ones who plan for it tend to do better in the long run. 

We use life insurance and annuities as a way to protect clients’ assets during and after their lives. Our strategies help our clients reduce the risk of asset loss while ensuring they’re also building a legacy. For more information on our asset protection strategies, contact us today at 800-DIE-RICH.

source:  howardkayeinsurance.com

Buy Life Insurance with Social Security Benefits to Create a Retirement Nest Egg for Your Kids

Are you at or near the point of qualifying for Social Security benefits? If so, you may or may not need those payments to supplement your other income sources. For many of us, the focus becomes repositioning those payments to create a greater legacy for our kids or charity. We’ve dealt with this issue at length and below you’ll find a few ideas about how to handle this situation. 


Using Social Security to Buy Life Insurance

Let’s take Jim, a retired executive who has accumulated $15 million in assets over his lifetime. At 69 years old, Jim still has not turned on Social Security benefits because he knows they continue to increase each year that he waits. However, at 70 years old, the payments max out and there is no further benefit to waiting.

Jim’s plan is to turn on the roughly $40,000 of income and have it directly deposited into his checking account. In the process, he will withhold one-third of the payment to cover taxes that will be due on the income. Jim is trying to figure out the best way to leverage those payments into an eventual legacy, either for his kids or charity, and how to do so without increasing the size of his taxable estate.

We believe Jim should use his payments to buy a life insurance policy. Doing so will allow him to access some incredible advantages not offered through other vehicles. First, to prevent his Social Security payments from increasing the size of his estate, Jim decides to set up an irrevocable life insurance trust in which to purchase the policy. He decides to make his cousin the trustee and his two kids the beneficiaries. 

Given the roughly $25,000 that is left after paying taxes, Jim can purchase over $1 million of life insurance. As soon as he makes that first premium payment, the $1 million benefit is locked in. This strategy perfectly meets Jim’s desire to create a future nest egg for his kids without increasing the size of his estate. Plus, he can do so without taking on the market risk associated with stocks and bonds. 


Charitable Giving with Social Security Payments

Now, let’s suppose Jim wanted to use those payments to support his favorite charity instead. Rather than own the policy himself, he can $40,000 each year to the charity and have them use the money to buy a life insurance policy. Why would he do this? By donating the money, he can more than likely take a tax deduction for the full $40,000, part of which is the net amount of his Social Security income.

Also, by having the charity own the policy rather than himself, he is avoiding the death benefit being included in his estate: Nothing would upset Jim more than watching 40% of his gift slip away to unnecessary taxation. Also, because his premium is now $40,000 per year instead of $25,000, the face amount of his policy has jumped from $1 million to $1.5 million.  

When we compare the results of these strategies against the alternatives, it’s hard to rationalize a different move. If Jim just took his Social Security payments, paid the tax, and gave the proceeds to charity, he would likely give them somewhere between $300,000 and $600,000 in total depending on how long he lives. By using life insurance, he creates a $1.5 million gift, even if he dies in year one! 

If the charity is wise, they can choose to only spend the interest from that lump sum and create a gift that gives forever into perpetuity. Life insurance also provides a guaranteed death benefit, avoiding the volatility and uncertainty of market investments.   


The advisors at Howard Kaye can show you how to think differently about your estate plan. A fairly simple strategy such as the one illustrated above can change lives, just by taking an extra income stream and repurposing it for the benefit of your family or charity. Call 800-DIE-RICH to speak with us today and let us start crafting a similar plan for you.

source: howardkayeinsurance.com

Mortgage Insurance Vs Life Insurance

People often see their homes as their biggest investment, and naturally they want to protect that investment. On the other hand, people also worry about what would happen to their loved ones if they were no longer around to care for them. For both of these situations, there is life insurance and mortgage insurance. Both types of insurance offer benefits, but they differ in their nature and eligibility criteria. If you are considering one or both forms of insurance, here are some things that you need to be aware of before making a decision.

Life Insurance

Life insurance is a smart move for many people who have dependents. However, life insurance does not often come without a rigorous application process. Age is a critical factor in the monthly premium you pay and you often have to undergo a medical exam. If you have had any previous complications, then that could work against you. In short, the younger and healthier you are, the better your chances of getting a good premium. However, for those who don’t qualify for life insurance but still want to protect their assets, they have to look at other options.

Mortgage Insurance

Mortgage insurance is usually offered by the same lender providing you with the mortgage. This form of insurance covers your monthly mortgage payments in case you can‘t pay them with your regular income. While mortgage insurance is much easier to secure than life insurance, there is a higher cost. Also, while the premiums don’t change as time goes by, the benefits are reduced as you pay down your mortgage. If you have trouble qualifying for life insurance but still want some form of protection, then mortgage insurance might be a more practical option. However, if you change your lender, your policy will also change.

Which Is Better?

Choosing between mortgage insurance and life insurance depends on your situation. If you know that you may not qualify for life insurance then mortgage insurance may be the next best thing. That said, there are many life insurance plans that offer flexibility and require little medical examination (often just a short questionnaire). So it is best to fully explore your options.

At Northwood Mortgage, our agents can help you find the best solution for your needs. Contact us today for a free consultation and let us see how we can help you protect your assets and your loved ones.

source: northwoodmortgage.com

Seven Mistakes to Avoid when Choosing Life Insurance

Choosing life insurance can be an onerous task. It doesn’t just make you think about all the bad things that could happen to you and your family, it makes you think about it in detail. On top of that, you then have to decide what type of insurance you need, what level of cover is best, and which insurance provider to go for.

It can be enough to put you off altogether. But, try not to be discouraged. Here are a few guidelines on what not to do. After all, once you know what not to do, the rest should fall into place!

Don’t settle

As we said, it can be easy to get discouraged when you are looking for life insurance. There are so many options, so many insurance providers and so many insurance products. Wading through them can seem like a huge task. However, it’s never a good idea to settle. Don’t just go for the first half-decent option, just so you can stop looking. Taking some extra time should mean you get life insurance that actually suits you – and at a better price. If you’re hung up on where to start, you can begin with a quote from mainstream providers.

Don’t be uninformed

Knowledge is power, as they say. Knowledge is also the key to finding the best life insurance. Do some research to find out what type of life insurance products are out there, and try to find out more about each insurer. This should help you to find a product that suits you, any extras that need to be added on, with an insurer that is professional and offers the kind of service that benefits you.

Don’t be pushed

Once you know what you want, you will also know what you don’t want. While some insurers may try to convince you to buy certain products or extras, it may be the case that you don’t actually need them. As long as you know what you need, you won’t waste money on anything you don’t need.

Don’t be put off by prices

When you find out the price of the policy you’re interested in, there can be a certain amount of ‘sticker shock’. Try not to be put off by prices. As long as you take the time to find out what level of cover you need, as well as what’s on offer, then you know you will be getting the best deal for the type of cover that suits you. And remember, life insurance offers valuable protection – it’s not really something you want to scrimp on.

Don’t let someone else fill in the forms

There is often one person in the household that deals with the finances and paperwork. However, you must make sure that you are the one who answers any questions about you, when life insurance applications and paperwork are being completed. However well you and your partner know each other, it’s still possible that incorrect information could be given. This could lead to a void policy, or a claim being denied.

Don’t undervalue non-working partners

Non-working partners and partners that work part-time are often undervalued on life insurance policies. Often, we only pay attention to the actual paychecks that come into the household, and forget about all the work that goes on around the house. However, if you think how much it would cost if an outside party was brought in to do those tasks, the costs would really add up.

Don’t just forget about it

Unfortunately, you can’t just forget about your policy once you have purchased it. It’s more than likely that your life insurance will need to be updated over the years. Try to have a look over your policy every year or so, or when there is a life-changing event in your family. Update your policy as required, to be sure you are still covered for any lifestyle changes.

source: bripblap.com

How Safe is Your Life Insurance Company?

Dear Insurance Adviser,
What should I do with a single-premium life insurance policy that originated in the 1980s? The interest on the lump sum I put in is better than I would get from money market funds or certificates of deposit, but I have concerns about the viability of the company. How can I find out if my money is safe? How can I learn about the health of the company? I am 77 years old and would like to leave the money where it is, but as I age, I have concerns. Thanks for your advice.
-- Singly Worried



Dear Singly,
Nothing helps with anxiety better than a few facts.

First, find out if your state has an insurance guaranty fund. Most states do. In the event that an insurance company fails and is declared insolvent, policyholders with claims against the insurer can collect from the state guaranty fund.

If your state has such a fund, make sure its caps on claims are high enough to cover both your maximum life insurance benefit and the cash value of your policy. Even if the limits are high enough, collecting from these funds is a painful and long, drawn-out process. It would probably take at least a year to get your money.

Second, go to the A.M. Best Co. website to look up the Financial Strength Rating for your life insurance company. A.M. Best has been rating insurance companies for more than 100 years and is considered the gold standard. Click on the link for consumers to check on insurance company ratings, and put in your company's name. If your company is rated A, A+, or A++, it's on solid ground. If your company is rated B or worse, pack your bags, and head for the hills!

I have a question for you: Do you still need life insurance protection? It sounds as though you are interested primarily in the investment part of the policy. You mentioned that your interest rate is better than you can get elsewhere. But that's misleading if you don't need life insurance. The annual "mortality and expense charges" for the life insurance need to be deducted from your interest earnings in order to measure your true return. Mortality charges for a 77-year-old would be quite large and would significantly reduce the earnings on your policy.

If you do need life insurance still, perhaps you don't need as much as you have. Most life insurance companies with single-premium policies will allow you to reduce your death benefit and still keep the policy and interest rate. With a lower death benefit, the mortality charges being deducted from your earnings would be much smaller, so your earnings would improve significantly. I recommend that you talk to a financial adviser to help you with this decision.

Good luck. I hope this helps.

source: foxbusiness.com