Well, all we tend to hear these days is the jeopardy of the pension system.
So, do not be surprised if Ontario Finance Minister Dwight Duncan ignores last year’s proposal from former law dean Harry Arthurs to increase the maximum pension guarantee from $1,000 a month – where it has stood since the early 1980s – to $2,500 a month.
Guarantees are harder to find.....life insurance may be the answerThe government of Canada and it’s provinces has thrown their hands in the air and pleaded an inability to guarantee Canadians their supposed right to receive their company pensions.
History has shown that when companies fail, or reach a point of restructuring or going out of business, they look to tap into what should be the “untappable”.
Laws tend to not protect the hard workers that have contributed to, and are relying on their company plans.
Now, let’s take this a step further.
The husband and wife living off one pension, and realizing the uncertainty are looking for ways to ensure the survivor and their children are left with a half decent standard of living need to look at what can be guaranteed.
In the old days, countless sales ideas were bantered around to suggest that life insurance can be an estate creation tool, and an estate preservation tool.
It is also a tremendous way of creating a pension, and it is this aspect that should be explored.
When young, and furthest from retirement, the amount of life insurance a couple needs is the greatest.
Often however, the agent looking to sell a policy looks to sell the one with the highest commission, and therefore leans toward the permanent versions at the outset.
This can cause a variety of issues, the greatest being a high premium outlay, and a low insurance amount.
If you are lucky enough to survive to retirement age, and are looking to use your insurance as a pension plan backup for your family, have you got enough coverage to be turned into an income stream?
If you are no longer insurable, you have now created a situation that you cannot change the amount of insurance (money) you will be able to leave your spouse and family. Wouldn’t it have been better to guarantee the higher amount with term insurance?
And, there is another problem you have when working – disability.
If you bought expensive life insurance and did not look at disability issues, then you will be taking additional chances.
You work to provide income, but also only by working do you contribute to your pension.
If the disability plan at work does not include a contribution to the pension when disabled, your pension will be smaller than it should be.
And, what if your income level is literally cut in half? Would your mortgage payment be covered?
Would you become a bank mortgage statistic? Another foreclosure because of poor planning or an insurance agent that did not include disability as part of your insurance planning?
It happens, and it happens more than you might think.
To prove it, ask yourself when your insurance agent last looked at your situation should you become disabled, and did he/she review your long-term disability coverage in your employee booklet?
You can ask us to help you – 1.866.856.6799.
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Are your insurance plans separating you from your money or guaranteeing it? Which is it in your case?