Retirement Planning
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March/April 2003
Commentary - Hans H. Mathisen
How Should I Life Insure My Mortgage?- LIFE LETTER for March, 2003, makes the choice very simple: If you want to have control of your own affairs, buy mortgage insurance that you control. And the individual mortgage insurance policy that you control even costs less than the bank's alternative. Call me to find out how I can help you be in charge of your affairs. And you will even save money and get guarantees when you have control..
It Won't Happen To Me - Well, it happened to my wife. So we have first-hand experience. It has happened to a few of my clients. All are alive and a lump sum payment was received by the person insured. LIFE LETTER for April, 2003 tells the story of Ross and Janis, and how a Critical Illness is a life disrupter for both the patient and the family. It's been said that "money isn't everything", but some of us have experienced what a critical illness can do to a family's finances. Suddenly, money - or rather - the lack of it - becomes everything.
I keep reminding you about the importance
of Critical Illness Insurance. Some of the plans available offer us
a win-win scenario: If you are subjected to any one of the 20 plus Critical
Illnesses covered by the policy, a lump sum payment is made to you with
no strings as to how you spend the money. OR, if you attain the age
of 65, 75, or 100 (your choice) without getting any of the 20 plus conditions
covered by your policy, every premium dollar you have paid will be returned
to you. This, in my view, is truly a win-win situation. Please give
me a call because It May Just Happen to YOU! Please read
this information from Empire Financial Group on Critical
Illness Insurance, or call me for more information
THE STOCK MARKETS - For the first three months of 2003, the major stock indexes are down marginally. The Dow Jones and the S&P 500 are down by less than 1, while the Nasdaq and the TSX Composite indexes have fallen about 3 so far this year. The major indexes in Europe and Asia have shrunk from a low of -3.2% (London) to -8.25% (Frankfurt). And crude oil is now prized well below $30.00 per barrel. Maybe a sign that the war in Iraq is finishing?
As the war in Iraq is nearing an end,
most analysts are anticipating the beginning of a bull market. This
is a good time to invest. I invite your call if you need an opinion
about where to invest.
HAPPY INVESTING!
Sincerely,
Hans Mathisen
How Should I Life Insure My Mortgage?
Don and Ronda are arranging a mortgage and the banker asks if they'd like to include life insurance to pay it off on death. Sounds like a good idea, so they decide to take it. After filling out and signing a few more forms, they have it.
But what do Don and Ronda really have?
They were sold group creditor reducing term insurance, with the hank as the beneficiary. Bankers love it because you pay the premium and they collect the insurance money. It can also help lock you in as their customer. The only advantage to your family is it pays off the mortgage if you die.
Is that really an advantage? Or would your family be better off if they collected the insurance, and then decided whether or not to pay off the mortgage? If they decide to sell the house, isn't it easier to sell with a mortgage already on it?
What happens if you increase your present mortgage, or sell your present home to buy another with a higher mortgage? Or decide to switch banks? You need new insurance. But what if you can't get it? Whenever there is a change to your mortgage, you may have to re-qualify for bank mortgage insurance.
Most banks offer the same premium rates for both smokers and non-smokers. Even though most people don't smoke, they still get to subsidize the insurance premiums for those that do.
The answer is to have a personal policy that is controlled by them rather than the bank. Benefits are paid to a beneficiary rather than the bank. And Don and Ronda only have to qualify for the insurance once, not every time they change their mortgage, switch banks or move to a new home.
A personal policy can be set up with a level death benefit instead of one that decreases. Let's say Don and Ronda start off with a $200,000 mortgage. A number of years later, they only owe $100,000 and one of them dies. The personal policy will pay out the full $200,000 to the survivor. After tlie mortgage is paid off, there's still $100,000 left to pay off other debts or to provide extra income.
The survivor may decide to not pay off the mortgage at all, but invest the life insurance proceeds instead and use the income to keep making the payments. Once the mortgage is paid off, the income continues and the house will be debt-free.
For about the same premium they would pay at the bank, Don and Ronda can each be insured for the full amount, or more, of the mortgage. That means that if one dies, the survivor will still have their coverage. They can decide at that time if they want to continue their protection. At the bank, they have no choice. The bank insurance only pays one benefit and the survivor cannot continue any coverage.
They can change homes, banks, or perhaps
buy a cottage. With their personal policy already in place, they won't
have to worry about qualifying for new coverage, likely at higher rates
because of age.
Want Mortgage Life Insurance You Control? Call today!
Call Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca
Copyright © 2003 Bowen Financial Inc. All rights reserved
It Won't Happen To Me! Yeah, Right.
Ross and Janis lived a typical Canadian life. They
were married, had two children, Melissa and Kyle, and both worked outside
the home.
An avid golfer, Ross also went on fishing trips with
friends and helped coach his son's hockey team. Janis played the piano,
enjoyed bike rides with her friends, and was treasurer for her daughter's
soccer team. They played in a mixed curling league.
Besides soccer, Melissa was active in gymnastics and
volleyball, and went out with friends to movies on weekends. In addition
to hockey, Kyle, played baseball, snowboarded, and often had friends
over to play rented video games.
Suddenly, their world came crashing down. Ross was
diagnosed with prostate cancer. He needed full time care after it spread
to his bones and became incurable several months later. Janis had no
choice but to quit her job and care for Ross. She had tried to work
part-time, but had trouble concentrating and kept making mistakes.
When he was healthy, Ross earned over $50,000 per year.
He did not have disability insurance of any kind. Ross and Janis had
to support the entire family on less than $1,000 per month of disability
benefit from the Canada Pension Plan. Even if Ross had a disability
plan, it would only replace a fraction of his income and could not replace
any of Janis' salary.
Adjustments had to be made. They had to give up hockey,
gymnastics, movies, video games, all their extra-curricular activities.
They had to take out a loan against Ross' life insurance policy. This,
of course, reduced the total amount paid on Ross' death.
There is a better way to deal with the financial turmoil
that arises when someone suffers a serious illness like cancer, heart
attack or stroke. It's called Critical Illness Insurance. It 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 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 twenty or more illnesses or injuries.
There are no restrictions placed on the use of an insurance
payout. It's entirely 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; replace lost income; fulfill dreams and wishes; modify your
home or vehicle if necessary; maintain your independence.
A critical illness is certainly a life disrupter -
for both the patient and the family. At a time like this, money should
be the least of your worries. Critical Illness Insurance can give you
the financial freedom to focus on what's really important.
Want to protect your family's lifestyle in case of Critical Illness?
Call
Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca
Copyright © 2003 Bowen Financial Inc. All rights reserved
Vital Link - Critical Illness Insurance
The following is from a pamphlet provided by Empire Financial Group on Empire's Vital Link Critical Illness Insurances.
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Protect Your At a time when you should be focused on recovering, you shouldn't have to worry about:
You may have disability insurance, but it probably won't replace all of your lost income. And, most provincial or personal medical insurance may not cover some costs that could drain your life savings, your RRSPs, and your retirement savings. Empire's VITAL LINK can help you recover financially while you're recovering physically. For pennies a day, it may become your most valuable financial asset. A valuable financial asset VITAL LINK offers financial protection for a wide range of critical illnesses and life-altering conditions. Normally, 30 days after you're diagnosed with a covered illness or condition, you become eligible for the tax-free lump sum payment of your VITAL LINK policy.' |
Vital Link offers
VITAL LINK offers
Costs to consider
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Protect your financial independence
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Use your VITAL LINK tax-free lump sum payment for medical costs, additional income, home modifications-whatever you need.
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Your VITAL LINK payment can help protect your RRSP and retirement savings by easing the financial strain of living with a critical illness.
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Pay for specialized treatments and travel expenses for medical services not available in Canada, or not covered by health insurance.
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Use your tax-free lump sum proceeds for training and financing a new career or profession.
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Business owners can help ensure the continuation of their business by using the
VITAL LINK tax-free lump sum payment to replace a key person, or fund a buy-sell agreement if a partner is unable to work because of a critical illness.
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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