We’ve all heard Aesop’s fable of “The Goose Who Laid the Golden Eggs.” The bottom line of the story was that the greedy owner could not wait for the next day that the goose laid another golden egg. She killed the goose in order to get at all the gold at once, only to find that it was just like the other geese.

A wiser person would have spent a lot of time and energy taking care of that goose, feeding it well, exercising it and educating it to maximize the size and frequency of those golden eggs. Insuring those eggs probably wouldn’t be a bad idea either. The wisest person would have taken out a huge life insurance policy on that goose!

Getting the idea? We spend a lot of money today focusing on the golden eggs – all of our possessions. Although we wisely insure these possessions, too often we don’t spend enough thought on insuring the goose (ourselves) against the catastrophic risks of dying or becoming critically sick or hurt – both of which can have devastating financial consequences to our families. It is critical to carry enough life insurance, disability insurance and critical illness insurance to replace your economic value during the working years.

The question is: “Do you insure the goose when it retires?” After all, the debts are usually all paid by that time, there’s a ton of money in the Pension, RRSPs and RRIFs and Canada Pension Plan and Old Age Security start kicking in. In other words, the goose has done some financial planning and has become “self-insured.” However, one strategy the goose has used all these years has been to grow the investment portfolio without paying too much tax along the way. But wait! The tax has only been deferred! Capital gains and recapture taxes are due upon death, as well as income taxes on RRSP and RRIF balances. Mr. Goose can pass his estate along to Mother Goose without any tax but, upon her death, all the poor little goslings will probably have to sell off pieces of the estate to pay Canada Revenue Agency. Not only that, but Mr. Goose’s pension could reduce substantially when he dies, leaving his better half a bit short on cash flow. There are other matters to consider, such as probate fees on the estate, legal fees, accounting fees, executor fees, burial expenses, etc. Because the Goose Estate has been so wisely invested, there is little in the way of inactive cash and several pieces of the estate may have to be sold at fire sale prices in order to meet the demand for cash.

So, do you insure the retired goose? It’s probably a question you want to raise with your financial advisor.