Capital in Canada | Personal Investment Tips

Mar/13

27

Car Insurance in Canada

Vehicle insurance is the means whereby the owner of a vehicle pays an insurance premium, so that in the event of an accident the insurance company that received the premium pays for the damages caused by the accident. This damage is not limited to the vehicle itself, in fact the vehicle that caused the accident is usually the least consideration when it come to damage payments. The prime aim of the insurance is to cover damages and costs to other people and property, which could be well above the financial limits of the driver of the vehicle.

Example

You accidentally crash your car into a tree, which then falls over and hits a house both injuring the occupant and destroying a supporting wall. The damage claim not only involves re-instating the tree, a structural assessment and possible rebuild of the house, but also compensation to the injured owner for medical expenses and income lost While unable to work. This final bill could run into hundreds of thousands of dollars, well above what a normal driver would be able to afford.

As you can see, driving can be an expensive experience and the potential risks of it have to be covered by someone, else it would be too potentially expensive to drive. This simple form, or basic level of insurance cover is mandatory across the whole of Canada, your insurance must cover damage to third parties and properties.

Note : In Canada, driving without adequate insurance is considered a civil offence, not a criminal one, but will still incur appropriate fines and disqualification of license where appropriate.

Usually you would pay your insurance premium to a private company that specializes in insurance, and has the mechanisms in place to process claims made against it. However, some parts of Canada offer public Car insurance, which is where you pay your premium to the state and it covers any claims made against you and your vehicle. This form of motor insurance is normally a  lot cheaper than private insurance, as the state has access to large funding and can usually cover any damages without having to underwrite a risk, or tap into limited investments for funds.

“No-fault” policies are also common across Canada, both in Car and other types of insurance. A no fault policy is where no fault is apportioned for any claim made against a policy.

This doesn’t mean that when you crashed into the tree it wasn’t your fault, it might have been and you will suffer the legal consequences of the accident through due legal process (disqualification, fines, penalty points etc.). No fault means that the insurance company cannot penalize you for making a claim on your insurance, namely they cannot raise your next premium because you had an accident. This has the advantage that you know that your insurance premiums are going to remain unaltered (with the exception of the effects of inflation) for as long as you have your vehicle. But it also has the disadvantage that if you are a careful driver and have never had an accident, your premium is still likely to be higher than an “at fault” system because the premiums charged by the insurance company have to cater for both the careful and the reckless driver.

As well as providing basic insurance cover, most private insurance companies offer extra options for your vehicle insurance. The main one of these is self cover, meaning that the insurance company will pay for damages to you and your vehicle in the event of you causing an accident. (In the case of the tree incident above, only having basic cover would not have replaced your totally wrecked car, self cover would have). Self cover options usually also cover things like loss, or damage of property While in your vehicle  through theft or other causes. (The thief didn’t steal the car, but did steal your smart phone – your insurance will cover its replacement)

In conclusion, vehicle insurance is usually mandatory and is there to protect the environment and people around you as you drive, not to protect you. Car insurance ensures that in the event of an accident all damages and costs are paid totally and quickly, without the need for lengthy and expensive litigation. Before getting into your car, on your motorbike, or attempting to drive any other vehicle, make sure that you are covered. If you’re not and have an accident, you could be facing a bill that will bankrupt you.

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Mar/13

1

Life Insurance for Seniors

The average age of someone instigating life insurance with a view to starting a policy is 42. This allows adequate time for the insurance policy to accrue interest and gain value if the event of death (the average age of death in Canada is 81) where the proceeds can eliminate any outstanding debts of the deceased, pay for any death related expenses and provide a reasonable sum to the next of kin.

But, what if you are one of the people who didn’t take out an insurance policy when you were in your forties? As you approach your retirement years are worried that you don’t have the required insurance to cover the costs should you die. Or if you did take out an insurance policy, and have later come to realize that it will not have sufficient monies in it at the time of your death.

Can you get, or increase your coverage when you start to get into your 60’s?

The simple answer is yes, you can. Many insurance companies specialize in providing insurance policies for the elderly, with some even providing discounts specifically because you are elderly.

(In fact, the market of providing life insurance for seniors is actually growing as our average life expectancy rises.)

Like anyone applying for an insurance policy, the insurance company is going to want to know something about you and your way of life, specifically:

  • Are you in general good health (some companies may require a medical)
  • Do you smoke (most companies will increase the requested premium if you do as it is a known fact that habitual smokers has a lower life expectancy than non-smokers)
  • Do you perform or participate in anything that could be considered dangerous (when looking for life insurance for seniors this could be something as simple as driving a motorbike instead of a car)

When looking for life insurance for seniors, it is as important as any other thing in your life to find the right choice for you. With this in mind you should shop around; get life insurance quotes from as many companies as you can, asks friends who are of a similar age as you and who they are insured with, or even search out organisation that specialize in offering assistance to seniors with regards to insurance and many other things.

If you merely wish to increase your coverage, talk to your existing insurance company and see if they will accommodate you. If they don’t, you have the option with most insurance policies of transferring the insurance fund to another company – who will allow you to increase your coverage.

Your choice of which policy to go for, should take into accounts both your available finances, and your needs. You should look for a reputable company that will offer the biggest pay-out for the lowest premium.

If you are looking for life insurance for seniors that will only cover expenses at the time of your death, then you should research what the average costs incurred after a death are (An average funeral can cost anywhere between $10,000 and $20,000). Once you have this figure in mind, you can find the policy that will pay this amount and reduce your premium because you do not require any added benefits from the policy.

Should you be looking at a policy that will cover any loans or debts you have at the time of your death, again work out what they are likely to be and a find a policy that will cover that amount.

You may wish to look for a fixed premium policy, which is one where the premium you pay at the beginning of the policy remains the same until the expiration of the policy, or your death, thus allowing you to efficiently budget for the future. Some policies will increase their premium as you age, and could eventually become a burden to your finances.

Some policies allow you to surrender, or cash, them at a later date (or after a specific period). Which may be of interest to you, as you can, at a later stage in your life surrender the policy for a fixed sum, put aside the required funds to cover after death costs and use the remaining to enjoy your later years? This kind of policy will normally, also allow you to withdraw money from the combined fund of the policy to use as you will. Doing this will reduce the final pay-out figure, but can be a good back-up should you need money later on in your life.

So, no matter what pre-conceptions you have about life insurance for seniors; it is possible, it can be affordable, and there are a multitude of companies and organisations out there that are ready to help you through the insurance jungle to get what is best for you.

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UK banks are in the hole for £9 billion, payable to consumers that were mis-sold payment protection insurance (PPI). Six million people or more stand to benefit from this compensation. The banks have been in court embroiled in a legal battle over this issue for a while now, but as of May 2011 they decided that they weren’t going to win this one.

The reason why the banks were in court over this issue is because they created a bit of a mess for themselves by mis-selling PPI policies. PPI is a type of insurance that protects consumers from defaulting on an outstanding debt on a loan or overdraft and is typically sold as an add-on. PPI will protect a borrower if circumstances occur that prevent him from making money to pay back the debt. For example, if a borrower falls gravely ill and cannot work, PPI should kick in. With other types of insurance, it can be relatively easy to determine whether a consumer needs it or not, but with PPI it is a lot more difficult to determine this.

Many people who have PPI never asked for it and are not even aware that they have it. Records show that 72% of the adult population in the UK has PPI, but according to surveys 40% of them didn’t know they had PPI. The Financial Services Authority states that 95% of all claims upheld by the Financial Ombudsman Service were mis-sold to consumers, which translates to 70% of the entire adult UK population having been mis-sold PPI. Selling PPI makes a huge amount of money for bank, providers and third party brokers – and some aren’t above being somewhat deceptive to make a sale. Some banks and brokers instructed their agents to tell people that they would not be able to get credit if they did not have PPI, which is blatantly false. Others sold the policy to unsuspecting consumers and added the full cost of the policy up front, which consumers were then required to pay interest on.

People only really became aware of the PPI problem in 1998 when the consumer group Which? brought it to light. The Financial Services Authority got involved in 2005 and started fining lenders, but the problem still continued. Claims for mis-sold PPI are on the rise, with consumers initiating claims against the people who sold them the policies. The UK courts decided against the banks in April 2011, declaring that consumers were in the right and that banks needed to pay out these claims. Although consumers and consumer advocates are rejoicing over this legal victory, others are taking a more sober approach. They claim that the banks aren’t going to quietly take this loss and that consumers are going to bear the brunt of this payout when the banks raise their rates, give poor customer service or push up credit card or overdraft charges.

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Regardless of the huge amount of money you are earning, without proper personal finance management, you will eventually lose all you have. It is very vital to ascertain the sources of money and the amount of money, which is coming in and how much money is being spent and on what heads. And individuals, who are looking forward to an early retirement, for them efficient management of personal finance is of utmost importance.

Managing personal finance is a very critical and crucial task and needs to be carried out consistently for financial stability over a long run. However, though it is a difficult task, but by adopting certain essential habits of managing personal finance, people can easily save few bucks by the end of the period in consideration. Regardless of the amount of money which is earned every month, it is very vital to manage the amount so that all the essential needs are fulfilled. It is not important to earn huge pay package, spend on high end luxuries and own expensive cars in order to become happy. These things are just methods of luxuries and there is no end to luxury. However, if individuals aim to live a comfortable life and well manage their personal finances they can easily lead a happy satisfied life.

Some quick tips to manage personal finance –

  • The first essential step towards efficient management of personal finance is to keep proper track of day to day expenditure. By maintaining a regular record, you can check the various heads on which you are spending and to what kind of use is your money being used.
  • The second step is to evade the use of credit cards. Credit cards are small devil cards, which compel you to initiate avoidable expenses. People should develop a habit to just use credit cards just for the sake of convenience and not to attain a lifestyle which is beyond affordability.
  • The third effective step is to pay yourself before you discharge various expenses. This simply means that individuals should keep some amount of money aside as savings.

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Apr/10

27

Mortgage rates on the rise again

That’s what the Montreal Gazette is saying today.

Apparently a new survey done this year shows that 1 in 5 Canadian homebuyers feel ok with their current debt levels – but another increase in interest rates could make things tough for a lot of Canadians.

The Canada Mortgage and Housing Corporation ended up surveying over 2,500 people about things relating to Canada home mortgage levels. These surveys were done before three consecutive hikes in interest rates. Interest rates went from around 5.2 – 6.2 % in less than a month.

That’s a pretty quick increase. I guess we’ll see how things go from here.

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