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|Posted on January 27, 2015 at 7:07 PM||comments (3)|
I've been asked by another Dad I met my thoughts on insuring your children. He mentioned his advisor told him not to do so as they earned no income. True, but is that all the reason there is.
I shared my view that if you could, then you should and the reasons why I thought so which I will share a little later.
I've heard the argument from a family member that it is just wrong to "profit" from your child's death. I had an issue with child insurance being viewed that way and shared my thoughts. Here are several of the reasons I gave.
1. Most families would not only suffer a devastating emotional setback, but they could be financially challenged as well if they had to come up with funeral expenses. Though the cost may not be backbreaking, there is an impact. The additional impact is this......Could you see yourself going back to work immediately if you lost a child? What if you didn't want to but your situation did not allow an option? If your process is to keep busy, then this may be a better scenario for you but most of us would not want to. What if one spouse does and the other doesn't? What if neither can bear the thought of doing so right away? Does our situation allow that? What about the other siblings (if any)? Should they be back in school immediately? Would you want that? Would they want that? Is there specialized counselling you would like to access? Is there a special place the family may want to go or go back to together? Your options may be severely limited if no coverage is in place.
2. Insure them before health issues and habits become a factor. Could they develop health issues as they grow? There are exceptions where some children are born with or develop health issues earlier in life. These situations would be more challenging but the vast majority would have a relatively easier time getting coverage. As they become teenagers and into their early adult lives, could they pick up habits and try things that may make insurance more difficult and costly to get? Think of yourself and others you know for that age group. Have you gone to a gathering and tried something new? Did you or anyone you know do anything "crazy" as your younger selves? Some of these "fun" activities may make insurance more costly or impossible when desired later on in life.
3. You are giving them a gift for life. This may impact them, their future spouses, children and possibly grandchildren. We hope they live a good, long life and this may be the case. What if through health, habits or employment type they can't be covered when they have children? You could impact your next several generations in a positive way. How? Depending on the type of insurance and level; this could be a substantial investment for your children. Some Grandparents have funds for their grandkids and a permanent policy is sometimes a great place to build wealth and an awesome legacy gift. They don't always want to hand over cash but a policy not only protects them, it gives them a place to build their net worth while they're still children.
4. The cost for insurance for your children will never be more affordable. As we get older, insurance costs more. There are some plans that have an option to pay earlier. You could be done paying in 20 yrs for something that could continually grow and potentially be around for another 60 to 80 years accumulating.
5. Access to cash. Down the road, is it possible they may need some additional cash for education, a home purchase, starting a business? Depending on cash value and type of policy, they could have access to cash for a variety of needs. What if they have a business but access to credit is tight? They may be able to access some cash for additional business use with worrying about debt ratios and credit. There are a variety of possibilities.
These are a few of the reasons why I think insuring your child (if possible) is generally a good move if your situation allows. I hope you notice that only 1 of the 5 points involves a child dying early.
For further discussion, please contact us at [email protected] or 587-390-7359. We look forward to helping you protect your family and building a lasting legacy.
|Posted on November 22, 2013 at 10:31 AM||comments (7)|
CRITICAL ILLNESS--THE RRSP PROTECTOR
I have been very vocal of late on Critical Illness Insurance. The statistics are staggering. It is said that 1 in 3 Canadians will suffer a critical illness in their lifetime. Look at the people in your home or place of work. Which one of you out of every 3 persons could it happen to?
It doesn't just affect the life of the person who's ill; it affects their loved ones as well. I've heard a lot of folks say "Well i have benefits at work so i'm ok." Let's examine that. If you have specific critical Illness Insurance then good. It provides a lump sum if the severity of your illness meets the definitions. If you do have disability coverage at work then that helps as well. Not everyone does, but it is very helpful should such a situation arise. My question is.....Could your family survive on 75%-80% of your takehome pay (not counting bonuses)? If so, then consider yourself one of the more fortunate ones. For most folks, that drop in income would cause a huge crunch and additional worry.
If you have been diagnosed with a critical illness....life threatening cancer, heart attack, stroke etc....is it possible that worrying about finances may not help you in your fight to get well? Working with the 75%-80% of takehome may be possible if nothing else changes. If you are hospitalized, do you know what it costs for parking to have your family visit you regularly. Would they perhaps spend more on food since they may be home less to prepare meals? Would they just pickup or order more food in that instance? Could you need special food that perhaps costs more than what you would normally purchase for your family? Could you need medications and treatments not covered by your benefits? Where will the additional funds come from?
Generally, the savings account goes first (for those who have funds available). Then it's the TFSA's, the Line of Credit, then the credit cards and last but not least the RRSP. Would making these withdrawals add stress to the sick person and the family? How much further could that set your retirement back? You would probably put retirement on the back burner while you fight for your life. I need to survive first. I'll worry about retirement later. I submit it would add great stress to have to go through all that.
What if you could have access to $25000, $50000, $500000? Would that keep your RRSP's in place and avoid the huge taxation of an early withdrawal? Would it minimize or eliminate the need to rack up debt on your Lines of Credits and credit cards? Compare the costs of a premium against a taxable withdrawal or huge interest debt.
It would be nice to have your credit card and Line of Credit companies call you up and say....Dear valued customer, we understand you have a critical illness so you can have this money interest free. You don't even have to make payments until you recover since we know you'll be taking home less than normal. I haven't heard of that happening yet. Would Canada Revenue Agency say that since you're sick, we won't charge you the withdrawal penalties for cashing in your RRSP's....10% for up to $4999, 20% for $5000-$14999 and 30% for $15000 plus. We won't add all that money you take out to your income for the year and tax you on the overall amount. I haven't heard of that either.
If your spouse needs to take extra time off work to help out with taking you to appointmens or taking care of the added load of household and family duties, will their benefit plan cover them (if they have one)? It may not since they aren't the sick party. They may have to work less and bring in even less income as well. What does all that do for a family's stress level?
Critical Illness insurance will not prevent any of the illnesses. It gives you and your family options to deal with your situation and allows you to focus on getting better as opposed to worrying about finances while trying to get better. What if the treatment you need is in another country and not covered by your plan? What would you do to try and save your life? What would you cash in or sell if you didn't have these funds available?
What if you won't recover? It is an unfortunate reality. Could these funds give you the opportunity for a spouse to take time off to spend with you......take that trip that you've always wanted, cross a few things off your bucket list?
OPTIONS---That is what Critical Illness Insurance gives a family. It allows for the bills to be taken care of so that you and your family can focus on recovery. I believe the absence or minimizing of stress would be better for any recovery attempts. Please contact us for further discussion. Let us protect you and your family.
Glenval Griffiths, CHS
Griffiths Insurance and Financial Services
|Posted on September 24, 2013 at 4:03 PM||comments (30)|
In my time serving the insurance industry, i've heard a variety of reasons why folks don't purchase insurance or enough of it.
First, let me say that i believe in the products, which is why I purchase such products for myself and my family.
I've heard several over the years and my favourite is "I don't believe in life insurance". I submit that I have not heard of beneficiaries refusing to collect the proceeds to support that claim. There should be more insurance benefits refused if the statement matches the reality. It is not that folks don't believe in insurance and what it does; it is that they may not see the importance at the time of disucssion.
Let's be clear....next to noone likes paying for insurance, but we like what it does for us when needed.
What will happen to my family financially if i'm unable to provide as a result of death, critical illness or disability?
Will we be able to pay the rent or mortgage?
Will we be able to afford the vehicle payments?
Will the kids be able to continue in thier activities?
Will my spouse be able to take time off to adjust and care for the children?
Will we need additional childcare?
Can they stay in the same home and attend the same schools without my income?
Will additional employment be needed for the family to survive financially?
If so, who will take care of the children and how will they manage?
These are some of the questions we need to ask ourselves. Do we have the answers or do they bring up more questions?
Also, if the proper coverage seems too costly, remember that some is better than none.
Please review your situation. My team and I are available to help and look forward to working with you.