Recently, I have been receiving a lot of questions on the price of personal insurance products that people have purchased. These are great questions, because it gives us the opportunity to revisit why the product was purchased?
WHY AND WHAT?
Why did you buy the product and What is the product suppose to do for you? Some of the reasons people purchase insurance:
- Life Insurance – is used to help pay for most people’s largest asset, their mortgage;
- Your income – I don’t think people give this one enough credit. Put together a quick spreadsheet of expenses within your home. Then take away your income and see where you could cut back and what is available to you from the government, EI, savings, or other sources. Most people will drain all their savings within 6 months;
- Shareholder/Partnership Insurance – until a business partner is gone and you have now become the partner with the spouse of the deceased partner, and/or their new spouse, will you totally understand how important this insurance is;
- Critical Illness Insurance – seems to be one that quite a few people have purchased and are happy to keep. Cancer is the one that most people think of when they think of illness, and it is the one that is paid out the most. This is a great policy to have in your portfolio. However, if you are employed it should come after you have covered your income by purchasing disability insurance.
IS CHEAPER BETTER?
When a Broker comes knocking on your door and says they have a product that is cheaper, please be aware. If you are older now then when you initially purchased the insurance product, start asking questions. Insurance does not get cheaper as we age.
I have been asked to review a few of these contracts lately, especially with disability insurance. When it comes time to claim and you don’t receive the money because of :
- the limitation or exclusions within the contract;
- it has a 2 year Own Occupation definition, then Any Occupation to which the insurance company deems suitable after the two years;
- The premiums aren’t guaranteed;
- etc
The extra $10/month you saved by reducing your benefit will not have been worth it.
PROS & CONS
If the broker will not do up a spreadsheet reviewing both products definitions in detail, be very concerned.
Please contact me with any questions regarding these contracts prior to purchasing them. I will complete a spreadsheet of pros and cons and at least you can make an informed decision.
Is Price or Quality of the Product Important? Ask someone who just received a cheque from the insurance company, Quality at that time always wins.
If you are looking for a Broker who understands the product that they sold, contact Glendinning Insurance Services at 250-764-0142.
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