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Your Insurance and the Covid-19 Pandemic

By:  Dan Reith BA(Hons) CAIB
President/Principal Broker
Reith & Associates Insurance and Financial Services Limited

We are in the midst of an unprecedented situation in Canada and around the world.  COVID-19 is impacting all segments of our economy creating challenges never, before experienced.  Let us help you better understand the reality of your insurance and the Covid-19 pandemic.

Personal Insurance

There is no coverage under any personal insurance, home, auto or critical illness, that provides protection or indemnification against any financial loss as a result of a viral pandemic–Covid-19. 

Business Insurance

There is no coverage, under the standard commercial property policy, for any loss or cessation of business income as a result of a temporary business shutdown and/or closure caused by a viral pandemic. Simply because a viral pandemic is not an insured peril.  A property and liability policy insures the physical premises and therefore the insured peril must damage the premise preventing the business from operating. Pandemics do not negatively impact the premise.  It is important to understand that:

  1. Not all standard commercial insurance policies carry business interruption or income replacement.
  2. Policies that do carry business interruption, have a standard language in the contract that requires a “trigger” being an insured peril to cause damage to the premises of the business and/or a contributing or recipient property, in order to render the premises unusable and therefore the business unable to generate revenue.  This causes the policy to respond and the quantifiable loss is insured and replaced in accordance with the settlement option of the policy.  In the case of a viral pandemic, Covid-19, there is no damage to the business premise, by an insured peril, therefore, there is no physical reason for the business to cease operations or stop generating revenue and therefore, the coverage is not triggered.
  3. Where a policy contains business interruption, it typically carries an extension that provides for cases where a business is shut down by what is termed “civil authority”—an order, by a government body, not to access a property.  Again, however, the trigger is a physical loss to the premise and/or adjoining or neighbouring premise by an insured peril. In the case of Covid-19, the government order to close one’s business is effectively an arbitrary decision based on public health policy, not the cause of a real physical loss or damage to the business premises making it unsafe to access or occupy. Thus, the civil authority extension does not apply.

There are certain exceptions, to the norm, where certain industries can purchase secondary pandemic coverage; but this is restricted to niche industry classes such as healthcare and food processing because in these limited classes the loss can be isolated and quantified.  In the broad sense, as we are encountering today, such business interruption losses are not isolated, limited or controllable with reasonable certainty; therefore, not quantifiable.

Here are some common Q & A’s we have been fielding:

I pay my premiums monthly, what happens if I don’t have the money to pay my premium.

If your income, business and/or personal, is compromised in any way, and there is a likelihood you will not be able to make your premium payment call us immediately!  Generally speaking; most insurers are waiving NSF charges and not cancelling policies for non-payment in the first month.  Beyond that, insurers are willing to review and negotiate on a case by case basis.  Be proactive we are here to a find a solution that works best for you. Note, that while your insurer may be waiving NSF fees, that does not mean your bank is.  That is a conversation you need to have with your bank. 

What happens to my coverage if my business is shut down?

There is no change in coverage during the government mandated shut down.  That said, you must continue to maintain any warranty’s and or requirements your policy may have, i.e. alarms activated when building not occupied, heating on during heating season, building attended at least once every 72 hours.  Contact us so we can review your specific requirements to ensure compliance, we don’t want any surprises should you have a claim during this period of uncertainty.

Can I reduce coverage during shutdown?

Ultimately, you can make a change to coverage at any time.  In practical terms, any changes made need reflect the actual circumstances of your operational changes during the pandemic.  It is best to speak directly with your insurance provider to review operations to best determine what is right for you.

I/we are not working, currently laid off, what can we do to reduce our insurance costs?

That depends on your personal circumstances, needs and expectations in the event of a loss.  Call us, we will review your current coverage and find a solution to bring down your premium as best we can without placing you in jeopardy.  Note, changing insurance companies for a lower premium will STILL cause an early policy cancellation penalty if we make the change before renewal.  Insurance companies, at present, are not waiving early cancellation penalties, rather working with policyholders to make premium payment manageable.    

 I am laid off, I can get a job doing food delivery, am I insured?

No, if your current policy provides coverage for you to drive to and from work you are NOT insured to be a delivery service.  If you do this, call our office, to learn what the additional premium cost will be, it may not make sense.  If you do not, and you are in an accident while in the course of delivering food and/or other goods your insurer can deny the claim, both the repair/replacement of your car and/or liability if you are sued for injury to a third party.*

*some statutory coverage may apply speak to your broker for full details.   

To assist our customers and to keep our business going, we are now offering delivery service.  Are we insured?

Offering delivery is a great way to respond to customer demand; for some a great business decision, however, if you are using vehicles NOT insured as delivery vehicles, then there may not be coverage if a claim is filed as a result of a loss from delivering goods to a customer.  If your employees are using their personal vehicles to deliver to customers there is NO coverage for them unless their vehicle is rated, and a premium is paid for delivery purpose.  Speak to us before you make this operational change and/or offer a new delivery service to your customers; and do not require your employees to use their personal vehicles.  Reduce your liability exposure, partner with a professional delivery service instead.          

Will insurance companies honour claims during this period?

All insurers claim departments remain ready to respond.  Their claims representatives will be working in accordance with current protocols for personal and community safety and that may mean a delay in the settlement process, but it is business at usual at the present time.

We trust this information will assist to help you work through the current pandemic.  If you have any questions, or concerns about coverage during this uncertain period, we are here for you, we want to provide the right solutions for where you are today.  Let’s work through this together.  That is what we are here for. 

We look forward to hearing from you.

Nikki Johnson No Comments

Railway City Live!

We welcome you to join us at what promises to be an amazing series of original local talent. If you enjoy original performances by rising new talent this is the place to be!

The next scheduled evening is Friday June 5th, performances start at 7:00 pm at Streamliners Expresso Bar, 767 Talbot Street, St. Thomas.

Reith and Associates is proud to be producing, in collaboration with Rogers TV, and sponsoring  Railway City Live hosted by Streamliners Espresso Bar, St. Thomas, throughout 2020.  These evenings, led by local music talent, Jeff Butler, will be recorded and aired on Rogers TV 13 and streamed through the Rogers TV web site.

Railway City Live is an evening intended to provide local music and art talents a platform to perform their original songs, music, poetry and artistic talent to the public.  Performance registration is open to anyone.  The first session is fully subscribed but there are performance slots available in the future dates:  June 5, September 5 and December 4.

Consider joining us at this fun event filled with live original performances and don’t forget to tell your friends about it!

Nikki Johnson No Comments

Business Risk Advisory for 2020

By:  Dan Reith  BA(Hons) CAIB
President/Principal

Biggest Risks to Watch in 2020

The most relevant risks to Canadian businesses are constantly in flux. Only by observing trends and planning appropriately is it possible to reduce these risks and prevent being caught unprepared. According to experts, the following are the biggest risks for Canadian businesses to watch out for in 2020. 

Data Protection

The number of reported cyber threats targeting data, such as ransomware, continues to rise, indicating an increased need for data protection and privacy. This risk is further underscored by the growing amount of data being collected and number of devices being connected to each other, each representing a new potential avenue to exploit.

Third-party Liability

Risks increase as organizations become more interconnected, sharing data, systems and technology. Organizations need to not only worry about their own security and risk management, but also about every other organization that they share resources with, as each one represents a new potential vulnerability for cyber attacks. In fact, 24 per cent of ransomware incidents reported in the third quarter of 2019 were caused by a vendor or managed service provider.

Reputation

Employees, business partners, stakeholders, consumers and the public are increasingly holding organizations accountable for unacceptable behaviour or conduct. High-profile cyber breaches and social movements such as #MeToo have shown that damaging news travels faster than ever through major media and social network channels. Organizations must closely examine and refine their approach to dealing with risks, and emphasize crisis and contingency planning.

Benefits of Mental Health Days

Mental health is an increasingly popular subject these days, with many studies and organizations drawing attention to the fact that mental health issues are more prevalent and harmful than was previously believed. In many ways, mental health is just as important as physical health in that it has a significant effect on one’s ability to perform to the best of their abilities while at the workplace.

As such, it’s important for organizations to recognize the importance of mental health in the workplace, and adjust policies and expectations accordingly. This can be done through offering greater flexibility in the workplace, such as by offering flexible hours, the ability to work from home and greater autonomy. Additionally, it’s also important to encourage employees to take mental health days if they are feeling mentally burdened.

While there is no need to create a separate form of time off specifically for mental health days, being candid with employees about the importance of their mental health and highlighting the ability to take time off or adjust hours worked to focus on mental health can go a long way toward improving morale, employee satisfaction and productivity.

To help encourage the use of time off for mental health at your organization, consider adopting the following practices:

  • Encourage conversations about mental health—Speak candidly to your employees about the topic, underscoring the fact that you understand and support decisions made in the interest of maintaining or improving mental health. Provide resources and education about mental health to increase awareness and communicate any related policy changes to employees.
  • Adopt a policy of confidentiality—Employees may not feel comfortable disclosing the use or purpose of a mental health day, whether it’s a full day off to rest or a few hours off to see a therapist. Make it known that requests for mental health days will not need a stated reason for approval.
  • Follow up after time off—While respecting their privacy, check in with employees after they have taken time off to find out if they are doing alright and if they require any additional support on your end, such as a temporarily lighter workload.

Your group benefits provider can provide a number of tools to assist in tracking these sorts of issues to ensure you a healthy and productive workplace.

Nikki Johnson No Comments

“How are we going to afford Post-Secondary School for our Children?”

By: Darren Reith, BA, RIB(Ont), CHS, RCIS, RFC
Director/Partner – Financial
Services

As an advisor, I hear this question regularly. At this time of year as your teenager is finishing first semester and thinking about September, the panic may begin to set in, and the dollar figures become clearer. With the high cost of post-secondary education, many parents, grandparents and other family members and friends recognize the need to save for education well before the expenses become a reality. That’s why the Registered Education Savings Plan (RESP) is such a popular saving vehicle.

What is an RESP?

An RESP is a tax-deferred savings plan designed to allow you (the subscriber or contributor) to save for a beneficiary’s post-secondary education. All the interest, dividends, capital gains and government incentives in the plan grow on a tax deferred basis. Depending on the type of plan you choose, you can name one or more beneficiaries on the plan and make contributions for their benefit. Contributions to an RESP are not tax-deductible.

An RESP is an investment option sponsored by the Canadian government that helps individuals save for their child’s, grandchild’s, niece’s, nephew’s and similar beneficiary’s post-secondary education. Plan subscribers—those that open an RESP and make contributions into it—designate a beneficiary who can then use the funds to cover expenses related to apprenticeships, trade schools, colleges and universities. Subscribers can enrol in RESPs simply by opening an account with a financial institution.

In addition, RESPs have the following benefits;

  • RESPs are flexible, and anyone can open an account for a beneficiary. There are two basic types of RESPs—family and individual plans. The major difference between the two is that, with family plans, subscribers can name more than one beneficiary and funds do not need to be shared equally.
  • The first $2,500 you contribute each year gets a 20 per cent matching contribution from the federal government using what’s called a Canada Education Savings Grant (CESG). Under CESGs, beneficiaries are entitled to $7,200 of government contributions.
  • Subscribers can contribute any amount to an RESP. However, there is typically a lifetime contribution limit of $50,000 per beneficiary.
  • RESPs allow subscribers to get an early start on saving for their beneficiary’s education expenses. In fact, RESPs can be opened as soon as the beneficiary has a social insurance number.
  • Subscribers don’t pay taxes on contributions until the money is taken out. Account holders can make lump-sum contributions at any time or set up automatic payments.
  • Qualifying investments include savings deposits, guaranteed investment certificates and mutual funds.

What can a RESP be used for?

A Registered Education Savings Plan can be used to pay post-secondary tuition and fees, as well as associated costs like textbooks, transportation, and living expenses. It’s a very flexible account in this regard! All that matters is that an enrolled student is using the funds to attend a qualifying educational institution.

Withdrawing funds from an RESP

An RESP can stay open until the beneficiary is 35. But the best time to withdraw from the account is when the child is in post-secondary. When withdrawing the funds, many financial companies will ask for a proof of enrollment from the school to ensure the funds are actually going towards the beneficiary’s education. Make an effort to spend the entire RESP while the beneficiary is a student, as you can transfer any excess cash to an RRSP when the education funding is no longer required.

Learning is the key to success at every stage of life. Education is among the best investments you can make today for your child’s future. Close to 70% of all new jobs now depend on some form of education after high school. To help you save for the large financial burden a RESP will be an imperative tool to help aid in the cost and the success of your child in education. A RESP will give you peace of mind and ease any stress you may have when sending your children off in the world to post-secondary education. It is crucial that you find an investment advisor that you feel comfortable communicating with and who listens to your future goals and dreams when it comes to your finances.

Nikki Johnson No Comments

Lifestyle Planning Tips

You have until March 2, 2020 to contribute to your RRSP (Registered Retirement Savings Plan), assuming your contribution is intended to reduce your tax obligations owing for 2019, or generate a bigger refund, come April 30th.  The question, however:  is an RRSP the right instrument for you? 

An individual RRSP is one of the most common types of personal savings plans. Individuals—as well as their spouses or common-law partners—can contribute to these plans up to an annual limit using a mix of investments, including stocks and mutual funds.

What’s more, individual RRSPs have two tax benefits that help you save for your retirement:

  1. Tax-sheltered growth—Investment income in your RRSP isn’t taxed while within the plan. In most cases, investors won’t have to pay any tax until funds are withdrawn. Because you may be in a lower tax bracket once you’re ready for retirement, your total savings can be significant.  However, if you have pension income and/or income from other sources it may be combined with the funds withdrawn from the RRSP for the purposes of calculating your income tax due.  It is possible to create a tax liability for yourself.  Careful planning is essential to minimize tax implications.
  2. Tax deductions—Individual RRSPs can be used to reduce your income tax, as contributions are deductible within specified limits.

In addition, investors can withdraw funds from their individual RRSPs without being penalized, provided the money is repaid by a specified time. This can be particularly useful for large purchases, like buying your first home or paying for your education. That said, if the withdraw is not repaid within the specified time frame, the amount withdrawn will be added to the income earned in the year and the tax assessed on the total income earned.  The penalties can be significant.  Best not to withdraw if you don’t have the capacity to repay the amount in full within the required time frame. 

There are a number of qualifications you must meet in order to open an individual RRSP. Simply put, if you have earned income and file an income tax return in Canada, you can contribute to an RRSP until Dec. 31 of the year you turn 71. You must also have contribution room available, which will be stated on your annual Notice of Assessment sent by the Canada Revenue Agency.

One need also consider the benefits of a TFSA (Tax Free Savings Account) For Canadians 18 years of age or older, TFSAs are a great investment tool. Unlike traditional savings accounts, TFSAs allow you to increase your savings without having to pay tax on the growth within the account. In addition, TFSAs have the following benefits:

  • TFSAs provide flexibility, account owners can use them to save for a variety of uses like home improvements, vehicles, vacations and emergencies. You can withdraw money at any time, for any purpose. Many Canadians invest in a mix of cash, stocks, bonds and mutual funds.
  • TFSAs can be used as an alternative source of income following retirement. What’s more, TFSAs do not need to be converted to income, which provides retirees with a tax-free way to save throughout retirement.
  • TFSAs are a good substitute for registered education savings plans if you’re not sure your child will pursue a post-secondary education but still want to set aside money for them.
  • Income from a TFSA does not affect an individual’s eligibility to receive:
    • Old age security
    • Guaranteed income supplement
    • Goods and services tax credit
    • Other income-tested benefits and tax credits
  • Account owners can contribute up to $5,500 a year. In addition, you can re-contribute any amount you withdraw. In the event that you can’t make your full contribution in one year, you can make up the difference in future years.
  • In the event that the account holder dies, funds from TFSAs can be transferred to a spouse. This can be done without affecting the spouse’s existing TFSA or contribution allowance.

Let us not forget the benefits of a RESP (Registered Education Savings Plan).  An RESP is an investment option sponsored by the Canadian government that helps individuals save for their child’s, grandchild’s, niece’s, nephew’s and similar beneficiary’s post-secondary education. Plan subscribers—those that open an RESP and make contributions into it—designate a beneficiary who can then use the funds to cover expenses related to apprenticeships, trade schools, colleges and universities.

Subscribers can enrol in RESPs simply by opening an account with a bank, credit union or other financial institution. The first $2,500 you contribute each year gets a 20 per cent matching contribution from the federal government using what’s called a Canada Education Savings Grant (CESG). Under CESGs, beneficiaries are entitled to $7,200 of government contributions.

In addition, RESPs have the following benefits:

  • RESPs are flexible, and anyone can open an account for a beneficiary. There are two basic types of RESPs—family and individual plans. The major difference between the two is that, with family plans, subscribers can name more than one beneficiary and funds do not need to be shared equally.
  • Subscribers can contribute any amount to an RESP. However, there is typically a lifetime contribution limit of $50,000 per beneficiary. There are no limits on the number of plans subscribers can establish or RESPs a beneficiary may have.
  • RESPs allow subscribers to get an early start on saving for their beneficiary’s education expenses. In fact, RESPs can be opened as soon as the beneficiary has a social insurance number.
  • Subscribers don’t pay taxes on contributions until the money is taken out. Account holders can make lump-sum contributions at any time or set up automatic payments.
  • Qualifying investments include savings deposits, guaranteed investment certificates and mutual funds.

At the end of the day, one or all of these tools may be right for you along with a mix of other investment vehicles.  The choice of which and the amount of money one invests in each is entirely dependant on what your lifestyle goals are. Many do try to go it alone and some can have success.  Ideally, find an investment adviser that shares your personal values, is a right-fit for you and take the time to listen to what they have to say, ask questions and participate in the development of a comprehensive, flexible and personalized plan that reflects your ability to finance today and that will be able to meet your future lifestyle goals and expectations.  Mistakes can cost you dearly in tax penalties and fees.    

Darren Reith BA,RIB(Ont),RFC,RCIS, CHS

Partner/Director-Financial Services

Reith & Associates Insurance and Financial Services Limited

Tel. 519-631-3862 x 224

Fax. 519-631-0386

Email: Darren@reithandassociates.com

Nikki Johnson No Comments

The 10 Most Common Life Insurance Myths

Life insurance. Just the term itself can put people on edge. People might think they are wasting time and money if they sign up for life insurance when they don’t consider it necessary.

However, you should purchase life insurance because it will be essential sometime in the future. Life insurance protects your loved ones in case something happens to you by designating beneficiaries who will collect financial benefits upon your death.

Term life insurance is generally the simplest and cheapest form—you buy coverage for a specific time period, and it can usually be renewed, but premiums will increase based on age and health factors. All other types of life insurance are permanent, but there are a few varieties—whole life, universal life and variable life. Each type is slightly different, making each one ideal for certain types of people.

The ten myths listed below are some of the largest misconceptions individuals have regarding the necessity of life insurance.  Read on to learn why life insurance is important to purchase.

Myth 1:  I just simply don’t see the need for life insurance.

No one is immune to having to pay back his or her financial obligations after death. If you have a vehicle to pay off, or credit card or student loan debt that has accumulated, life insurance is a very beneficial option for you. If you die unexpectedly, no one waves a magic wand and makes those responsibilities disappear—you have to make the preparations to take care of them, or your family members will be stuck with the bills.

Myth 2:  I’m young. Why would I start spending my money on life insurance now?

Being young also usually means you’re more active and probably putting yourself at risk more often than the older generation by travelling, clubbing, hiking, boating, driving longer distances and staying out later. Your body may be younger and less likely to break down on you, but your high-risk activities put you in the same boat as older, less healthy people.

Myth 3: I’m a stay-at-home parent.

There isn’t a need to replace my income, since there isn’t an income to replace. If you’re a stay-at-home parent and you pass away, your spouse may not be able to afford childcare for your kids. Or, if there is no partner in the picture, your relatives or friends might not be able to take care of your children in a way that allows them to attend the same school, with the same parenting style you used, etc. Also, when the time comes for college, you will want your children to have the option of affording the education they desire.

Not having an income and staying at home means you are saving money you would be spending from a spouse’s income (or from any other source of income) on childcare and even on tending to your home. When you’re gone, those things still need to be covered, and life insurance can do that for you.

Myth 4: My kids are all adults and my house has been paid off, so what do I need life insurance for?

Everyone has daily living expenses. Just because the home is paid off doesn’t mean there aren’t other financial obligations for which your spouse would be responsible, such as owning multiple cars, a boat, an RV or another large purchase you both made later on in your lives.

Also, consider this: If your spouse outlives you by 10, 20 or even 30 years, he or she might not be able to afford to stay in an assisted living centre when he or she can no longer take care of him- or herself. You need to ensure that your spouse continues living with the same financial security he or she has with you now. You don’t want your spouse to fear having to take care of daily expenses with only half the income.

Myth 5: I’m a smoker. Insurance companies won’t even consider me.

Being a smoker doesn’t mean you can’t get coverage. Your premium will be a bit higher than the premium for someone who doesn’t smoke, but it is more affordable than you may think.

Myth 6: Even if I quit smoking, I’ll always be considered a smoker to insurance companies and be stuck paying a higher premium.

Most insurance companies consider you a non-smoker if you’ve stayed away from cigarettes for at least a year. Even if the first six months were an accident because your spouse hid your cigarette packs, you can most likely get your premium lowered after a year.

Myth 7: Life insurance seems too good to be true.

It can seem that way, but it’s not. Life insurance isn’t like one of those free vacation spam emails—it’s the real deal. As long as you keep paying the premium, you’re covered, whether that is until your kids move out or until your home is paid off.

Myth 8: It is too much of a hassle to obtain life insurance.

Finding life insurance isn’t as hard as you think. Getting a life insurance quote is quick and painless. All you need to do is provide basic information about yourself, including your height, weight, age and gender. Once you have a quote, you can choose the right coverage for you.

Myth 9: I get life insurance through my job.

Why would I need more? The life insurance you get through your job might not be adequate coverage. You should compare your family’s living expenses with your coverage to see if it’s sufficient to cover all of your family’s needs. You should be thinking about future responsibilities as well, like being able to pay for your children’s education after you’re gone.

Also keep in mind, like all good things, your employer-paid coverage ends when the coverage limit is met—which is the maximum amount your employer will pay out upon your death. Most experts suggest obtaining coverage five to eight times your yearly salary. If you are only covered for half of that amount, what will your family do when their living expenses exceed that amount?

Myth 10: My mortgage lender provides me with coverage. Isn’t that enough for me?

Your mortgage isn’t the only expense your spouse or children will have to take care of if you pass away—there are cars, college education, food, medical expenses, funeral costs—the list goes on. Life insurance can cover those for you.

By: Dan Reith BA(Hons) CAIB
President/Principal