All posts by Financial Independence Hub

The 13 biggest Life Insurance mistakes: Experts’ perspectives

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By Lorne Marr, CFP

Special to the Financial Independence Hub

There are numerous life insurance mistakes Canadians are making, and who qualifies better to talk about these mistakes than life insurance experts? We asked numerous life insurance experts to weigh in on the top life insurance mistakes they have seen throughout their careers.

You can find a summary of their replies in the above chart, with more detailed explanations following in their segments (% shows how often a particular mistake has been mentioned).

The top three mistakes are:

1.) Putting off your life insurance purchase until it is too late, or not getting life insurance at all (especially in your younger years).

2.) Not doing a needs analysis and not understanding all possible risks resulting from being underinsured.

3.) Not leveraging the benefits of a permanent life insurance policy due to its higher cost, though there are numerous benefits to this product in the long run.

Tony Bosch, Development Hub Financial

Tony Bosch – Executive Vice President Broker Development Hub Financial

“Life insurance is a key component in most financial and estate plans”

Three key mistakes people make when purchasing life insurance:

  1. Not doing a needs analysis: The first step in any life insurance purchase should be to do a proper needs analysis. People often fail to look at the big picture when buying life insurance. The calculation of how much insurance you need should be more detailed than just having your mortgage paid off or replacing a certain multiple of your income. In determining your life insurance needs it is necessary to determine what amount is actually necessary to “allow your family to maintain their standard of living and pay off outstanding debt”under “less than ideal circumstances,” factoring in that the grieving process and the time to recover emotionally may take several months or even years. Life insurance should provide “financial confidence.” allowing a family time to adapt and adjust to life without a loved one.
  2. Product selection: Life insurance, unlike most forms of insurance, can come in a variety of payment options from low cost term insurance to permanent policies that can build substantial tax sheltered cash values and can help solve estate planning needs and/or serve as an alternative investment. The problem arises when the product selection overrides the need. Clients with a limited budget may be attracted by product features causing them to choose a permanent product with a lower face amount than is required. A family with three kids may like the idea of a shiny sports car but may need a mini van. It is critical to first define the amount of protection required and then choose the product or combination of products that meet this need within a given budget.
  3. Choosing a solution based on price and/or convenience rather than contract guarantees and flexibility: A simple example may be purchasing loan or mortgage insurance through a lending institution. Although this may seem like an easy and convenient solution, it may require additional underwriting at the time of claim, which could result in a claim being denied. A basic renewable and convertible term plan underwritten by an insurance company may take a little more time to set up, but in most instances provides a better and more flexible policy that can adapt to your changing needs.

Life insurance is a key component in most financial and estate plans. Working with an experienced and trusted independent advisor will help make sure you and your family get the life insurance you require with the flexibility to adjust to your changing needs.

Michael Liem, Canada Protection Plan

Michael Liem – Canada Protection Plan Regional Vice President

“Don’t put it off until it is too late.”
  1. Putting it off until it is too late: Even though Canada Protection Plan can help get life insurance for people with medical or lifestyle issues, I think it is always best to get insurance when you don’t need it and when you are healthy. It’s not how much you can afford, but rather how healthy you are that gets you the best insurance options.
  2. Not telling anyone about your life policy: People get a life insurance policy but when they pass away, some beneficiaries don’t even know about it. I always suggest that advisors should acquire contact information for the beneficiaries and where possible, introduce themselves because these beneficiaries will most likely be contacting the advisor to make a claim.
  3. Regularly reviewing a client’s policy: So many advisors provide the initial policy but never review them. People’s lives are constantly changing and they may need to adjust or add more coverage. If an advisor never contacts their client, then they should not be surprised when the client switches their business to another advisor.
Lawrence Geller, L.I. Geller Insurance Agencies

Lawrence Geller – President of L.I. Geller Insurance Agencies

 “Everyone has asked to either renew the existing policy or buy a new policy.”

Of the many people who have assured me over the years that they only needed life insurance for a maximum of 10 years, every one has asked to either renew the existing policy or buy a new policy to replace the one that was renewing. Even then, most have deluded themselves by thinking that they would not need the coverage when the term of the contract ended, and almost all have wanted coverage at the end of the term.

Not a single client who bought a guaranteed paid up whole life policy has ever told me that they made the wrong choice of coverage, although many have told me that they wished that they had purchased a larger amount of life insurance.

Daniel Audet – Vice President Assumption Life

Daniel Audet, Assumption Life

“Don’t gamble on being uninsured.”

The top life insurance mistake, from a consumer’s perspective, has to be the choice to gamble on being uninsured (or underinsured).

LIMRA reported a year ago in 2019 that 32 per cent of Canadian households do not have any life insurance coverage, while 56 per cent of Canadian households do not have any individual life coverage. Everyone would agree that there are more pleasant things to consider and address than the risk of dying prematurely, and that may be the reason why so many Canadians are shying away from a proper assessment. More likely, the observation comes from a knowledge gap of the risk and associated loss. Many Canadians would not necessarily consider themselves as gamblers, meanwhile the chosen approach of not buying insurance (or not buying enough) is very similar to that of a gambler’s behavior. The gambler “invests” a little wager with a small probability of a large payoff. In comparison the non-insured “saves” paying a small premium hoping he/she wouldn’t die with a significant financial burden. Both types of gamblers have small amounts involved when compared to what is at stake, and the odds of the event, while relatively small, can have a significant impact. They are just at both ends of the spectrum: the casino gambler hoping for the big win, and the life gambler neglecting to consider the major financial loss.

Turning a blind eye to the needs of paying final expenses, replacing income, paying off the mortgage, or paying the estate bills, and choosing not to be insured (or underinsured) is essentially just like gambling the financial state of the loved ones left behind. Several Canadians, when asked why they do not own life insurance, have stated they could not afford it (27 per cent) or that they had other financial priorities (25 per cent). Continue Reading…

Creating an environmentally safe Home

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By Sia Hasan

Special to the Financial Independence Hub

Your home is your castle, but it might also be a substantial contributor to environmental contamination. That certainly isn’t a very encouraging thought, but you can do something about it. These tips can help you create an eco-conscious home that is safe for your family and the environment.

Upgrade Your Appliances

The major appliances in most homes use a lot of energy, and older ones tend to be the least efficient. Upgrading to energy-efficient models can help the environment by reducing your dependence on electricity or fuel oils. The heating, air conditioning and water heater systems are prime targets for the biggest reduction in resource consumption. Look for new models that are ENERGY STAR certified for the highest level of efficiency. When visiting a water heater company, look into tankless heaters that supply a nearly endless amount of hot water on demand.

Invest in Smart Home Technology

Smart homes can also help you reduce utility consumption and your carbon footprint. Even if you have a programmable thermostat, consider adding a Wi-Fi-connected one to make adjustments while you are away from home. You will have a more comfortable and customizable experience that way. Smart refrigerators are not only very efficient, but some also let you see inside without opening the door. That means they can maintain a more even temperature, requiring less run time. They can also help you cut down on repeated trips to the store by allowing you to see inside while you are wandering the aisles of your local supermarket.

Switch Cleaning Products

How you clean your home affects the environment inside it as much as it does the planet. Most people wouldn’t knowingly expose themselves and their family to hazardous materials Yet, by choosing to use many common cleaning products, that is exactly what they do.

These chemicals can cause irritation if allowed to contact the skin and respiratory symptoms if inhaled. In addition, many make their way into groundwater where they can cause potential contamination. Luckily, it is an easy situation to remedy. Environmentally friendly and safe green cleaning products are readily available at most grocery and big box stores, so you can make the switch without having to go out of your way. They are just as effective and much safer to use.

Eliminate Food Waste

Nearly half of all food purchased in the U.S. becomes waste. That is both sad and completely avoidable. Embrace root to stem cooking techniques to consume more of the fruits and veggies you do buy. Scraps can be saved in the freezer and turned into delicious vegetable stock later on. Many fruits and veggies that are starting to show their age can also be made into baked goods like bread, cookies and cakes. For the carnivores out there, don’t toss those bones after a meal. Instead, turn them into a nutritious stock or bone broth.

Turn the food waste you do produce into compost — something useable and eco-friendly. Learning how to compost can be simple and fun for the whole family. Check with any HOA or other neighborhood associations to ensure you don’t run afoul of their policies regarding outdoor composting before you get started. Or, explore indoor composting option instead. Vermicomposting using a worm bin is often a favorite method for kids who will have a blast playing with the wriggly critters. Bokashi composting uses an inoculant to transform virtually any food scraps into compost in about a month.

The investment of time and resources you make in creating an environmentally friendly home will pay you back in improved health and well being. Use technology to your advantage with smart and energy-efficient appliances, minimize harmful chemicals and reduce food waste to get started.

Sia Hasan is a tech entrepreneur by day, and a freelance writer by night. Her passion lies in business technology, efficient and sleek programming, and customer relationship management. When she doesn’t have her nose pressed against her computer screen, you can find her spending time with the loves of her life, her two dogs, Pixel and Vector.

The most under-owned Asset Class

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Brazil, Russia, India, China and South Africa (BRICS) are just some of the 23 Emerging Markets most investors are underweight in

By John DeGoey, CFP, CIM

Special to the Financial Independence Hub

Pretty much every serious investor has a favourite investment thesis or theme that they employ.  Many of these are mainstream, which, by, definition, means that a number of people do something similar.  One such theme is to invest disproportionately in either dividend paying stocks or stocks that have a history of raising dividends.  Some people like to invest in the so-called FAANG stocks.  Some people like to speculate and call it ‘investing’ by putting large percentages of their assets into new ideas like cannabis stocks.  The point is that there are different strokes for different folks and that virtually everyone can justify their own peculiarities.  People seldom resist their own ideas.

I’m like most people.  For a generation now, I have been pounding my fist on the table about the need to address what I see as a chronic under-investment in emerging market equities.  To me, this asset class makes sense from virtually every meaningful perspective: historical risk, expected return, co-variance, current valuation, prognosis for growth… you name it.

In a world where overall GDP growth is anemic and not likely to improve materially in our lifetimes, emerging economies are the only ones where economic (specifically, GDP) growth remains strong.  These are rapidly industrializing countries which are mostly stable politically, young and full of ambitious strivers who want access to a more western way of life.  Many people are of the viewpoint that the key to a growing economy is a growing middle class. There are far more people entering middle class status in emerging economies than anywhere else. Continue Reading…

8 experts on the first step in Retirement Planning

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There are many articles about retirement planning written by qualified financial planners and advisors.

But what about the first step in retirement planning? Where should you even begin? And, what do people like you (small business owners, business professionals) have to say in addition to the advice from a financial planner?

We asked hundreds of people the same question: What is the first step in retirement planning? Here are some of the best tips and answers we received to the question.

Create a Retirement Budget

Retirement planning is about determining how much you need to live the life you want. A smart first step in retirement planning is creating a retirement budget. You’ll need to identify the amount of money you’ll have coming in during retirement, how much it will cost to enjoy the retirement you have in mind and the amount of debt you have. The last thing you want is a financial surprise in retirement, and creating a retirement budget is one healthy step to putting a solid plan in place. — Carey Wilbur, Charter Capital

Determine Retirement Age

In order to set yourself up for success, you should start planning for retirement early. By extending your runway, you can start saving money early and investing that money in areas that will make retirement even more comfortable for you. The best place to start is by determining what age you want to retire and how much money you will need each year to maintain your retirement. — Blake Murphey, American Pipeline Solutions

Get Curious

Reading The Richest Man In Babylon at 19 years old inspired me to start thinking about money. Next came books like Think and Grow Rich by Napoleon Hill, I Will Teach You To Be Rich by Ramit Sethi, The Millionaire Next Door, and many more. I think the first step in retirement planning is getting genuinely curious about the topic. Many people will labor over compound interest calculators and investment decisions, but if you can find something that ignites your interest, doing the hard stuff like saving and sacrificing becomes a little easier. — Brett Farmiloe, Markitors

Figure out where you are now

When planning for retirement, figure out where you are now, or your starting point. Far too many people focus solely on the endpoint (their retirement number) without fully examining where they are today. Imagine you’re taking a road trip and want to get to Kansas. How you get there depends a lot on where you’re starting. If you’re starting in New York, the route will be a lot different than if you’re starting in Montana. The same is true with finance. Overspending, not contributing enough to retirement, contributing to the wrong accounts, or paying too much in fees will add unnecessary headwinds to your trip. As uncomfortable as it may be, you need to examine your financial situation with cold objectivity. — James Pollard, The Advisor Coach LLC

Create Five-year Goals

The first step in planning for retirement is determining where you want to be financially once you hit your retirement age. Continue Reading…

First-time Homeowner? Follow these 3 tips for a smooth financial transition

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By Gary Bordeaux

Special to the Financial Independence Hub

Becoming a homeowner is an exciting, pivotal and sometimes overwhelming time in a person’s life. A home is likely the largest investment you’ll ever make, so it’s important to go into it with a clear head and a solid (yet still flexible) plan. Even though everyone’s experience will be different, there are still some things that remain similar for everyone adjusting to life as a homeowner. If you’re embarking on this journey and could use some direction, keep reading. Here are three tips to keep in mind that will ensure this transitional time is the best it can be.

1.) Make essential upgrades that will improve functionality and save money

When you purchase a home, you’re also purchasing any essential items that might come with it, such as appliances, water heaters or even a home security system. Since all of these are major parts of a home, pay attention to their condition regardless of what the inspection report says.

It’s not uncommon for new homeowners to have to spend money right off the bat on either repairing or replacing these types of items. This adds up, so pay attention to where (and how) you’re spending your money. So, while it might be tempting to go on shopping sprees for new furniture and home decor, try to wait it out until you have a grasp of how everything is working. There’s not much worse than being short on funds when you need them most!

For instance, maybe your new home came with an older water heater that doesn’t heat efficiently. Maybe it’s too small to meet your needs, or maybe it just doesn’t work consistently. A simple call to a firm like this water heater company in Thousand Oaks can determine the best course of action to take to ensure your hot water situation improves quickly. A more efficient water heater also means more money saved, so you can go ahead and buy that new piece of art for your new mantel.

2.) Prioritize Convenience

When you purchase a home, you might have certain things in mind that you’d like to do, such as installing new flooring or painting throughout. Both can be costly and time consuming, and both have one thing in common. They’re much easier to do when your new home is empty, before you’re actually living in it. This is a situation where it’s important to prioritize what will make your life easier, especially when the projects are inevitable. As you’ll quickly figure out, you will have plenty of decisions to make along the way and some will carry more weight than others.

3.) Get a Home Maintenance Plan together (and stick to it)

As a new homeowner, you will quickly realize how there is always something that needs to be done. If you don’t set up some sort of schedule or guide to manage to-dos, your new adventure can quickly become a huge source of stress. Since nobody needs that, make sure you don’t skip this part. Breaking it down seasonally is a great place to start, also including recurring tasks such as cleaning and landscaping. Continue Reading…