We make a point in our discussions with clients to always think of the long term. While many decisions should be made sooner rather than later, there are very rarely any “limited-time offers” or “one-day only” sales when it comes to insurance and financial planning.

That being said, we are in a rather unfortunate time where the major financial institutions in Canada are reacting to the global economy and need to make some adjustments to their products. Nearly all major insurance carriers have announced that they will be increasing premiums on their life insurance products (especially Universal Life policies) within the next few weeks.

If you are considering purchasing Permanent or Universal Life insurance, or if you have Term insurance and wish to convert some or all of it to Permanent insurance in the future, I encourage you to get in touch with us soon so we can take advantage of the current pricing structure and lock in the lower premiums.

The time to buy life insurance is now, by Garry Marr – Financial Post | Personal Finance

You probably don’t want to hear this, but poor investment returns are delivering a new casualty – rising insurance premiums.

Rates on universal life policies are set to increase in the coming weeks on top of increases in November 2010, as insurance companies attempt to better match their funding commitments.

I spoke with John Rovansek recently about his opinions on the current investment climate in the US. Here are some of his comments.

On Wednesday, September 7, Mark Carney, the governor of the Bank of Canada, decided to hold rates steady at 1%, declaring the need for rate hikes has “diminished.” In his speech he said, “in light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished.” He cited a deeper US recession and shallower recovery as one of the reasons for the decision.

Over the past few months, I have been laying out a case for considering US and global equities for your portfolios, as part of a strategy to build positions in an asset class that has been somewhat out of favour. With this in mind, along with Mr. Carney’s interest rate decision and commentary, it made me think about corporate earnings, particularly in the USA, P/E ratios and what could impact future earnings. I asked myself this question: Are equities/stocks still cheap? The answer: That depends if you believe the numbers.

For particular stocks, the numbers look good, but for the market as a whole, it’s not so clear. Wall Street strategists have provided all kinds of models and forecasts. The crux of the mainstream bullish argument is that stocks are inexpensive based on standard measures such as price-earnings (P/E) ratios as well as the equity-risk premium. Both measures depend on corporate profit forecasts, which are open to uncertainty. As we know, the problem with forecasts is that they are about the future, and the future is unknown.

A recent report from Societe Generale’s lead global strategist, Albert Edwards, highlighted several key issues. In his report, Mr. Edwards pointed out how corporate profits were terrific in 2010, but have become less so in 2011. Labour costs are surging, which is slashing margins. Mr. Edwards thinks we are at a “tipping point” at which companies can no longer pass cost increases to a low-demand world. While this may be true, we have seen corporations respond to higher expenses by trimming all types of costs, including labour. In the US, an example of this effect and reported in late August, is zero jobs growth. Mr. Edwards also points out that the pace of unit-labour costs is a key driver of inflation and coupled with deteriorating trends in productivity suggests that earnings recovery, based largely on profit-margin expansion instead of top-line growth, is coming to an end.

Back to my question: are stocks cheap? The S&P 500 trades at approximately 13 times consensus estimate of $90 earnings per share and just 11.5 times the $102 forecast for 2012. The equity-risk premium, calculated by comparing stocks earnings yield (the inverse of the P/E) to the 10-year Treasury yield (assumed to be the risk free long term interest rate) indicates that equity asset class prospective returns should vastly exceed those of government bonds. Some stocks already sell at extremely low P/Es (10 or less), despite massive earnings growth over the past 10 years. What has this left? A group of large, global blue chip companies with rock-solid balance sheets, high dividend yields and significant cash generation potential to expand payouts selling at low valuations. An opportunity, in my opinion, worth exploring, particularly if you believe the numbers.

Photo credit: “Sale Sticker (Vector)” by Vectorportal on Flickr

Good Day everyone,

Many of our friends have or are thinking of buying US property. We have found a very good article that explains some of the complications to your estate if something happens to you. We are recommending a small permanent insurance policy to cover the tax liability to your estate eliminating one of the issues that may occur.

Please call us to discuss some more options available to you.

All the best,

Harvey

Holding U.S. property requires right paperwork | BY RAY TURCHANSKY, EDMONTON JOURNAL