Posted by Tim Stobbs on October 12, 2012
So as a follow up question to my previous post on The Cure for Pension Envy when I discussed annuities. I had a question from someone:
So how do you get an annuity quote?
Well you can search around the internet for public information on rates, for example I came across this website for Canadian information that would give you some ballpark numbers. Yet there is a problem with these sort of sites as they will even warn that the rates change constant due to a number of factors.
So what factors really matter? Well the obvious one would be the age difference between your spouse and you if you are looking for a joint annuity (when your spouse will continue to get payments if you die). If you are just six months apart in age that is one thing, but if you are six years apart that is an entirely different ballgame especially if you are picking up an annuity in your 70s.
So in the end, it might just be faster to breakdown and contact some companies directly and get some quotes. That way you can be sure to get the correct information for the options that you are looking for and for your particular situation. In general the quote forms will be similar and ask the following information: your name and contact information, what product you want a quote on (single, joint or term certainty), your age (and your spouses age if applicable), if you plan on using money from your retirement or investment accounts and then some details on what payments you are looking for (and how often) or the lump sum you are looking to invest.
A quick search with Google for ‘annuity calculator’ will generate a nice list of potential places to check out. For example I ran a few different searches and came up with a few sites like: Saga annuity calculator (UK) or RBC annuity calculator (Canada). You should with little difficulty be able to get a list of quotes to know approximately what you are looking at if you really want to buy an annuity.
Posted by Robert on July 9, 2012
Not everything with the word “insurance” in its name is actually insurance. Sometimes, it might simply be a cost recovery plan. Here’s how you can tell the difference and why I’m opting into an insurance plan.
Insurance protects against unforeseen costs. Cost recovery reimburses planned costs. If we know that out of every 1000 workers, 5 are likely to be injured on the job, we can put in place accident insurance. It will cost 5/1000ths of a dollar for every dollar of benefit (plus admin). That is an example of insurance, and it makes economic sense. Where I worked, we had a cost recovery plan that paid for eye exams. An eye exam is something that people can get every year, not only as needed. The cost of offering the benefit (eye exams) is the cost of one exam per employee. There is no savings to individuals.
I have just begun a master degree at the University. There is a graduate student association with an insurance plan. In order to function as insurance, membership is mandatory for all full-time graduate students. It offers health and dental benefits to students and their families. Because I’m a distance student, I can choose whether or not to opt in.
The math is pretty easy. The coverage costs a little under $500 per year and it covers me, my wife and our three children. The benefit includes up to $900 of work (in one visit) each per year. For $500, I can access from $0 to $4500 of dental work. Personally, I need a crown ($1000) and my middle child needed a $350 visit. The other family members need checkups, and I don’t know how much that costs. Already, we’ll get our money’s worth, and with some luck, we’ll get reimbursed more than the cost of the coverage. That feels like a rebate on my tuition.
Do you health or dental coverage? Do you feel it’s economically worthwhile
Posted by Dave on June 12, 2012
This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
I have tons of insurance. I have house and liability insurance, car insurance, CAA (accident/roadside assistance), health insurance through work and life insurance. Additionally, I have a fairly sizable amount of cash in savings, which would allow my household expenses to be paid for almost 8 months if anything changed employment-wise. Essentially, just about anything that would substantially affect my financial goals is insured against (probably too much).
I am generally not one to sit around worrying about worst-case scenarios, I don’t freak out thinking about possible future happenings, but one thing that I have been thinking about in the past little while (perhaps due to reading or listening to too many post-apocalyptic stories) is what would happen if money couldn’t fix the problem? One instance of this is the power outage experienced in Ontario in 2003.
For those outside of the Southern part of the province, the power went out for over 3 days in this period. For me, and most people involved, this turned into a pretty good time. I went to a friend’s place with the meat in my freezer and we had an enormous barbeque and drank warm beer. Eventually, the power came back and everything was fine. When I look back though, I’m wondering what would have happened if the power had remained off for longer, say a week to 10 days….
I would have run out of food, in fact I was basically out of food at around the time the power came on. At some point, I’m guessing city water would stop running and that would result in some problems as well. I could have left the city and headed north but there weren’t any gas stations available to fill up my car, which had only 1/4 of a tank of fuel in it. I would have had some troubles if the issue had continued and I don’t think I was the only one.
Think of your own family – do you have people who have food allergies and can’t just eat any food? Is anyone dependent on refrigerated medication, or something like that? What about pets – how much food and water do you have available for them?
The government of Ontario has a website listing items that should be included in an emergency kit that probably nobody has ever looked at or thought about (I know I hadn’t until a few weeks ago). Some of the stuff that should be included in the kit is obvious, but the amounts needed should be kept in mind (for example 4 liters of water per person per day), along with just ensuring that you have at least some of the stuff that is on the list.
We in the developed world are heavily reliant on each other, even though we don’t even talk to our neighbours anymore. We need the transport trucks full of food (which I swear at when trying to get somewhere on highways) and grocery stores because we don’t grow our own anymore. Most of us depend on taps of water to deliver our cooking, cleaning and drinking water because we don’t have wells in our backyard and the water in our rivers and lakes is not safe to drink. In essence, we don’t really look after ourselves all that well.
While I have no vision of some catastrophe that would require any such emergency kit – isn’t that the point of insurance? I also don’t think my house will ever burn down or I will be in a car accident, by I pay quite a bit of money per year to cover these eventualities. At some point maybe all these different kinds of insurance are overkill, but then again I’m reminded of newscasts showing people after a fire who didn’t have house insurance and don’t want to feel like that.
Do you have any sort of Emergency Preparedness plan? Do you ever foresee a situation that you would need one?