Affiliated with Sentinel Life & Sentinel Financial Management Corp.
January/February - 2001
Commentary - Hans H. Mathisen
Dirty Bank Tricks ó LIFE LETTER for January deals with a topic that I always suggest my clients look into on their own. I have an opinion, but I want you to do your own research on this topic.
We Are Living Longer ó This issue of LIFE LETTER speaks for itself. Not only are Canadians living longer, but we, increasingly, are asked to look after ourselves to a larger extent than since the 1930ís. Less and less can we count on the government to look after us during and after a Critical Illness, or to take care of us when we will need Long Term Care.
FACT: The advance of medical science helps us live longer. Persons who are victims of Cancer, Stroke, Heart Attack, Kidney Failure, Organ Transplants and other previously fatal illnesses now survive and live (maybe not so happily) after. Because their illness has caused their ability to make a living to disappear. Is Critical Illness Insurance the answer?
FACT: For every 1,000 Canadians, 5 will have a house fire. 70 will have an auto accident. 600 will need Long Term Care. Knowing this, should we insure to protct ourselves against having a house fire, or for the time we will need Long Term Care?
If you would like more information on
Critical illness and Long
Term Care coverage, please email
Hans Mathisen. Or, you can call
THE STOCK MARKETS - Year 2000 was not a year we want to remember. But we have to take the odd down-year. For the long-term investor, the 1990ís was a fabulous decade, and all indications are that the next several years will be very good years for the long-term investor. Because the fundamentals have not changed:
Unfortunately, because the banker didnít mention these advantages, they lost in the transfer:
Was this banker ignorant of these advantages or just too clever for the customersí good? Now the bank has easy access to their retirement savings and can seize them if Jack and Kate default on their loan. Did this banker have their best interest in mind when he recommended the switch or the best interest of the big bank?
Larry and Mary, on the other hand, were unhappy with the service they were receiving (or not receiving) at their bank, so moved their RRSPs away from it. The bankís practice of charging for every transfer they made disturbed them. Their stockbroker also charged them a fee for each transfer.
All major banks levy a service charge of at least $25.00 on each transfer to another financial institution. They can increase this charge at any time and some charge even more. Merrill Lynch charges a whopping $100.00 plus GST. This definitely affects net returns on their investments, especially the smaller deposits.
Larry and Mary also asked their fmancial advisor about their banking. He suggested that just as itís not a good idea to have all their eggs in one basket, so they shouldnít have all their financial eggs in one institution. He also pointed out that this deposit diversification would safeguard them if any institution fails, help them stay within the deposit insurance limits of each and be choosier about which deposits are where. So they now have deposits at a number of different institutions. (Obviously their financial advisor is not a bank employee!)
© 1999 Bowen Financial Inc. and Donald F. Pooley, Inc.
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Are Living Longer
Decreasing infant mortality is considered to be a major cause of increased life expectancies in this century. In 1915 in the U.S., 999 of 100,000 babies born, died before their first birthday. Fifty years later, deaths of infants in their first year had been reduced by 84% to only 161 per 100,000.
Life expectancies have continued to improve. On this side of the border, Canadian boys born in 1931 could expect, on average, to live to see age 60. Those born one-third of a century later gained an extra 8.4 years. Over the same period, the average life expectancy of our newborn girls increased from 62.1 years to 74.2 years.
According to recent statistics, boys born now can expect to live to 76.7, on average, while girls born now have an average life expectancy of 82 years. The lower average life expectancy of males is considered in large part to be due to higher accidental death rates in the 15 to 25 year age group.
Life expectancies have improved for both sexes at all ages through most of the last century. Women who were 40 in 1941 could expect to live to age 74, and 40 year old men to age 71.9. Half a century later, the life expectancies of our age 40 women had increased to age 82.7, and 40 year old men to age 77.9.
As life expectancies have increased steadily over the past half-century, the cost of term life insurance has decreased. This is illustrated in the table below which shows the drop in annual premium for a typical $100,000 five-year term policy bought in different years by men at various ages. Please note that the rates for 2001 are for a ten-year term plan.
This is not unique to one particular company. Every life insurance company has a similar history of reducing premiums as life expectancies improve. This means that if you have any term life insurance that is more than five years old, it may be worth reviewing to see if youíre paying more than is warranted. Incidentally, for those who have quit smoking, or never smoked, new policies have even lower premiums.
© 1999 Bowen Financial Inc. and Donald F. Pooley, Inc.
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