The following letter was recently sent to all my clients. The material is so important, however, that I have decided to share it with the public.
I hope you and your family have managed to stay safe during this difficult period. This pandemic has affected many people both financially and mentally. I recently became a grandfather for the first time, so for me, Covid has not been all bad. I am hoping you are able to find moments of joy as well.
Some of the changes I and the Insurance insurance industry are experiencing as a result of the pandemic (when people have been re-evaluating their coverage and considering their mortality) include;
1. Converting existing policies from Term to Permanent coverage (especially if ones health is suspect)
2. Purchases of new or additional protection due to the of fear of contracting Covid 19
3. Reducing coverage in order to make premiums more affordable (especially upon renewal or conversion to a permanent plan)
Over the years, I have learned that for most people, having a single policy is not the most efficient way of replacing ones income, covering their mortgage or providing for their spouse and dependents. As a rule, most peoples’ financial needs tend to go down over time, as their home gets paid off, their kids get through school and their registered and non-registered assets increase in value.
However, people that own property and businesses that want to pass an asset in its entirety to their heirs, typically have the opposite problem. These assets tend to rise substantially over time and an insurance policy may be the only way they can provide their heirs with the funds to pay the “capital gains tax” on their property or business, without them being forced to sell it.
Consider the reason you initially bought your policy. What has changes since then? Do you still require coverage and if so, should the benefit amount be higher or lower? Now that your assets are growing, will your goals be better served by taking a combination of Term and Permanent protection or by reducing or replacing your Term coverage with a smaller or larger Permanent policy? Could you benefit from a tax deferral on your investments that is available through a permanent insurance policy?
Another thing to ask yourself is…who do you know that has suffered from a heart attack, stroke or Cancer? Would having receiving the tax-free lump-sum proceeds of a Critical Illness policy have eased their worries, allowing them to focus on their recovery?
What about you (if you are under age 65), your children and grandchildren? Are you aware that once two members of a family have contracted the same Critical Illness, everyone else in the family could be excluded for coverage in the future? To me, anyone that has a family member with a covered conditions is the first person I would recommend getting a policy to.
What else to consider? If your personal situation has changed recently, you need advice on how to manage your retirement assets, are looking to lower your taxes, acquire tax preferential income or even a 8-20 year tax holiday on income from your mutual funds, or you want to re-evaluate your existing life and living benefit insurance, please contact me. This way, we can do a financial needs analysis to determine if your current plan is doing its job or needs to be adjusted.
Remember, people do not plan to fail, but they sometimes fail to plan. If you do not have a written financial plan, I urge you to get one as soon as possible, as it is the best way to determine if your retirement plan is on track or if it needs to be modified.