Insuring Your Debts - January/February Newsletter

Retirement Planning
for the
Canadian Investor

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Affiliated with Sentinel Life & Sentinel Financial Management Corp.

March/April 2002

Commentary - Hans H. Mathisen

Who Do You know? - asks LIFE LETTER for March, 2002. Most of us know someone who has been diagnosed with a Critical Illness such as cancer, heart attack, stroke, kidney disease. The list goes on and on.

Thanks to medical science, an increasing number of those who have contracted a Critical Illness survive. But, while modern medicine often saves the patient's life, the illness causes a huge financial drain on family resources

What can YOU do to protect yourself and your family? Please read this information, and then call me. I'll be pleased to answer all your questions.

Insuring Your Debts - LIFE LETTER for April brings up this topic again. No financial advisor in his or her right mind will recommend that debts not be insured. And financial advisors will also point out that life and disability insurance taken out with the party you buy a car or other 'major item from, including farm equipment, as well as "getting Mortgage Insurance from the mortgage company", is a very expensive way of insuring your debts. Why pay 60% more for inferior coverage? When you give me a call, I'll help you calculate how much you can save.

THE STOCK MARKETS - The markets haven't performed the way we wanted for the first quarter of 2002. As a long-term investor, it's important to follow the basics of investing in these volatile markets. And the rules are:
1) Stay fully invested; 2) Be diversified; and, 3) Don't panic because the markets will reach new heights in the not too distant future.

The legendary investor, Mr. Warren Buffett, was asked when is the best time to invest. "Right now", was Mr. Buffett's response. As the major financial markets appear to be on the way up, you may want to consider the Investment Mix I have used, personally, since January 1, 2002 for new money you have to invest: 20% Canadian Equity; 20% European Equity; 20% U.S. Equity; 20% Global Health Care, and 20 % International Fixed Income. Please give me a call if you need a second opinion on investing.

HAPPY INVESTING!
Sincerely,
Hans Mathisen

LIFE LETTER

Who Do You Know?
Gary received an e-mail from a long-time friend. It was not good news. He had just been diagnosed with cancer of the adrenal gland and spots had been found on his liver. Surgery was to be performed within days of this terrible discovery. This news came just days after Gary learned that his aunt has colon cancer.

Fortunately, Gary's friend and his aunt survived their surgery. Time will tell how long they will survive their illnesses. Medical science will allow them to return to work relatively soon after surgery, likely before either would be able to qualify for long-term disability benefits. Each event has obviously disrupted their lives and will probably have a negative financial impact on them. Gary was relieved that he had taken action to protect himself from the financial turmoil such a critical illness can cause.

What Gary did a few months before was purchase a Critical Illness Insurance Policy. Critical Illness Insurance was originally developed in South Africa by Dr. Marius Barnard, brother to heart transplant pioneer Dr. Christiaan Barnard. He noticed that patients were surviving their operations and needed help living. Critical Illness Insurance helps people get on with their lives by giving them the financial resources to maintain the lifestyle and independence they had before they got sick.

If you contract one of the diseases or injuries specified in a Critical Illness Insurance policy, you receive a tax-free lump sum between $25,000 and $2,000,000. The exact amount will depend on the policy and the insurer. Critical Illness Insurance pays a benefit even if you are still able to work and can cover up to eighteen or more illnesses or injuries, including cancer, heart attack, stroke and coronary bypass surgery.

There are no restrictions placed on the use of an insurance payout. it's up to you - pay medical expenses not covered by insurance or provincial health plans; pay-off a mortgage or other debts; seek medical treatment in another country; take a vacation or time off from work; offset lost income because of a reduced workload; fulfill dreams and wishes; modify your home or vehicle if necessary; maintain your independence.

People are living longer, often with a life-altering illness. Modern medicine can save the patient but often causes a huge financial drain on family resources. Canada Mortgage and Housing Corporation (CMHC) reports that only 3% of home foreclosures are due to death, but some 46% are due to serious illness. In 1999, Canadians withdrew over 186 million fully taxable dollars from their RRSPs because of major illnesses.

Who do you know who has survived a heart attack, cancer, stroke or other serious illness? Would $25,000, $50,000, $100,000 or more have made a difference in their lives? Could it make a difference to you and your family if you are struck by a critical illness? After all, shouldn't recovery be the first priority? .

Want to know more about the benefits of critical illness insurance?
Call Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca

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LIFE LETTER

Insuring Your Debts
Albert was about to sign the papers on his new vehicle. The dealer asked, "How about life and disability insurance to cover your payments? We can just add it to your loan."

The cost? $2,124 added to his $20,000 loan ($859 for the life insurance and $1,265 for the accident and sickness insurance), which, he was told, would make his monthly payments if Albert died or couldn't work during the loan repayment period. There would not be a refund if he pays the loan off early. He asked for a copy of the coverage wording and told the salesman they'd finish the paperwork the next day.

Because of finance charges, Albert figured his cost would actually be over $2,600 during the five years he will be paying for this new vehicle. Only the amount left owing on the loan would be paid if he died.

If he becomes disabled and qualifies for disability benefits, they would only make his $400 monthly payments for the balance of the loan period or until he goes back to work, whichever comes first. The insurance definitions said he's disabled only if he is unable to work at any job "for which [he] is qualified by education, training or experience." Albert realized this means that even if he could pump gas, for which he "qualified" as a teenager, or if he is only partially disabled, his disability claim could be denied.

Albert called his insurance and financial advisor for more information. He found out that, as a 30-year old non-smoker, he could get $100,000 of ten-year renewable and convertible term life insurance for about $95 per year. Plus, he can get $450 per month of disability insurance with a full five-year benefit period for just $196 per year. Unlike the dealership group insurance, this personal coverage does not diminish over time.

The personal disability plan pays a benefit if he can't work at his own job, not just any job, even if he is only partially disabled. His personal life insurance can be renewed without new medical evidence. This is important because it is not the last vehicle he'll ever buy and finance. He'll be older when he gets his next one and may not qualify for the dealer's coverage then because his health might change.

If he took the car dealer 's insurance, he'd pay 60% more for inferior coverage. It made a lot of sense to Albert to have coverage that is far more economical, has better definitions regarding disability, does not reduce, is completely portable and renewable, and benefits him and his family instead of just the finance company.

He likes the idea of covering his other debts the same way and believes that they shouldn't last longer than he does. When he met with the car salesman the next day, he just took the vehicle. As he wouldn't go to his insurance agent for an oil change, he won't be going to a car salesman for insurance.

Want your debts paid off when you die or become disabled? Call today:
Mathisen Financial, Inc. (306)242-7042 or email Hans at hans@mathisen.ca.

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Critical Illness Recovery Plan
INDIVIDUAL LIFESTYLE PROTECTION

This article is from a brochure distributed by Unum Life Insurance Company of America.

The Critical Illness Recovery Plan is designed to cover the additional expenses you may be faced with should you suffer a severe injury, or catastrophic illness, such as cancer, heart attack or stroke. This plan is also a perfect complement to any income protection coverage, which is designed to provide protection for your every day living expenses. It provides a lump sum benefit to give you the independence to make meaningful decisions about your physical and financial recovery and protect your standard of living. You may use the payment in any manner you choose, such as:

Out of country or non-government covered treatments
Specialized medical treatment, private nursing or child care
Alter your home or automobile to accommodate your special needs
Payments for your mortgage, business loans or other debts

WHO SHOULD PURCHASE THIS TYPE OF COVERAGE?

Policyholders of income protection policies, and their families
Those who are unable to qualify for income protection coverage, such as:

-Non working spouses
-Individuals who are unable to qualify for income protection coverage on the basis of their income or type of employment
-Individuals with certain non-criti-cal illness related medical histories that prevent them from obtaining income protection coverage
-Employees covered by group or association disability plans and their families

AVAILABILITY

Ages 18-65 (some plan designs are only available up to age 60)
Lump sum benefit from $10,000 to $1,000,000

POLICY DESIGN

We offer a variety of policy designs, ranging from long term protection of a Term 100 policy to the low cost alternative of a Term 10 policy design.

Coverage period choice of:
-To age 65, 75, or 100
-Term 10, convertible to age 65 and renewable to age 75
Return of Premium less any benefits paid, if you die from any cause

LIFESTYLE PROTECTION

Pays a lump sum benefit, even if you recover fully or do not suffer a loss of income or reduced ability to work, in the event you meet the policy definition of any of the following insured critical illnesses:

Alzheimer's Disease
Blindness
Cancer
Coma
Coronary Artery Bypass Surgery
Deafness
Heart Attack
Kidney Failure
Loss of Speech
Major Organ Transplant
Motor Neuron Disease
Multiple Sclerosis
Occupational HIV Infection
Paralysis or Loss of Limbs
Parkinson's Disease
Severe Burns
Stroke

EXCLUSIONS

Certain conditions, such as attempted suicide, commission or attempted commission of a criminal offense, drug abuse, act or accident of war, and driving when blood alcohol levels are high are excluded from coverage. We will not pay benefits for a 'Diagnosis of Cancer' and the policy will terminate, if any sign or symptom of cancer first manifests or where medical investigation was initiated, within 90 days following the issue or reinstatement of your policy.

FLEXIBLE OPTIONS

Return of Premium on Expiry Rider - Whether you claim or not, your Critical Illness Recovery Plan will pay you. If you do not receive a critical illness benefit or a benefit under any rider during the life of your policy, you will receive a refund of all premiums paid at the end of your coverage period.
Functional Independence Rider - If you suffer a severe disability or a catastrophic illness (not covered under the listed critical illnesses) affecting your personal independence, you may receive a monthly benefit to aid in the expense of receiving assistance.
Scheduled Increase Benefit Rider - Get pre-approved for a higher critical illness benefit today, but start out your policy at a lower premium, and a lower benefit amount. Every two years, your coverage and premiums will automatically increase according to a set schedule.
Waiver of Premium Rider - We will waive your premiums if you are disabled for 90 consecutive days. We will also refund any premiums paid during those first 90 days.

VALUE

Your choice to utilize your critical illness benefit in any manner you find suitable
Your premiums are refundable under certain conditions
Choice of various flexible options to customize the policy design
One underwriting process if you apply for both a Critical Illness Recovery Plan and one of Unum's individual disability income protection policies
Premiums can be controlled by choosing the policy design and the benefit amount that suits your budget
Your choice to access diagnostic and treatment insight on your case from the world's top medical experts. Even if you do not file a claim, you can use this consultation service to optimize your choices when faced with a complex medical problem (this service is offered through Health Resources and Technology, Inc. (HRT})

THERE ARE LIMITATIONS AND EXCLUSIONS TO THIS POLICY. PLEASE REFER TO THE POLICY FOR THE COMPLETE LIST OF EXCLUSIONS AND FOR DEFINITIONS OF THE INSURED CRITICAL ILLNESSES.

This article is from a brochure distributed by Unum Life Insurance Company of America.

"Unum is a world leader in protecting the rewards of work through insurance products and services created for individual customers and employees in the workplace. Our integrated income protection, critical illness insurance, and special risk product choices Ore designed to work together to help protect our customers' paycheques, assets, lifestyles and independence."

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Mutual confidence is the power that binds together all harmonious human relationships.

Mathisen Financial, Inc.
335 Redberry Road
Saskatoon, Saskatchewan S7K 4W5
Bus. (306) 242-7042 Fax. (306) 242-4314
Email: hans@mathisen.ca