Life is not always fair

Life is not always fair

Over the years that I was in business, my clients were always optimistic about their futures and rightly so.  Living in small town Canada having good incomes, excellent housing, fantastic food, access to good health care and tremendous family and social support, there is much to look forward to.  Despite the doom and gloom that our mainstream media continually paint, the opportunities for success in life are mostly equal for anyone who wants to reach out for the brass ring.

One thing that we all must be mindful of is death.  My financial planning business had at its core, a conversation about the importance of having an up-to-date last will and testament.  We also reviewed our clients Life Insurance policies, be they group benefits from their company benefit plans, their creditor plans that covered their debts and the personal policies that they owned.  Over my career, I was involved with each claim that my client’s families made.  The death of an important person in one’s life is always a shock even if the person had been sick for some time.

The first death claim that I had to deal with was a relatively young man.  This young man was in his early 30’s and had contracted cancer.  This husband and father had purchased his coverage when he first got married in his 20’s so that if an untimely death occurred, his wife would have enough money to cover their mortgage principal.  The risk that the client felt that he had to cover, was due to an accident given that he travelled between his home and his work that took him out of town regularly.  This clean-living family man was surprised when he was diagnosed with an illness – brain cancer.  Fortunately, he did not suffer for a long time.  I attended his funeral seven months after the diagnosis and was able to deliver the cheque to his widow.  The widow and children were able to become and continue to be debt free.  In a conversation with her 28 years later, she commented how she had never expected that the purchase of life insurance would eventually pay out.  “I expected to have a long life with my husband.  The vow ‘til death do us part’ was assumed to be in our 80’s or 90’s”, she commented wistfully, “not 8 years after our wedding.”   

Another sad event that I will share, happened about 15 years ago.  This, too, involved a young family where the husband and father were estranged from his wife and children.  In a fit of anger, he came into my office to cancel his policy on a Thursday afternoon.  Nine days later, the man was out with his friends enjoying their ATV’s.  The man flipped his “man toy” and died instantly by hitting his head on a rock.  The following week, the estranged wife came to my office to start the claims process.  I had to inform her that the policy had just been cancelled less than 2 weeks earlier.  The young mother and her 3 children found out from the creditor that the mortgage coverage also had been cancelled.  She was able to make a claim on the group benefits plan, but that coverage, only paid 1 times annual income.  The lady and her children were forced to sell the house and property and the vehicles.  She was able to get some support from her parents who lived in Alberta where she continues to reside.

The third story is about a businessman who held a couple of polices within his corporation.  The polices were in place to provide “liquidity” to his company if he died.  At age 78, the client had an accident at home while working around his acreage.  The client’s wife found him at the corner of the property several hours after she got home from town.  The coroner’s report confirmed that he had died several hours after the accident.  We were able to pay out to his company the proceeds from the life insurance policies.  The wife, who became the sole shareholder, was able to wrap up the affairs of the family business, meet the final payroll and take care of the outstanding receivables from a position of strength as opposed to desperation.

These three stories are all true.  While I am being deliberately vague about the actual details of each event, my point is that there are no guarantees of longevity.  In previous blogs, I have referenced actuarial truths that Canadians, by and large, are living well into their 80’s.  Individually, though, there is no guarantee.  “Those that have ears, let them hear!”

Al’s Nuggets

  1.  Don’t be cheap… keep your wills and affairs up to date!
  2. Life Insurance is usually the most cost-effective way to guarantee money for those who rely on you for financial security
  3.  An experienced and educated Life Insurance agent can be a great help in your Estate Planning.
  4. The next two blogs will describe the different types of Life Insurance… Term, Permanent and Universal Life