Commentary - Hans H. Mathisen
The five insurance must haves - LIFE LETTER for September points out the obvious insurance coverages we all should (must?) have. Please, take this bulletin as a reminder to review your total insurance portfolio. I'll be glad to help you.
Why should we insure our kids? - The October issue of LIFE LETTER brings up a topic that many parents and grandparents are reluctant to consider. Why not give this concept some thought?
LIFE LETTER MATURE - The enclosed issues cover two significant topics relating to seniors: "How to tell when a senior needs help with finances", and, "More income and less tax? It can be done ". I'm sure each person who reads this knows someone who either could use help with their finances and/or could use more income while paying less tax. Why not contact that person now?
THE STOCK MARKETS - In January and February, 2007, many "experts" predicted that there was no way the S&P TSX Index could produce a double-digit gain for a 5th consecutive year. Yet, at the end of September, with 3 months to go before 2007 ends, the TSX Composite is up 9.22% . The Dow Jones has grown 11.49%; the S & P 500 has increased 7.65%; and NASDAC rose 11.85%.In Europe, Germany's DAX is up 19.17%; France's CAC 40 rose 3.14%; and England's FTSE 100 has grown by 3.95%. In Asia, Japan's NIKKEI is down -2.56%, while Hong Kong's Hang Seng Index is up a whopping +35.95% for the year.
During the summer months, many investors were a bit uneasy about the way the markets were moving. But the Canadian economy is in great shape. The U.S., Japanese and European markets are stagnant. Indications are that the two major places to have money invested in now are in Canada and China. Call me to discuss your options, please.
The five insurance must haves
Insurance is, and has always been, a tool to manage risk. If you cannot afford to "lose" something, it is best to insure it. The five types of insurance everyone should have are:
Life Insurance - The primary reason to have life insurance is to replace an income that will be lost on death and to meet the financial obligations that are left behind. No ones debts should last longer than they do and life insurance can be a very economical way to pay them off if you die too soon. Also, it is becoming more and more common for people to carry significant debt into their retirement.
If someone is relying on you for the financial support your income provides now, they will also need it when you die. While a single person may not need very much life insurance, perhaps enough to take care of their last expenses, many seniors are relying on their children for financial help.
Accident and sickness insurance - Your lifestyle is determined by your income. If you were hurt or became sick and couldn't work for an extended period of time, how would you be affected financially? Disability insurance can replace a portion of your income to help meet your daily needs.
A critical illness, like cancer, heart attack or stroke, can bring additional expenses that ypur disability insurance may not adequately cover. Critical illness insurance can pay a lump sum to help you through a medical crisis.
If an illness or cognitive impairment prevents you from looking after yourself, you may need long-term care at home or in a facility. Long term care insurance can help meet the cost of professional help. After all, would you want your kids to bathe you?
Health and dental insurance - Provincial health care insurance provides for our basic health care needs, but it does not cover such things as prescription drugs, ambulance services or dental care. Many employers provide group coverage for their employee's health care needs. Individual plans are also available and can help cover health care costs.
Automobile insurance - While this insurance is required in every province, some drivers don't have it and many may be underinsured. Some pay too much attention to the replacement cost of their vehicle and leave themselves exposed to a liability if they are at fault in a collision. Your vehicle is worth only so much, but a liability claim can run into the millions. If you run a stop sign while chatting on your cell phone and cause someone a serious brain injury, a judgment could be well in excess of your liability coverage. It costs relatively little to significantly increase your liability coverage limits.
Homeowner or renters insurance - We've all read the news stories about someone's house burning down and they didn't have insurance. If you rent, be aware that your landlord may have insured the building you live in, but you are responsible for your contents. These policies provide liability coverage as well in case someone gets hurt on your property and you get sued. If you can't afford to replace all of your belongings today or compensate someone for their injuries, you need insurance protection.
Want help measuring your insurance needs?
Hans Mathisen today at (306)242-7042.
Copyright © 2007 Life Letter. All rights reserved
Why should we insure our kids?
The purpose of any insurance is to offset possible future financial needs. We can learn from the following examples:
Tom and Sara had three children, two boys and a girl. One of their sons died at the age of five. Nobody wants to imagine a child dying, but unfortunately it sometimes happens. They had to borrow money to pay for the funeral and other last expenses that arose.
Grace and Kevin have two daughters. Their youngest developed juvenile onset diabetes when she was 11. Fast forward twelve years and she is about to get married. It is virtually impossible for her to get affordable life insurance today, yet she and her new husband have certain obligations they would like to cover, like a mortgage and car loans.
Ted and Lynda are excited about their son's upcoming trip to the Middle East , but they are also concerned. Their son has skydiving as a hobby and with an extended stay overseas, he is unable to get life insurance. He also runs the risk of contracting a serious illness in the areas he will be visiting.
Sam and Debbie have two young children. Their son was struck by cancer and needed extensive treatment. As Debbie earned the higher income, Sam stayed home to help their son battle his disease. They needed to pay a caregiver to look after their daughter while Sam took their son for treatments and doctors' appointments. This added further strain to their already fragile financial situation.
Life insurance can generally be purchased on a child's life anytime after 14 days of age. A permanent type policy usually has level premiums for the child's life and they may qualify for a non-smoker premium reduction at age 18. Some plans are designed so that premiums last only for a set number of years and coverage will remain in force for the child's life.
Additional benefits can be added to a child's life insurance policy. A guaranteed purchase rider allows the child to purchase additional insurance, regardless of their health, occupation or hobbies, at certain ages or on certain events, like marriage or birth of a child. A rider can be. added to cover the premiums if the owner of the policy becomes disabled or dies.
Some parents and grandparents use the build up of cash values in a permanent policy as a way to accumulate and transfer wealth to a child or grandchild. Current tax laws allow this on a tax preferred basis.
A critical illness insurance policy for a child can provide the funds needed to cover the additional costs that arise if a child gets sick.
For information purposes only. Not intended as a specific offering of insurance. See your advisor and policy illustration for complete details.
Want to know more about insuring a child?
Call Hans Mathisen today at (306)242-7042.
Copyright © 2007 Life Letter. All rights reserved
Mutual confidence is the power that binds together all harmonious human relationships.