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Alberta’s Financial Benefit from Insurance

financial benefit

A common misconception people have about life, health and dental, critical illness, disability & long term care coverage is that insurance companies don’t pay out on many policies. The 2014 Canadian Life & Health Insurance Association’s annual report provides a snapshot of the huge financial benefit that 2.9 million Albertans and their families receive from insurance payouts. In addition to the boost to our province’s economy from these payouts, plus add in the 14,000 people employed in the industry here who all pay federal and provincial taxes.

Consider a family devastated by the premature loss of a parent. In addition to the emotional loss is the possibilities of losing their home, defaulting on debt, limited education possibilities for their children, plus a host of other difficulties. Although an abundance of cash provided by a life insurance policy will never compensate the family for that loss, it does make focusing on healing much easier.

At the end of 2013 about two million Albertans owned a total of $571.5 billion of life insurance, with an average coverage of $496,400. More than half of this was personally owned and the balance was with group plans. Almost $52 billion of new coverage was purchased in 2013, with an average face value of $384,500. The total premiums collected for all policy types was almost $11 million and the total benefits paid out almost $8 million.

In 2013, life and health insurers reinvested $74 billion back into the province into a wide range of investments, highlighting the excellent opportunities here in Alberta. This went into long-term capital projects such as infrastructure, provincial and municipal bonds to fund schools, roads and sanitation systems, as well as corporate securities (stocks and bonds), mortgages and real estate.

Part of what I do is to make families aware of the enormous financial risks they are exposing themselves to when they have insufficient or worse, no coverage for life, disability, critical illness or long term care. Costs can add up if a major earner is disabled by accident or sickness, costs which our provincial plans do not cover. By allocating just 10% of their income they can build wealth over their lifetime, and still cover the financial risks that a death or disability could expose them to.

In my view, a young couple with children should have at least $1 million of 20-year term coverage each, which would likely cost less than their monthly car insurance premium. In addition to this, they should have a reasonable level of disability coverage should they be unable to work, and sufficient critical illness coverage to pay their mortgage payments for one year.

I’m proud to be a licensed financial advisor in Alberta, helping to grow my clients’ wealth, protect it with the various insurance products, and provide them with guaranteed income when they retire. Then help them preserve or equalize their final estates, to pass on tax-free cash to their heirs, or their farm or small businesses intact to the next generation.

Don’t leave yourselves or your family at risk. Sit down with a qualified life advisor and figure out an affordable plan to cover you or your family’s needs.
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