Tag Archives: CBC Marketplace

Dec 19: Best from the blogosphere

By Sheryl Smolkin

I have just returned from a three week odyssey to Australia and New Zealand, so there is a significant backlog of stories from both old favourites and newer bloggers to share with you.

Sean Cooper is anxiously awaiting the release of his first book Burn Your Mortgage. He made headlines around the world when he paid off his mortgage at 30 on a house he bought just three years before. In a recent blog he says that in spite of inflated home prices particularly in Toronto and Vancouver, the home ownership dream is still alive and well. However it is taking twice as long to save for a house because we are buying bigger houses.

Toronto Star Consumer Columnist Ellen Roseman has had lots to smile about since her media articles, petition and blog were a catalyst for the Ontario Protecting Rewards Points Act effective December 5, 2016 which provides that loyalty rewards points can’t expire. Roseman found out about the changes when she was being interviewed on CBC Marketplace. However, to date similar legislation has not been tabled in Saskatchewan.

If you are planning a winter vacation this year, chances are one or more people will approach you about buying a timeshare week or two in paradise before you fly home. Tom Drake believes the purchase of a timeshare is usually a poor choice, since they can be hard to unload, and they depreciate in value so quickly. However if you can get a timeshare on the cheap on ebay or some other online site, it may be a better deal. But you might be required to pay the current year’s maintenance fee at purchase time, or you could possibly be on the hook for closing costs and transfer fees. Be sure to read the documentation carefully to ensure that you understand the terms and requirements.

In Episode 77 of her podcast series, Jessica Moorhouse interviews Steve Cousins from Arkansas who retired as a millionaire by working a regular 9 to 5 job for the same company for 40 years. She learned that he made sure to get a university degree in a field that has a high demand for skilled workers. Cousins also says you need to understand when it makes sense to stick with the same company or if you should move on. And finally, you need to live frugally, invest wisely and have a plan how to continue earning money during retirement. For example, he has become a serial entrepreneur with four different jobs now that he is retired.

And finally, Steve Weyman on HowToSaveMoney.ca describes how he ALWAYS does extreme price comparison to make she he gets the lowest price. Take a look at his 10-step process.

  • Choose your product
  • Start with a light google search
  • Track the lowest prices
  • Check ALL  flyers using Flipp.com
  • Use price comparison sites to compare prices fast
  • Do a manual search of well-known stores
  • Find the lowest past selling price
  • Price match to save more money
  • Tack on a coupon if you can

I guess I’m not up to Weyman’s standard because I don’t have the time or energy for extreme price comparison. But you’ve got to admire his persistence!


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Should you buy mortgage insurance?

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

There are many excellent articles about the pros and cons of mortgage insurance vs. term life insurance. But every year a new crop of first-time buyers begins their search for a perfect new home, so it seems like a subject worth revisiting.

The purpose of mortgage insurance (also known as mortgage life insurance or creditor insurance) is to pay off the mortgage when you die so your spouse and dependents are mortgage-free and have one less major expense to worry about. If both you and your spouse are working and want to protect each other, both of you need to be insured.

The first major advantage of term life insurance is that it is much less expensive than mortgage insurance.

I obtained quotes on the Cowan Financial Solutions website for standard non-smoker term life insurance for both a man and a woman aged 36 for $400,000 of life insurance for a term of 25 years. The lowest annual quotes were $556 for the man (Assumption Life) and $420 for the woman (Foresters Life), or $976 in total for both. Of course, if you plan to pay your mortgage off more quickly, you can request quotes for a shorter term.

I compared this quote to mortgage insurance information on the TD Canada Trust website. Mortgage insurance premiums are calculated based on your age and the value of your mortgage. There is no discount for non-smokers or women. With a monthly premium of 21 cents per $1,000 for each borrower 36-40 years old, the annual bill for both spouses would be $1,512 (including a 25 per cent discount for two or more borrowers).

But the cost differential is only the tip of the iceberg. After viewing a YouTube video in which Cowan Financial Solutions advisor Rita Harris explains some of the other reasons why term life insurance is a better deal than mortgage protection offered by the banks, I gave her a call to get some additional details.

Here’s what she said:

Protection: When you die, your mortgage insurance is payable directly to the bank. Term life insurance protects more than just your mortgage. Your spouse (or other beneficiary) can use the money as is most appropriate in the circumstances.

Premium Guarantee: The term life insurance premiums and benefits are guaranteed for the life of the policy. Your coverage amount is constant but can be reduced at your request. Premium levels for mortgage insurance can be unilaterally changed by carrier. As your mortgage reduces your coverage goes down but your premiums do not.

Portability: If you take your mortgage to another company, you may lose your existing mortgage insurance and have to re-qualify for new mortgage insurance coverage. In contrast, individual term life insurance is fully portable even if you move your mortgage.

Repayment: You lose all your mortgage insurance coverage when your mortgage is re-paid, assumed or in default. As long as your term life insurance premiums are paid, you can convert your insurance to a permanent plan.

Underwriting: If you buy term life insurance, the insurance company will assess the risk and establish the premiums based on your health at the time the policy is purchased. In the absence of any fraudulent activity, you know your claim will be paid out when needed in accordance with the terms of your contract. Mortgage insurance is subject to post-claim underwriting, which means technically you could be declared uninsurable when you submit a claim.

Moneyville blogger Ellen Roseman’s story about the Feldmans is only one example of a case where a bank initially denied coverage after the fact for medical reasons. CBC marketplace also did a brilliant report called The Mortgage Insurance Game.

So caveat emptor! Remember, mortgage insurance is sold by bank employees who may not be trained to explain the legal intricacies of those insurance products. You could pay premiums and think you are covered, only to realize later you are not.

Do you have tips for people shopping for life insurance in order to protect their mortgages? Share your tips with us at http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card. And remember to put a dollar in the retirement savings jar every time you use one of our money-saving ideas.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

25-Jul Telecommuting Jobs where you can work from home
1-Aug Vacation Staycation ideas that can save you money
8-Aug Garage sales How to make money on your garage sale

What you need to know about travel insurance

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

I’ve read so many horror stories about people losing their life savings because they became seriously ill when travelling in the U.S. that I’ve become a bit paranoid about having enough travel insurance.

That’s probably why for many years we have purchased an annual travel policy in addition to coverage available from both of our employers and our credit card company. I figure that if something happens, one or more of the companies will make us whole.

But like many other people, I really never thought about needing travel insurance for trips to other Canadian provinces. A 2012 survey by TD Insurance revealed that 29 per cent of Canadians believe they only need travel insurance if they travel internationally and 35 per cent admit they have travelled out of their home province without it.

However, when I talked to TD Insurance VP Dave Minor, he reminded me that existing provincial plans do not necessarily cover all expenses that may be incurred if a medical emergency occurs in another part of the country.

For example, if you have an accident water skiing in B.C. and you must be transported by air ambulance back to Saskatchewan, your Saskatchewan Medical Care Insurance Plan will not foot the bill. Similarly, if you have a serious heart attack in Halifax when you are travelling alone, flying a family member out to be with you would normally be an out-of-pocket expense.

Because an accident or illness can happen anytime, Minor says travel insurance is also important even if you only cross-border shop in the U.S. a couple of times a year. “For people who travel across the border on a regular basis, we recommend an annual plan. When you look at the per trip cost vs an annual policy, it will pay for itself after three or four trips.”

You can compare prices and features of available travel insurance coverage from a number of carriers here. However, the cheapest policy will not always deliver the best value.

For many years we have purchased the annual TD Meloche Monnex Wide Horizons policy which is available to members of professional and alumni associations. For $187.77/year (at age 63) we are covered for unlimited trips of up to 30 days outside our home province plus hospital and medical expenses up to $5 million. The cost of the policy increases with age and customers over 85 pay $2473.54/year for the same coverage.

If you have any medical conditions or you are on medication when you apply for travel insurance it is very important to fully disclose this information and discuss it with your carrier so you understand whether any potential medical expenses for pre-existing conditions are excluded.

Also, if your vacation plans include engaging in risky activities like para-sailing, bungee jumping, mountain climbing or other extreme sports, be sure to clarify whether or not the policy will pay if you have an accident in these circumstances.

Here are some questions you should ask when you are purchasing travel insurance.

  1. What is the maximum each policy will pay above provincial medical insurance limits?
  2. Is there an age limit or medical criteria for who can apply?
  3. Does age affect the kind of coverage I can expect?
  4. How does the policy define a pre-existing condition?
  5. Will a pre-existing condition of mine affect my coverage?
  6. Are there any medical exclusions that apply to me?
  7. Will I have to pay a deductible? If so, how much?
  8. Does the policy contain a co-payment clause? What percentage of medical expenses will I have to pay?
  9. Will the insurance company pay the hospital or physician directly? Or will I have to pay the full amount myself, and then be reimbursed later by the company?

I also particularly like this Tip Sheet from CBC Marketplace called “What you need to know about (the tricky world of) travel health insurance”

Do you have tips for people shopping for travel insurance? Share your tips with us at http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card. And remember to put a dollar in the retirement savings jar every time you use one of our money-saving ideas.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

18-Jul Buying a home Mortgage insurance vs life insurance
25-Jul Telecommuting Jobs where you can work from home
1-Aug Vacation Staycation ideas that can save you money