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Tag: insurance premiums

  • Is pet insurance worth it in Canada? – MoneySense

    We’ll walk you through the current landscape of pet insurance and discuss current premium costs to help you decide if purchasing a policy makes sense for your pet and your wallet.

    Watch: Is pet insurance worth it?

    What pet insurance covers (and what it doesn’t)

    Pet insurance is similar to health insurance, but it’s for your pet. Just like with a health insurance policy, you’ll pay a monthly fee, called a premium, to keep the policy active so your furry friend is covered.

    • An accident-only policy covers accident-related injuries, such as those from a motor vehicle accident, a torn ligament, food poisoning, and ingested foreign objects.
    • An accident and illness policy covers the accidents listed above, plus other types of emergencies, such as broken bones, surgery, hospitalization, prescription medications, digestive issues, infections, and illnesses.

    If your pet needs medical care, you’ll take them to the vet as usual. As long as the reason for the visit is covered by your insurance policy, you’ll pay only your deductible and any co-pay, and the insurance provider will cover the rest (or pay up to the coverage limit).

    Some conditions may be excluded—pet insurance doesn’t usually cover pre-existing conditions, older pets, specific breeds, or alternative methods of treatment. It also doesn’t typically cover preventative care and dental work unless you purchase a wellness add-on.

    Pros and cons of pet insurance

    Before making any decision that will impact your finances, it’s wise to consider the benefits and drawbacks. 

    How much does pet insurance cost?

    Several factors determine how much you could pay each month for pet insurance, including your pet’s breed, location, age, and medical history. Plus, there are factors you can control, such as the deductible, annual limit on coverage, and what percentage of costs your insurer reimburses.

    Keep in mind that as your pet ages, the cost of caring for and insuring it increases. Some insurance companies even set a maximum age limit on coverage, so enrolling your pet while it’s young and healthy could unlock more affordable rates.

    According to data from the North American Pet Health Insurance Association (NAPHIA), in 2024, the average monthly premiums in Canada were:

    • $22.46 for dogs and $18.47 for cats for an accident-only policy 
    • $89.18 for dogs and $45.86 for cats for an accident and illness policy

    The more coverage and benefits you get, the higher the price tag. For this reason, it’s important to consider the pros and cons to decide whether purchasing insurance is worthwhile for you.

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    Why is pet insurance getting more expensive? 

    The cost of pet insurance has risen steadily over the past decade or so. The average annual increase for accident and illness insurance was 6.5% for dog owners and 15.24% for cat owners.

    Source: North American Pet Health Insurance Association (NAPHIA)

    Inflation, increased wages of veterinary staff, and higher medical costs have all contributed to the rise in pet insurance premiums since the pandemic; however, higher costs are also tied to advancements in the medical care that pets receive. Vet clinics are increasingly able to treat life-threatening conditions like cancer and other diseases, but it can be expensive. 

    Before deciding whether or not to get insurance, pet owners must weigh the possibility of paying thousands of dollars out-of-pocket for medical procedures vs. paying ongoing monthly premiums.

    How to keep pet insurance costs down

    There are several strategies you can use to keep pet insurance costs low: 

    Shop around and compare policies. Insurers each have unique offerings and calculate premiums differently. Get multiple quotes to find the most affordable rate, but be sure you’re comparing similar coverages. 

    Choose a higher deductible. The higher your deductible, the lower your premium will be. That said, be sure you choose a deductible amount that you can afford to pay at a moment’s notice if your pet requires urgent care.

    Choose a lower annual limit. This is the maximum amount of money your pet insurance company will pay out to you every year. Once you’ve reached that threshold, you’ll be on the hook for any additional veterinary costs.

    Ask about discounts. If you have multiple pets, it’s worth asking if you can get a discount from your provider for insuring them both (or all). Typically, you have to enroll each pet and pay separate premiums.

    Jessica Gibson

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  • Should you buy life insurance to pay for tax owed upon death? – MoneySense

    Should you buy life insurance to pay for tax owed upon death? – MoneySense

    Capital gains tax, Nazim, might apply to some of your assets. If you own non-registered stocks or a rental property, for example, they might be subject to a capital gain on your death. Your home would likely be sheltered by the principal residence exemption. A tax-free savings account (TFSA) is tax free, whereas a registered retirement savings plan (RRSP) is not subject to capital gains tax, but is subject to regular income tax. Your RRSP, unless left to a spouse, is generally fully taxable on top of your other income in the year of your death.

    The tax is payable by your estate, so although it reduces the inheritance left to your beneficiaries, it’s not payable directly by them. It can be paid with the assets that make up your estate.

    Hard versus soft assets

    You mention that your estate is made up of hard and soft assets, Nazim. I assume by hard assets you mean real estate. And by soft assets you mean cash, stocks, bonds, mutual funds and/or exchange-traded funds (ETFs).

    Your soft assets can be very liquid and used to pay the tax that your estate owes. That tax is not due until April 30 of the year following when your executor files your final tax return. If you die between November 1 and December 31, there is an extension to six months after your death for your executor to file your tax return and pay the tax owing. So, there’s always at least six months to come up with the funds required to pay income tax on death, and there’s more than six months when a death occurs between January 1 and October 31.

    Since soft assets are considered sold upon death, there is generally no advantage for your beneficiaries to keep those assets rather than turn them into cash or into other investments of their choosing.

    Your hard assets, Nazim, are obviously less liquid. If there is a special property, like a family cottage or a rental property, they choose to keep, I can appreciate how you might want to make sure they can do that without being forced to sell.

    Should you buy insurance to cover tax owed upon death?

    Your cash and investments may provide sufficient funds to pay taxes owed upon death. Or your beneficiaries may choose to sell one or more of your real estate properties. You could buy life insurance to pay the tax, but I find this strategy is oversold or misunderstood. I will explain with an example.

    Let’s say you are 62 years old, and your life expectancy is another 25 years, based on your current health. If you buy a life insurance policy that requires a level premium of $5,000 per year for life, and you pay that premium for 25 years, you will have paid $125,000 to the insurance company. If you instead invested the same amount each year at a 4% after-tax rate of return, you would have accumulated $216,559 after 25 years.

    Jason Heath, CFP

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  • Should seniors cancel their life insurance policies? – MoneySense

    Should seniors cancel their life insurance policies? – MoneySense

    It’s got to be your decision. To help you decide, I will give a quick review of why purchasing insurance makes sense and the two types of insurance available. You can then relate the reason for purchasing insurance to your current need for insurance. 

    Why do Canadians need life insurance

    Ultimately, Canadians buy life insurance because they want to take care of others should something happen to them. They want to protect their survivor’s lifestyle or maximize the inheritance with insurance when they pass away unexpectedly, or naturally after a long, healthy and happy life.

    There are two financial needs to consider when determining the amount of insurance needed: How much income would be needed, as well as current and future debts. Current debt may be a mortgage, and future debt may be children’s university expenses or future taxes.

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    How much life insurance would you need?

    A simple method in determining the how much insurance you need to replace your income is to divide the income needed by a safe investment return.

    If you need to replace an annual income of $50,000, and you think you can safely earn 5% on the invested insurance proceeds a year, then divide $50,000 by 5%. This gives you a need for $1 million of insurance, or $1 million minus your existing investments. That is earning 5% a year on a $1 million gives $50,000 a year.  

    You could argue that you don’t need the $50,000 annual income replacement for life because, your expenses will be lower as you age, you will have other income such as the Canadian Pension Plan (CPP), Old Age Security (OAS), and so on. That’s all true— but this calculation does not take into consideration inflation. Over time inflation will whittle down the value of that $1 million.

    Does life insurance cover debt?

    Yes, and once you know how much insurance you need to replace income, then just add on the debt.

    Maybe when you purchased the insurance your situation looked a bit like this: A $750,000 mortgage and anticipated post-secondary expenses of $250,000 for children, if any, means upping the insurance from $1 million to $2 million.

    Allan Norman, MSc, CFP, CIM

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  • Why is auto insurance so expensive in Alberta? – MoneySense

    Why is auto insurance so expensive in Alberta? – MoneySense

    Alberta premiums have gone up specifically due to soaring legal fees and other costs associated with lawsuits following accidents, which is not the case in other provinces. That’s thanks to a culture of litigation in the province, which isn’t as present in the rest of Canada.

    Over the last 10 years, the average size of accident benefit claims increased by 147% in Alberta, compared with 53% or less in other provinces. Put plainly, claims are higher in Alberta than elsewhere in Canada, due to bodily injury claims and escalating legal costs in Alberta. 

    The province of Alberta has consistently had the highest claims frequency for third-party liability, accident benefits, comprehensive and collision coverages, says a report from consulting firm MNP commissioned by the IBC.

    Huge auto-insurance legal costs are to blame as well. These costs have gone up in the province by 38% since 2018 and account for about 20% of the premiums drivers pay for mandatory auto insurance coverage in Alberta. 

    “This is equivalent to nearly $200 for each policy annually,” the IBC has stated in a recent report.

    Another contributing factor, according to MNP, is the increasing cost and length of car repairs. A Toyota RAV4 bumper costs $4,144 to replace today, up 50% from $2,769 in 2017. Also, 24% of auto sales in Alberta are of trucks, which is higher than the national average of 18.1%.

    Supply chain issues have slowed down auto parts replacement, as any car owner who’s had to cool their heels for a part to arrive at their mechanic can attest to. This waiting has had a knock-on effect of making car rental lengths longer in Alberta as well. 

    TOYOTA RAV4 model year Cost of repair Total increase of repairs
    2017 17 parts total cost of repair: $2,769 n/a
    2022 39 parts total cost to repair: $4,144 50% increase from 2017 (newer vehicles have complex technology and more parts to repair)

    Source: IBC

    Helen Racanelli

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  • Canada’s auto theft crisis: What it means for your ride and your insurance – MoneySense

    Canada’s auto theft crisis: What it means for your ride and your insurance – MoneySense

    Five years ago, auto insurance companies in Ontario, Quebec, Alberta and the Atlantic provinces paid out $400 million in theft claims. In 2022, that figure ballooned to $1.2 billion, the worst on record. Amanda Dean, interim vice president of Ontario region for the Insurance Bureau of Canada, says the situation isn’t likely to improve for 2023. 

    “As theft rates increase, and along with it claims costs, insurers are certainly worried about what the future could hold,” she says. For drivers, even those with no history of theft or damage, auto insurance is likely to get more expensive so long as theft rates remain high. Fortunately, experts say there are some things drivers can do to minimize their chances of losing their ride. 

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    Why car theft is on the rise across Canada 

    Joyriders and opportunists aren’t responsible for most Canadian car thefts, according to insurance experts. Organized crime groups, using sophisticated techniques, bear much of the blame for Canada’s billion-dollar-a-year auto theft problem. 

    Bryan Gast is the vice president of investigative services for Équité Association, a national not-for-profit that helps Canadian insurers fight fraud. He says one common technique is a relay attack: intercepting the radio frequency used by a key fob to unlock a car remotely. Another is by using the electronic diagnostic port found under a car’s steering wheel to reprogram the car. 

    Once inside, a thief can drive away with your ride and sell it off. In the most extreme cases, it may end up smuggled through a port—generally on Canada’s eastern seaboard, Gast says—and shipped to West Africa or the Middle East. “We have thousands of vehicles, that have been identified, that we’re working to repatriate back to Canada,” Gast says. 

    Alternatively, a car might be given a false vehicle identification number (VIN) and used as a car by an organized crime group for its operations. Then there are old-fashioned “chop shops,” where stolen cars are stripped down and sold off for parts. “It’s extremely lucrative,” Gast says.

    Experts blame a couple of factors on the rise in auto thefts over the past few years. Dean points to outdated anti-theft standards for Canadian vehicles—the last update, in 2007, was before keyless entry became a common feature on many cars. Then there’s the price of cars themselves. Thanks to persistently-high demand, the average new vehicle cost $66,288 in June 2023, according to Autotrader. 

    The most stolen cars in Canada

    Many of the most-stolen vehicles in Canada aren’t all that flashy. Gast says the models vary by region. In Alberta, for example, pickup trucks are high on the list. According to Équité Association, the most commonly stolen vehicle model in Canada last year was the Honda CR-V. The Ford F-150, Honda Civic and Toyota Highlander—all mainstays of Canadian driveways—made the list of top five most stolen vehicles, as did the Lexus RX, a higher-end model.

    Even if you don’t own one of these vehicles, Dean says you’re still on the hook for the ongoing auto theft epidemic. “Claims made by the few are paid for by the premiums of many—this is one of the basic principles of insurance to ensure that claims can be paid.”

    Brennan Doherty

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