If you have mortgage insurance to secure your family’s future in case you get sick, hurt or die, congratulations on making the right choice.

If you don’t have any coverage, you may need to get some. Your loved ones need to stay in their home even if you are out of the picture. Don’t you owe it to yourself and them to read on?

Although you may insure your home, cars and other valuables your ability to provide for your family is by far your greatest asset.  Here are the chances of real catastrophe:

Life, disability & critical illness insurance replace the value of a person’s income if those disasters strike. However, mortgage payments are typically only one third of a household’s income. The banks will only cover the mortgage payment. What about the other expenses?

Mortgage insurance is an easy sell for the banks. They suggest it before you’re able to do any comparisons. There’s added pressure in the requirement to sign a waiver if you say no.

The bank should not control your insurance. Here is why:

A glossy mortgage insurance brochure doesn’t cut it. You really need to work with a specialist.

WealthSmart Financial Group is independent and works for you. We help to confidentially analyze your needs and existing coverage, survey the available options from our 14 different carriers, prepare a thorough plan and you are under no pressure to buy.

We’re good at this and you will probably improve your coverage and save a lot of money. Call us at 604-241-4357 and ask for Richard or Zinha.

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.

There are some surprises that just should not happen  – like having your disability insurance (DI) coverage change at the worst possible time.

With non-cancellable guaranteed disability insurance the premiums, benefits or features won’t change just because your circumstances change.

Non-cancellable coverage can be confusing for people familiar with group LTD coverage where their plan may change from time to time and where the benefit amount depends on your  income at the time of claim. I find there are three critical questions:

What if I…

1.            Have a decrease in my income?

A good disability insurance contract can’t change the monthly benefit. If a total disability occurs – the insurance company pays the full monthly benefit stated on the policy.

2.            Change occupations to something more hazardous?

Say you are an executive and become an expert Formula 1 racing car mechanic. The insurance company cannot change the occupation class, so you will continue to pay the same premium you did before.

3.            Am no longer working?

The policy cannot be altered. Even if you win the lottery, stop working, have no earned income and you  become disabled according to the provisions of the contract, you will be paid total or partial benefits, depending on your ability to perform the important duties of your prior occupation.

That’s the beauty of non-cancellable disability insurance. No surprises.

I’m always a bit careful when recommending resources provided by an insurance company, as they usually focus too much on selling their own products. However, Manulife has done a great job on their “InsureRight” site. It’s very clean, gives a clear, unbiased introductory presentation and provides viewers with a straightforward 5-step process of planning and implementing a good life insurance program.

Here’s the link again: www.insureright.ca

As always, I look forward to your feedback

I found the information resource sponsored by the “Life and Health Insurance Foundation for Education” especially useful. Although it’s a US site and contains a few references to terminology unique to the United States, its core principles are priceless in helping you to secure the future for yourself and your family.

It flows smoothly from general education on insurance using high quality multimedia presentations, walks you through a great online insurance needs calculator, gives you a great downloadable guide and walks you through the four major ways to buy your insurance.

Here’s the link again:

www.lifehappens.org

Have a look through it and let me know what you think. When I find a good resource that’s more specific to Canada, I’ll post it here.

This afternoon, I googled Steve Jobs and was awed by the unbelievable accomplishment he’s made. Apple closed today at $227 billion in market capitalization versus Microsoft at $220 billion! Since Job’s reclaimed the helm at Apple in a boardroom coup in July of 1997, he has grown the company by 6,690 %!

Proof positive that the potential of human capital is without limits.

There is no secret then to my frustration in the seeming inability of the insurance industry and the consuming public to recognize the value of every human being. I have a strong conviction that each one of us is created to live, to love, to learn and to leave a legacy. We each have a unique ability to leave a positive mark on this world and everytime one person gets seriously ill, is incapacited by an accident or dies, there is a tragic loss of value. What does not stop though are the bills, the unmet goals and the interruption of a potential lasting legacy.

Because we cannot grasp the enormity of the human capital equation, we instead concern ourselves with questions like “How much is $1,000,000 of 10 year or 20 year term insurance going to cost me?”

Instead, let’s begin by working it backwards by asking:

• “Who will cry when I die?”
• “What do I want them to say when I finally leave this existence?”
• “What will be the lasting mark I leave on my family and on this world?”

Getting more specific, let’s then ask:

• “How much am I going to earn in my remaining years?”
• “What will my family require of my earnings?”
• “What will it cost to provide the best education for my children?”
• “What will  it cost to provide my children with a healthy start when they go out on their own?”
• “What will my lasting legacies cost in today’s dollars?”
• “How will my business partners afford to buy out the business from my surviving family?”

It get’s complicated, doesn’t it?

Maybe it’s time to start getting answers to these questions and treat the issue more seriously than our next vacation plan. Food for thought.