TD Line of Credit

[meds2015]

I currently have TD's Medical Student Line of Credit. I pay interest for it every month but there is also the life insurance cost. I was thinking of opting out of this life insurance money. When I talked to the bank, they said its not a problem and they can do it. But, has anyone done this before? Thanks.

[future_doc]

I currently have TD's Medical Student Line of Credit. I pay interest for it every month but there is also the life insurance cost. I was thinking of opting out of this life insurance money. When I talked to the bank, they said its not a problem and they can do it. But, has anyone done this before? Thanks.

 

I am with another bank, not TD. Just find out the process from them, make your decision and sign if you are opting out. I imagine that in the event of death prior to repayment in full to TD, at this stage of the game, should you die, your Estate would be at zero and they will never receive repayment. Later, your Estate will eventually have money and will need to repay the TD.

 

Today, a 25 yr old for $100,000 worth of 10 year term of life insurance will pay about $10/month. If you are younger less. You can always buy cheaply term life insurance for about $100/year at age 25 or slightly more depending upon your increased. Compare this to how much you are paying monthly for what you owe and make as decision.

[meds2015]

I'm definitely not paying $10/ month and I'm below 25. So If I opt out of TD life insurance and get a cheaper one, will that apply? I will ask this question to the bank as well. Are you doing something like that?

[future_doc]

I'm definitely not paying $10/ month and I'm below 25. So If I opt out of TD life insurance and get a cheaper one, will that apply? I will ask this question to the bank as well. Are you doing something like that?

 

I assume your loan is less than 100k. Prorating it, if you owe 25k, you should be paying max. $2.50 mo., if 50k = $5/mo

 

Do they require insurance? If not, dont get any. And when you owe 100ki, if you wish, go to London Life or another ins company and get a 10 year renewable term for 100k or more, but you can always add to it as your loan increases OR take out another policy.

 

Honestly, I dont know what I am doing, I dont think it came up and at this stage, my loan is still relatively small.

[lazyboy]

The simple answer to this is: DON'T DO IT

 

This is more for the benefit of the bank, not you, and is more expensive.

 

Firstly, It is much cheaper to go with a life insurance company to get whatever insurance you need, disability, life etc.

 

Secondly, the benefit if you get your own, goes to YOU when you claim it. You decide what you want to do with the money.

 

Thirdly, the insurance premium you pay to cover your line of credit, credit card balance etc are on the whole amount and is payable to that bank alone, whether you actually have that high balance. In any case, you don't see the money. Where if you go and buy your own insurance, you get the whole amount and you can choose to pay whoever.

 

Forthly, you will need to get separate insurance for different line of credit, credit card balance etc.

 

If you are a medical student, CMA insurance package is very attractive, and the premium is low.

 

It is my believe that everyone should have life and disability insurance. You should get it when you are YOUNG and healthy. When you make sufficient money as you grow older, you become self insured and then you don't need to pay the HIGH premium. The whole idea of insurance is you won't become a financial burden to your family, and your family is covered if you die.

[NLengr]

I will second getting OMA life insurance. It's by far the cheapest, and you get on average, 50% of the money you pay on per year refunded to you.

[future_doc]

^ I agree with all you say except for:

It is my believe that everyone should have life and disability insurance.

 

I mean I will wait for disability insurance until I have entered whatever field I have choseon, n and have an established income.

 

As for life insurance, sure, one can start early. However, it is complicated and the devil is in the details, e.g., term, 10 year term, 20 year term, universal 100, whole life, etc. You have to understand what you are buying. Once you overcome this hurdle, for sure, the earlier you buy, the cheaper. Of course, most of us do not have families and we have limited reasons for life insurance at this stage. True, it becomes more expensive with age, but if we wait 10 years, will the increased premiums be offset by the premiums saved during the next 10 years. For sure, if you have children, with the cost to raise a child through to completing their education to say age 25, $500,000 of term insurance for each child is worthwhile, diminishing the amount of insurance and premium over the years. So, if you wait until the child is 5 years old, you lock in a 20 year term policy that you reduce over the years.

[lazyboy]

You CANNOT PLAN when you are going to die. It is called "Known Unknowns", we all know we are going to die, we just don't know when.

 

You buy insurance with the hope that you will never need to CASH it. However, you protect yourself and your family in case you do.

 

We don't want insurance to deny us when we really need one. Thus, we apply early and keep the account active. IMHO, it is part of COST of running a business. :D

 

btw, buy TERM insurance, don't buy those whole life insurance (with investment portion), they're very expensive and the investment portion never grow, b/c you have to pay management fee.

[future_doc]

Students w/o children don't need life insurance except in very limited circumstances.

[cheech10]

Agree with future_doc. If you have no dependants, there is no need for life insurance. Once you get married, you probably want insurance, unless your spouse is a high income earner and you have no debt. With children, you almost always should have insurance. Later in life, you should have accumulated enough in assets to no longer need life insurance, as your dependants will be able to live off your estate, and the premiums quite high.

[future_doc]

If you have no dependants, there is no need for life insurance. Once you get married, you probably want insurance, unless your spouse is a high income earner and you have no debt. With children, you almost always should have insurance. Later in life, you should have accumulated enough in assets to no longer need life insurance, as your dependants will be able to live off your estate, and the premiums quite high.

 

Agreed....

[lazyboy]

I think you will be surprised at how low the insurance premium is once you join CMA.

 

I have make quite a few points, and I hope it helps someone to decide one way or another. Let's not forget the OP is asking about buying insurance for LOC, which is definately a NO NO.

 

[future_doc]

Can you give an example. Once the free 100k expired, I never renewed.

[cheech10]

Lazyboy, I know the premium is low (I've been a CMA member for 9 years now). The point is that life insurance is not necessary until you have dependants (who will be the beneficiary?). Disability is a different story since the benefit is paid to you (although, I still think waiting makes sense, since you have no income to replace as a student, and limited income as a resident, plus most provinces have disability insurance provided for you in their contracts with the hospitals).

 

Totally agree that an LOC (or mortgage, for that matter) does NOT need insurance (term life for the amount of the credit is more economical if you do have a dependant).

[Mourning Cloak]

Have you dealt with a great TD or BMO rep?

 

Please post their contact info (e.g email) - I need to talk to someone who really knows their stuff!

[Starfish31415]

Dragging up this old thread again...

 

So I went to open an LOC with Scotiabank today, and the representative recommended that I get Life+Critical Illness+Disability insurance at a price of ~$1 for every $1000 i borrow. That would amount to $50/month just for the first year that I borrow $50 000! It seems like quite a bit, and after reading this thread I'm definitely going with the OMA life insurance instead.

 

 

What surprised me however, was that she said if I were to pass away, my parents would be responsible for paying off my LOC. Is there any truth to this? I could understand it if I had a spouse or dependents, but would parents really be expected to pay off their 21 year old's LOC?

 

Gonna call the bank tomorrow and some specialists to confirm, but could anyone shed some light on this?

 

 

 

 

Edit: I now realize that this thread says "TD LOC" at the top, but this was the most relevant one I could find pertaining to life insurance

[Aetherus]

On this same note, if you don't have a cosigner for the LOC...does that mean no one is accountable for the LOC besides you. So why would your parents be obligated to pay?

[Starfish31415]

On this same note, if you don't have a cosigner for the LOC...does that mean no one is accountable for the LOC besides you. So why would your parents be obligated to pay?

 

 

 

That's what I said, but she insisted that was the case. I'm 80% sure she's wrong and I usually wouldn't even listen to something like that... but even the slight possibility of giving my family a huge debt to pay after dying is too horrible.

 

So now I'm left feeling more than a little annoyed at the rep who probably had no idea what she's going on about. Ah well, I guess I'll know for sure when I phone tomorrow

[rmorelan]

That's what I said, but she insisted that was the case. I'm 80% sure she's wrong and I usually wouldn't even listen to something like that... but even the slight possibility of giving my family a huge debt to pay after dying is too horrible.

 

So now I'm left feeling more than a little annoyed at the rep who probably had no idea what she's going on about. Ah well, I guess I'll know for sure when I phone tomorrow

 

ok, ok, let's cut this right now - who one earth were you talking to?

 

that is utter nonsense, you family is not on the hook if you die for your LOC. Your estate is. Since your estate is likely very low then your default on your loans - this also means there is no money to bury you either etc so your parents would likely be one the hook for that (actually some people have life insurance for that reason alone). People do not inherit debits (well unless you were loaned money from the mob, or so I hear ) .

 

and that 1 dollar thing for critical insurance - that is also not how that works either. Don't get that either until you get what you are supposed to be getting.

 

That being said there are things you should be worried about - disability being the main one. You really shouldn't care much if you die - bluntly dead people aren't liabilities from a financial point of view. You should care a lot more about what happens if you can no longer work or finish school. Living your entire life from that point one with very limited income potentially. Disability is far more likely to be the problem at your age and with a big LOC and no income you are in trouble. This is in part why in residency there is required disability insurance. Disability insurance is also relatively cheap. Personally I have a solid amount of disability insurance.

 

Bottom line is get to talking to the right person, and you shouldn't be in fear of any part of the process. Wise people protect themselves with appropriate insurance and go from there. This is simple and basic personal finance - and shouldn't be held over you as some stupid threat.

 

By the way it takes about 2-3 hours to go over most the personal finance most people need to be well protected and very well off for life. Since you are on the path to getting a good income (a great step towards wealth but just one step) I would suggest you will eventually need to take the few hours to protect yourself from this sort of crap, and ensure you will well taking care of financially

[rmorelan]

That's what I said, but she insisted that was the case. I'm 80% sure she's wrong and I usually wouldn't even listen to something like that... but even the slight possibility of giving my family a huge debt to pay after dying is too horrible.

 

So now I'm left feeling more than a little annoyed at the rep who probably had no idea what she's going on about. Ah well, I guess I'll know for sure when I phone tomorrow

 

was this person in London for scotia (doesn't sound like our usual contact from my home school)? Seriously I want to know who this person was

[Starfish31415]

Deleted

[jmatt1122]

was this person in London for scotia (doesn't sound like our usual contact from my home school)? Seriously I want to know who this person was

 

I did my LOC through Rob and signed with a rep in Windsor who lead me to believe the same thing regarding family being on the hook. I was 99% sure she was mistaken so passed on paying for the insurance that would really only be benefiting the bank. I was going to make an appointment with MD Financial or some other advisor to make sure, but your post is reassuring. Thanks!

[sfuguy]

http://www.cfms.org/member-benefits/discounts--to-help-you-save-money/disability-insurance.html

 

what do you guys think about this disability insurance package...I think it is what is recommended to us, at least by our faculty of med, and simply appears to be the best out there from my limited searching. You gotta get it before end of 4th year or something like that to lock in rate with no med exam.

[lokiki]

I also just signed through scotia and I heard a few things. I dealt with a great rep in Vancouver, but did all the signing at my local branch (in a fairly remote location, so I don't blame my local rep for not knowing certain things).

 

So first, the LOC life insurance as printed was based on $200,000, and is $120 per year based on my age.

-I asked why it was based on $200,000 since I only had $50,000 available the first year.

-She told me that the remaining insurance on the remaining $150,000 would go to my estate.

-She called the rep in Vancouver and he said that it could be changed to $30 per year based on $50,000, and that the remainder did not go to my estate, it is purely to pay off my LOC if I die

-I kind of stupidly asked if it is required that I get this insurance since it's an unsecured loan, and she said it might be.

I signed it just because it's "only" $30 and like some other posters here, I'm a little worried about others being responsible for my debt if I died. I'd like to figure out more about it though, and decline it next year if possible.

[schmitty]

I also just signed through scotia and I heard a few things. I dealt with a great rep in Vancouver, but did all the signing at my local branch (in a fairly remote location, so I don't blame my local rep for not knowing certain things).

 

So first, the LOC life insurance as printed was based on $200,000, and is $120 per year based on my age.

-I asked why it was based on $200,000 since I only had $50,000 available the first year.

-She told me that the remaining insurance on the remaining $150,000 would go to my estate.

-She called the rep in Vancouver and he said that it could be changed to $30 per year based on $50,000, and that the remainder did not go to my estate, it is purely to pay off my LOC if I die

-I kind of stupidly asked if it is required that I get this insurance since it's an unsecured loan, and she said it might be.

I signed it just because it's "only" $30 and like some other posters here, I'm a little worried about others being responsible for my debt if I died. I'd like to figure out more about it though, and decline it next year if possible.

 

Just so you know, nobody else is responsible for your debts on an unsecured loan with no cosigners. Anything in your estate (likely tiny/non-existent for most students) would go to pay it of as much as possible and that is it.