Financially, it is never enough

Last week I was talking to an Insurance Agent about possibly changing my term insurance carrier, to see if I could get a lower rate, and (as usual) the conversation was not just about Term Insurance for guys over 50 (that was the topic I wanted to talk about), unfortunately the topic of retirement planning and insurance coverage to protect my family came up (no, I didn’t bring it up, you can guess who might be the protagonist in that part of the conversation).

Financial Despair

At the Signpost Up Ahead, you see you are entering… The Financial Despair Zone

I pointed out that I have a pension plan (a very good and generous plan) so my family was going to be OK, in terms of retirement planning, or were they? The agent I was speaking with pointed out that the Life Insurance that went with my pension wasn’t really that much and if I died, my wife would only get a fraction of the money in my pension.

This statement is entirely correct, but it still annoyed me because after I hung up the phone I realized when you are talking to anyone selling financial services, you never are safe in terms of retirement or insurance coverage (yes, I will plead guilty on this, but I am not selling anything).

Let me give you a few scenarios I have been a part of over the past couple of years when talking to various financial service folks about various topics:

  • If I talk about Life Insurance, and bring up that I prefer Term Insurance, inevitably the agent I speak with espouses the importance of “Whole Life” insurance as it will protect me in my “Golden Years”.
  • Credit Card companies used to call me incessantly asking if I wanted to increase my Credit Limit, because you never know when something might go wrong and I needed some extra help.
  • If I am negotiating a new Mortgage Term, the topic of Mortgage Insurance will inevitably come up, because it is important to protect my family in case something terrible happens.
  • When I call to talk about disability insurance, suddenly the topic of Catastrophic Illness insurance comes up.
  • And on, and on, and on….

My family is never really safe is it? I can never rest easy that I have enough insurance coverage, financial leverage or low enough debt load, is it? I realize that all of the cases I mention are sales folk simply trying to either up sell new services to me, or to make sure they have a bigger commission, but this does explain why I have such trepidation when I have to meet with anyone about my financial situation. I know I will be barraged with worst case scenarios, and how badly prepared I am for my retirement.

 

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Disability Insurance vs. Critical Illness Insurance

I really didn’t understand the difference between these two different types of insurance policies, but luckily I have smart friends who answer my dumb question like, “What is the difference between Critical Illness Insurance and Disability Insurance?”.

Chantal Marr answered my query (she is part of LSM insurance one of my advertisers, and she is also my insurance consultant for this blog as well), and I think I now understand the big difference between these two policies.

Critical Illness Insurance

Critical Illness Big Winner! (really?)

Chantal’s answer is concise and easily understood:

Disability Insurance pays out a monthly benefit that is tied to your ability to earn an income.  Critical Illness pays out a lump sum benefit but is is not tied to your ability to earn an income.  Disability Insurance underwrites your occupation and Critical Illness does not.

Chantal has also written a more detailed description and discussion of these insurance vehicles with: Critical Illness insurance vs. Disability Insurance Why You Need Both.

I do not agree that you need both insurances, I think Critical Illness insurance strikes me as a bit ghoulish, in that you get a big pay out for getting a critical illness. Do you need a large lump sum payment if you are diagnosed with a critical illness? I am not sure, I would have thought that if you have a good health insurance plan, and you have some kind of disability insurance, that would be nearly enough, but I am sure Insurance folks would argue you need the critical illness to be completely covered (again, I don’t agree with that).

As for the Disability Insurance, read over your policy carefully if you are purchasing one to ensure you understand how “Disabled” is defined, and how you qualify (or don’t qualify) for funds (but you should do that with all Insurance policies). Understanding what Disabled means, is the key to the policy, as what you think of as disabled and what your insurer thinks of as disabled may not be the same thing.

The other part of any Disability Insurance Policy is figure out who is insuring you. I have written previously about Self Insured Disability Insurance that decimated many families during the Nortel fiasco. Make sure that whoever is insuring you, is financially sound.

Image courtesy of Ambro/ FreeDigitalPhotos.net

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Read Your Home Insurance Renewal Notices

My home insurance is coming up for renewal in a few weeks, and my insurer was kind enough to send a letter saying, “You better read how our water damage coverage is changing”, so I was warned, and thus I read over all of my coverage that showed up with my renewal documentation.

My sewer backup coverage is now being capped at $15,000 seems to be the major change to things. To quote what I was sent exactly:

“… We adjusted this amount in response to a sharp increase in the number and total cost of water damage claims in recent years, due to climate change and aging infrastructure…”

Nice, so there are arguments going on all over the world about climate change and such, but my Insurance company has embraced it as a fact and are changing my premiums due to it. It seems almost like Miracle on 34th Street (the original version), if Insurance companies think Climate Change is important enough to change my coverage, it must be true! (OK, I digress, and apologies for the sarcasm for the lovers of old movies too).

It is also a damning statement about the City of Ottawa’s infrastructure that it is mentioned specifically as another reason they think sewer backups are more likely as well.

OK fine, given the number of floods I have seen in Canada, it’s not really that surprising (it’s still annoying as a consumer, but then again, all I can do is shop around and call to see if this can be dealt with to my satisfaction).

My insurance company also seems to think that I have a crappy old roof, as they are removing the “… Weight of ice, snow or sleet — Ice Damming — Roof Water Damage Endorsement…” as well. I am pretty sure my roof was redone in 2006 (see writing a blog gives you a wonderful records keeping option as well), so I will call to see if they were aware of that, since I am not sure I told them either. I can’t believe that an 8 year old roof is now viewed as a risk in their eyes, but I need to call and confirm that with them.

I guess I should tell them about all the upgrades I have done as well (upgrades? not really, I just replaced the windows, heating and air conditioner as well).

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Term Insurance Over 50

I have had a 10 year term life insurance plan to act as “Mortgage Insurance” on my house (no it is not really a Mortgage Insurance product (that is a rip off (IHMO)), and the 10 year term is about to expire. I received a letter informing of this and how that if I wanted to renew for 10 years more, my monthly premium would be 3.45 times higher than it is.

This perturbed me a bit, but I decided that since this wasn’t going to happen until July I’d have time to shop around and maybe find something cheaper or decide whether I need this policy any more.

Fifty Looks Big

Heck 50 Looks Big in Print

I received a phone call from TD Life Insurance (the Policy provider) it was a licensed TD agent calling asking if I had read the letter and whether I had any questions. I said I wasn’t happy with the rate increase, but knew it was going to go up but not by that much. The agent sounded sympathetic and then she said that there was another option. At that very moment my “here comes another one for my horse” incident in my life, and I was not wrong.

Evidently if I buy a NEW policy I could have a rate increase of only 50% monthly, however, since it is a new policy I’d have to answer a medical questionnaire and sign forms stating I was telling the truth about my current health.

My guess is this is the Insurance Company attempting to cover itself, assuming an old guy like me, might have picked up some disease or bad lifestyle choices, so they want to be sure I have a clean(er) bill of health than most 50 year olds. This is the risk you take buying Term Insurance and not “Whole Life”, and I fully realize this, however, a quadrupling of my rates does seem a little punitive (just my opinion).

I think I’ll shop around a bit more but I haven’t decided my next steps just yet.

 

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Discounts (and you only get what you ask for)

In my continuing search to pay as little for my insurance as I possibly can (while remaining within the laws of the land and keeping my stuff safe), I was told about a great discount that I would get from being a member of PSAC. I dutifully checked with the insurer in question and received a very odd quote that was higher for my cars than my current insurer, however over all it was lower due to the cost of having my daughter on my Auto Policy.

No She Isn't Going to School In China!

No She Isn’t Going to School In China!

I wasn’t really that impressed with the savings, however, I was considering changing, until I remembered the words of my post  The Answer is Always No, Unless You Ask, so I decided to find out why on my current Auto Policy I was paying so darn much for my daughter.

I called my current insurer and asked about why my Daughter cost so much on my policy. The agent I spoke with was sympathetic, but then I remembered that Michael James had mentioned a while ago about Student Away at School discounts, so I mentioned that my daughter goes to school a fair distance away, and Voila, thanks to that and my daughter getting her G license, I saved $290 , not an insignificant pile of cabbage.

Am I happier? Absolutely. Do I feel stupid for not remembering what Michael James had written? Absolutely.

I have sent the proof of my daughter’s enrollment (via e-mail, how nice and clean) and hope to see the discount show up on my policy very soon.

 

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