Insurance business in Canada in terms of capital involved in it holds the second place after the bank business. It is difficult to specify what sphere of human activity in Canada exists without insurance. The range of insurance services includes life insurance, medical insurance, insurance of disability, real estate insurance as well as insurance of all kinds of movable property (from cars to jewelry), insurance of businesses and bank loans, pension plans and investment projects. Such a broad coverage for all possible misfortunes or complications associated with the life of man and his activities is an essential part of ensuring a high level of social protection of human rights in Canada. Here, it is assumed that anyone who understands his responsibility to himself, his family, business partners and community at large is obliged to insure himself, his property and actions.
Insurance in Canada is provided by several hundred companies from the most famous ones with a very respectable pedigree (these include “Canada life”, which is aged 150 years, “Transamerica”, “NN Financial”, “Equitable Life” and others), to just any young companies. Most companies have a certain specialization. Companies working in the same sphere usually offer the same spectrum of services. In order to attract customers new companies sometimes have slightly lower prices than existing ones, or offer more advantageous insurance programs, but have a lower degree of reliability and stability. Therefore, when choosing a company it is better to focus on the proven reputation of it.
There are two basic types of life insurance. The first is called “TERM”. At its core, it means irrecoverable payments for insurance in case of death, paid monthly. The amount of payment depends on the age of the insured person and type of insurance. During 10 years after activating the insurance the amount of payment is the same, after which every transfer is increased by a certain amount.
When 75 years of age is reached, this insurance is automatically terminated. If a person under 75 is not dead, then all money paid to him irrevocably become the property of the insurance company. Accordingly, if a person dies before reaching 75, the insurance premium is paid to his heirs. In case of termination of monthly payments validity of this insurance will automatically be terminated. This type of insurance is in demand because of its relative cheapness. For example, if the amount of insurance is $100 000, the non-smoking men aged 25 to 35 years pays $12 a month, men aged 35 to 45 – more than $12, aged 45 to 55 – from $25, aged 55 to 65 – $50, aged from 65 to 75 – from $ 00 per month. With an increase in insurance premium increases the amount of payment, but to a lesser extent. For example, a doubling of insurance premiums increase the transfer only by 1.5 times, tripling premium increases it only by 2 times, etc. Payment is also dependent on the individual’s sex (men pay more than women), his state of health, whether he smokes or not, etc. But the emergence of a disease after the start of insurance has no effect on the insurance conditions. However, if the person wants to insure after finding out about a serious illness, the insurance company will most likely deny him this. Also, if the person knew about the presence of a serious illness, but hid it when applying for insurance, it may be grounds enough to recognize insurance invalid.
This type of insurance is primarily used in those cases where a person wants to insure his family from financial problems arising in the event of a sudden loss of its member or costs relating to the mortgage payments or children’s education, or simply to maintain a certain standard of living of the family until the children become financially independent.
The second type of insurance is called “WHOLE LIFE”. The money is accumulated according to a specific insurance policy and in the case of death of the person they are transferred to his heirs along with interest (on average 6-8% per annum) and the insured sum. The main feature of this type of insurance is that the amount of the monthly payment is determined only once when signing the contract and depends on the amount of insurance premium and the person’s age, and subsequently does not change.
Furthermore, after 10 years of payments the person can continue to make payments (for accumulating funds) or terminate them entirely or partially. In any case, he is already insured for the rest of his life. When reaching 65 the client may either take all accumulated amount, or receive it as a supplementary pension. Such pension offers two possibilities. The first: the period of receiving the pension is clearly defined, for example 10 years. During this period the person pays some bills, and after the end of the period, payments are stopped. If the person dies before the end of payments, his heirs will receive the rest of money. The second possibility: the pension is appointed for the whole life. In this case, the total payout may be both smaller and larger than in the first possibility. For example, if a man dies a month after signing the contract, his heirs will receive payment for only one month, and the rest of his money is taken by the insurance company itself. Anyway, the insurance company pays for all the time the person lives. After the death of the person his heirs may immediately get the remaining sum, or continue to receive a pension.
This type of insurance is certainly more beneficial than the previous one, as the payments are not only not lost, but are returned with sufficiently large interest (8 – 10 APR). But this insurance, compared with the previous one, along with the same amounts of insurance requires much higher monthly payments before the age of 55. For example, with insurance for $100,000 in “Equitable life” man aged from 45 to 55 must pay a minimum of $70 per month instead of $20 on the previous insurance. For people with allowances ($ 1,000 per month for a family of two people) this is a pretty decent sum which is already difficult to pay out. That is, this type of insurance is used by relatively wealthy people. But for people aged over 55 insurance payments are much smaller than for the previous one.
In some cases, the use of combined (TERM and WHOLE LIFE) insurance depends on the wishes and opportunities of the person. Each of these two types of insurance is paid even in case of suicide, but only if it takes more than two years after the beginning of the insurance.
In case of health insurance, people can not only insure death, but also the life-threatening diseases such as heart attack, stroke, cancer, kidney failure, multiple sclerosis, blindness and deafness. If a person has such illness but remained alive, in 30 days after the diagnosis was defined he will receive insured sum ($50,000 to $1,000,000). But in the case of death from the disease, his heirs receive only already made payments.
Disability insurance provides income during previously specified period in case of disability. The magnitude of payments depends on the insured amount, duration of insurance and occupation of the insured person. For some professions, such as lawyers, the basis for obtaining disability insurance can be, for example, a statement of temporary weakening of memory which is virtually impossible to verify.
The person taking a bank loan such as for buying a house, must necessarily be insured from not being able to repay the loan in case of his death. This insurance can be provided by both the bank and the insurance company. The difference here is the following. Bank insurance in case of death of the person who has taken a loan covers the remaining debts, and acquired via credit means property remains in the possession of his heirs. But if at the time of death the main part of the loan, for example $250,000 of $300,000 loan has already been paid, the heirs in any case will not receive money, and only the remaining $50,000 will be covered by bank insurance. In turn, insurance company pays the entire amount of the loan to the heirs. Insurance with the insurance company in this case is more reliable and cheaper.
Insurance of businesses
This type of insurance has several options. In one case, business partners insure each other. In case of death of one partner, his heirs have the right to claim they invested money in the business. The other partner compensates for losses from insurance and continues business.
In another case, business can be insured against losses related to the disability of the owner. If because of illness, injury, etc. business owner can not manage it himself, the insurance company will pay all the costs of maintaining the business in insured period.
All medical care in Canada is free. The only exception is dental care, which relates to the field of private initiative. But for newcomers this rule shall only be valid for three months after arrival. Also people who are temporarily residing in Canada do not have health coverage. In this case, it is highly desirable to purchase health insurance. The cost of treatment is high, a one-day hospital stay can cost over a $1,000 and some operations cost more than $10,000. Health insurance costs $1.30 a day with $5,000 insurance, $5 a day for $100,000 insurance, etc. (prices of “21st Centure Travel Insurance”).
Note that Canadian medical coverage and health insurance is valid only in Canada. Therefore, when traveling abroad, it is desirable to have a travel medical insurance. It costs $0.85 a day, and covers the costs of medical treatment abroad on amount of $2,000,000.
In addition to these, there is a very large number of different kinds of insurance – real estate, property, jewelry, paintings, etc. For more information you should directly contact the insurance company specializing in insurances which you are interested in.
Insurance agents in Canada either are employed by the insurance company and sell only its insurance policies, or are brokers and sell insurance policies of any insurance company. Typically, brokers offer a greater choice of several types of insurance as well as different prices for the same insurance from different companies. Agents of insurance companies have no choice, but they offer good insurance which is verified by high reputation of their companies or by more favorable insurance conditions.
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