3 Reasons Why You Should Insure Your Body Parts

3 Reasons Why You Should Insure Your Body Parts

Purchasing policies for specific body parts is not a typical topic of conversation in the insurance world. Although in most cases it is celebrities who want this kind of coverage, there are also instances in which other people could benefit from it. For example, if your income depends on the use of a particular appendage or body part, it could affect your livelihood. Therefore, here are a few reasons why you should insure your body parts if you fall into this category.

3 Reasons You Should Insure Your Body Parts

While it might seem like a strange notion to you, many people have insured their body parts in the past. Certain careers, such as athletes, entertainers, and artists depend on their skills or appearance to earn an income. Here are some of the most common reasons why people have decided they should insure their body parts.

1. You want to protect your assets.

Without a doubt, entertainment companies are willing to shell out big bucks to insure their cash cows. This is even more important if the celebrity is known for a trademark feature or aspect of their appearance. Whether it is Julia Roberts’ smile or Tom Jones’ chest hair, these entertainers are instantly recognizable because of them. So, it makes sense to protect your source of income. As former playmate Holly Madison said after insuring her breasts for $1 million, they are important “assets.” If anything would happen to them, it would affect their ability to work and bring in income.

Looking at it from the professional sports franchises’ perspective, each athlete is vital for their business to make money as well. If their all-star athletes aren’t able to play, they lose money in ticket and merchandise sales. Therefore, sports teams often have a general disability policy if their stars have an accident that keeps them from playing. These types of policies are available from most standard insurers. However, you will need to find more specialized insurance companies if you want to insure a body part. Athletes like David Beckham and Cristiano Renaldo did exactly this, insuring their legs with multi-million dollar policies to protect the assets that helped make them famous.

2. You will have disability insurance should you have a career-ending injury.

One of the most important reasons why you should insure your body parts is because the policies provide coverage in case of death, damage, or dismemberment. Not only do people want to protect their assets, but also make sure they have a source of income if they have an accident or career-ending injury. Taking out disability insurance for specific body parts would supplement their income if they are no longer able to perform their craft or skill that they depend on to earn money. Actors and models purchase policies to protect their appearance while athletes insure the body parts they rely on to play at the professional level.

However, they aren’t the only occupations that can benefit from customized insurance policies. Musicians and artists sometimes insure their hands or vocal cords in case they can no longer perform or create. Chefs and wine tasters have also been known to insure their taste buds as well. If they were to lose their sense of taste or smell, it could cost them their entire livelihood.

3. It could generate more business with free publicity.

Another reason some people suspect that celebrities insure their body parts is to generate publicity. As ridiculous as this may sound, stories like this grab headlines and get people talking. If the story stirs up enough buzz, it creates a lot of free publicity.

In fact, a supermarket in the UK used this publicity stunt to generate more income. They insured the taste buds of their senior wine buyer for 10 million pounds (about $17.3 million). What seemed like a crazy idea turned into a huge profit for them. The story was picked up by three magazines and six national newspapers. Then, following the story, the supermarket’s wine sales increased by 19%.

Some have suggested that celebrities do this as well. While the rumor has never been confirmed, there was gossip that Mariah Carey insured her legs for $1 billion. However, the timing happened to coincide perfectly with the beginning of her “Adventures of MiMi” tour. Whether the rumor is true or not, Carey still made $27.9 million in box office sales that tour.

How Do You Insure Your Body Parts?

Although these insurance policies aren’t exclusively available to celebrities, they do cost more than the average person can afford. These are not your standard insurance policy. They will personalize it to each client’s specific needs. So, you should expect to pay a high price for their attention to detail.

If you decide to insure your body parts, options are limited. Most people who want to insure their body parts must consult with one company that has become internationally known for selling specialized insurance. Lloyd’s of London has provided some of the most famous insurance policies for celebrities for over 100 years. One of the first celebrities to seek such a policy was silent film star, Ben Turpin, who bought $25,000 of coverage to insure his crossed eyes. However, they continue to sell specialized policies today to many celebrities worth millions of dollars.

The Most Expensive Body Parts Ever Insured (Reportedly)

Even though it is possible, it is still not common practice to insure body parts. However, several celebrities have gone to great lengths to protect their assets. Here is a list of the ten most expensive insurance policies (reported but not confirmed) ever purchased.

  1. Mariah Carey’s legs – $1 billion
  2. J-Lo’s butt – $300 million
  3. Cristiano Ronaldo’s legs – $144 million
  4. David Beckham’s legs – $70 million
  5. Michael Flatley’s legs – $40 million
  6. Julia Robert’s smile – $30 million
  7. America Ferrera’s smile – $10 million
  8. Daniel Craig’s body – $9.5 million
  9. Tom Jones’ chest hair – $7 million
  10. Bruce Springsteen’s voice – $6 million

The celebrities have made headlines with their unusual insurance policies. However, this list is likely to expand and change as more people decide to view their bodies as assets worth insuring.

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Can I Sell My Life Insurance Policy In Canada?

Yes, you can sell your policy in Canada1

 

Budget and Invest sometimes tackles difficult financial questions.  One which has come up consistently is: Can I sell my life insurance in Canada?  Read on for the answer to this question.

What’s a life settlement?

When a person with insurance sells the policy they have, this is referred to as a life settlement, also sometimes known as a viatical settlement. The sale price is typically more than the policy’s cash surrender value, but also less than the death benefit.

When you do this, you get your lump sum immediately, though at the expense of your policy. Then, the new policyholder will pay the monthly premiums, and will also receive the full benefit upon your death.

So, can you sell your life insurance in Canada?

Yes, you can sell your life insurance policy in this way in Canada. Selling life insurance in Canada is complicated, however, because it can only be done in certain areas. What’s more is, even in the areas where selling your life insurance is allowed, it’s still only allowed by certain companies under certain circumstances.

For example, the life insurance company Sunlife Insurance never allows a life settlement, regardless of where in Canada you are.

Where can you sell your life insurance in Canada?

In Canada, a life insurance settlement is legal in the provinces of Saskatchewan, Nova Scotia, New Brunswick and Quebec only. In recent years, there have been several attempts to make selling life insurance policies legal in Ontario, too. But, since this means fewer profits for insurance companies, these attempts have been totally blocked.

What are the problems with selling life insurance?

As we just touched upon, there was recently an attempt to amend Ontario’s insurance act, in 2017. All was going swimmingly until the Canadian Life and Health Insurance Association (also known as the CLHIA) began to protest voraciously against the attempt. This was partially because life settlements would mean less profits. But, the CLHIA also argued that giving Ontarians the ability to sell their life insurance opens seniors with policies up to financial abuse.

Still, people who support viatical settlement say that it gives people in dire financial circumstances who need immediate financial assistance, a good option. After all, a viatical settlement pays you far more than a cash surrender value, and it’s a better idea than just letting your policy lapse. From your insurance company’s point of view, though, a policy lapse is a good source of profit.

Are there alternatives to selling your life insurance?

So, unfortunately, for one reason or another, selling your life insurance simply isn’t legal in many parts of Canada, and is even still frowned upon by some insurance companies in provinces where it is allowed! If you live in one of these provinces though, don’t despair, because there are a few equally lucrative alternative options to life settlements.

How do you transfer life insurance in Canada?

One of these alternatives to a life settlement is the option of transferring your life insurance policy. Instead of selling your policy, simply change its beneficiary!

However, do be aware that the new policy owner has to have insurable interest in the life of the person insured. To have this, the new policy owner must be likely to suffer a financial loss when the person insured passes away. Transferring your life insurance policy is covered under the Ontario Insurance Act.

So, if you have someone in your life who has insurable interest, this person will be allowed to take over your policy, pay your premiums, and become your policy’s beneficiary.

People typically transfer their life insurance policy to someone like a child or grandchild.

Since there may be tax implications arising from a life settlement transaction, make sure that you get in touch with a tax lawyer.

Then there’s the Personal Health Spending Account, or PHSP. You’re probably well aware that most benefits programs for employees in Canada have certain restrictions and limits on their usage. And, if you don’t have access to a plan like this, of course, you must pay for health care using your own money.

This is what the PHSP is great for. The PHSP is a government benefit that yields a good health care strategy to people who are owners of incorporated businesses or are self-employed. If you are someone who claims expenses on your income tax, you may not be able to take full advantage of the Personal Health Spending Account. However, if you are considering getting life insurance for healthcare, the Personal Health Spending Plan can make a great alternative. Check out WEALTHinsurance.com to find out more about this.

What about compassionate assistance?

Many insurance companies also offer the option for a compassionate payment after a terminal diagnosis. After the diagnosis, your insurer will pay a portion of your death benefit before you pass away.

Generally, a compassionate assistance payment warrants a person to have a diagnosis of less than two years to live. But, the payment can help you out in whatever way you like — a gift to a caregiver, a flight around the world, or even hotel rooms for family to be nearby.

Compassionate payments are not taxed. Do be aware that a compassionate payment will reduce the size of your death benefit, however, since it’s an early payment of the benefit. You also must still pay your monthly premiums, too.

What are policy loans?

Rather than having to deal with life settlements, the life insurance industry prefers to make it easy to access a portion of your death benefit before the event of your death. This is done with a policy loan.

A policy loan lets you borrow money from your insurer by using the cash surrender value of your policy as a form of collateral. The interest that then accrues can be paid either while you are alive, or added to the cost of the loan, so that when you die, the outstanding balance will get deducted from your death benefit payout.

This all sounds simple enough, right? But there are a couple of other things you should know about policy loans. With this type of loan, you are only able to borrow an amount up to the value of your cash surrender value. Sometimes you are permitted to borrow only a certain percentage of your value, like 80%.

On top of this, you still have to pay your premiums, meaning you still run the risk of your policy lapsing.

Plus, despite the popularity of term life policies, you can only take out a policy loan on a whole life insurance policy, since term life insurance policies have no cash surrender value for you to borrow against.

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