Information Thieves - May/Jun 2000 Commentary

Affiliated with Sentinel Life & Sentinel Financial Management Corp.

May/June - 2000

Commentary - Hans H. Mathisen

The May issue of LIFE LETTER, Protect Yourself From Information Thieves, covers how you should protect yourself against people who may steal your confidential information. Please, don’t get caught! Be very careful about what you throw in the garbage.

Mortgage Life Insurance and the Banks — This issue of LIFE LETTER covers a topic few people are aware of . You pay more for your mortgage life insurance when you purchase the coverage from the lending institution than if you buy the same coverage on an individual basis. And, with the individual life insurance policy, you are in control. So, why would you want to get your life insurance from the bank?

THE STOCK MARKETS — As of June 1, 2000, the TSE 300 is the only major stock index that shows a positive return for the first five months of the year.

Over the past several years, I’ve repeatedly advised my clients to stay out of the Canadian equities market.

Did I give you the wrong advice? Should you have been invested in the Canadian market and not in world markets, as I have proposed?

I don’t think so. And here is why: The TSE 300 Index is made up of the stocks of the 300 largest Canadian corporations which are traded on the Toronto Stock Exchange. But the spectacular performance of the TSE 300 Index during the past year or so is mostly due to the success of only two companies: Nortel and BCE. As a matter of fact, Nortel, one company out of the 300, makes up 18% of the TSE 300 Index! Please read this again: 299 companies make up 82% of the TSE 300 Index and one company [Nortel] makes up 18% of the Index. Doesn't this appear to be a situation out of alignment?

So, my advise still is: Be careful about investing in the Canadian equities market. Instead, invest your money in the much broader based equities markets in the U.S., Europe and the Far East. Your risk is lower, and your potential for long term growth is better

HAPPY INVESTING!
Sincerely,
Hans Mathisen

LIFE LETTER
Protect Yourself From Information Thieves

Jill told Jack she noticed a young fellow going through their paper recycling bins. At first, she thought he was just looking for discarded adult magazines, but later realized he was rummaging through all containers.

These bins often contain old bank statements, cancelled cheques, private letters, miscellaneous papers, old documents, credit card statements and envelopes. And if its from a business or professional’s office, old client files or data. Of course magazines can be found there, too. There have been stories in the news about scavengers going through people’s discarded data looking specifically for these types of items. The information that can be gleaned from such material is valuable to information thieves and can he potentially damaging to you.

Bank Account Statements - With an old bank statement, a cancelled cheque and a little bit of today’s technology, anyone can easily print up cheques from your account on their computer and forge your signature. You can imagine the havoc this can wreak.

Credit Card Statements - Just how valuable is your credit card number to a thief? A couple was vacationing in Montreal last year when their credit card information got into the hands of an organized crime gang in Mexico. Overnight their card had been maxed out. How would you like your next vacation to start this way?

Envelopes And Magazines — Check your name and address on the magazines you subscribe to, or the notices you receive, and you will often find your account or membership number is part of it. With that number, anyone can gain access to your member or account information. And re-direct your mail. In some cases, this can be done on the Internet. If someone can re-direct your mail, would you wonder what else they might be able to do?

Office Waste - The information that can be found in discarded office material is very valuable. It can contain confidential information on your customers, correspondence from the companies you deal with, statements of account, customers’ account data, quotations, billing information, purchase orders, etc. Would you like a competitor to get his hands on any of this information? Or any unscrupulous person?

Jill and Jack decided to foil the information thieves by buying a personal paper shredder at an office supply store for less than $100. They now shred all papers containing names. Though the shredder’s output might be pieced back together by a determined thief, stirring it up should make this practically impossible.

To learn more about our rules of confidentiality and privacy of information, please call Hans Mathisen at 242-7042 or email hans@mathisen.ca.

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LIFE LETTER
Mortgage Life Insurance And The Banks

Dick is arranging a mortage and the banker asks if he’d like to include life insurance to pay it off if he dies. Sounds like a good idea, so he says, “Sure.” After filling out and signing a few more forms, he has it.

But what does he really have?

The bank sold him reducing term insurance with itself as the beneficiary. Bankers love it because you pay the premium and they collect the proceeds. It also helps to 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 to pay off the mortgage? If they decide to sell the house, isn’t it easier to sell with a mortgage? Another strategy many use is to invest the money, make mortgage payments with the income, and still have the cash after the mortgage is paid off.

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?

A 1992 British Columbia case illustrates this problem. A couple, with the same financial institution for over 15 years, had a five-year mortgage which they kept renewing. At each renewal they had to apply for new insurance. Prior to the third renewal the husband was diagnosed as having cancer. When he died, there was no insurance to pay off the mortgage.

The answer is to have a policy which belongs to you, not the bank, which is paid to your beneficiary, not the hank, and which doesn’t require proof of insurability every time you renew or change your mortgage.

The only benefit bankers insurance might have is if it were cheaper than owning your own policy. It isn’t, as one customer had to explain to his bank in answering its offer to insure his line of credit. “In your letter you stale that you have ‘negotiated a highly attractive l(fe insurance package’. You further state that ‘because this is group insurance prices are extremely attractive ‘ After looking at comparable rates per thousand for my age, I find that instead of paying $3.84 for one year, $5.52 for five years, and $7.80 thereafter, 1 can purchase term insurance with a large insurance company for $2.37, and that premium will remain constant for afull ten years. How can you say your rates are competitive let alone attractively priced? This is a distortion of the facts. Is this the kind of thing we have to look forward to if the banks are allowed into the insurance business?”

Want mortgage insurance that you control, not the bank? Call today:
Mathisen Financial, Inc. 242-7042 or email Hans at mathisen@home.com.

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