Russ MacDonald

Last month, I touched on a subject with individuals that rely on their employee benefits life insurance as their main source of coverage. After I wrote the article, I once again ran into another scenario of a client who came to me shopping for coverage because his ran out because he was retiring. Because this happened once again and continues to be a frequent problem for many individuals, I want to share his story.

The client was a 65-year-old that worked at SaskTel. He did have life insurance on his group plan all the years he worked there. He, much like many others out there, assumed that he could take his insurance with him upon retirement. With that thought in mind he also elected with his pension a 60% survivorship for his spouse upon his passing. He figured that the life insurance he thought he could take with him would bridge that gap between the 60% pension option he chose. What he was unaware of was that his life coverage was not something that came with him upon retirement. The option he had was to convert the coverage at his current age at limited options for purchase.

What does all that mean? Well for those who don't know, the older you are when you purchase coverage, the more risk you are to the life company which means you have yourself one big premium to pay. A premium that needs to be paid at the time you are on a fixed income in retirement years. Not ideal right? One can guess what happens.

This individual, much like many others, was forced to look at lower benefit amounts so that he could still have some coverage for his spouse when he died. Remember, he chose his pension amount with the assumption he had coverage that would top her up. Now, even though he had a conversion option — which was great — it really didn't matter in his situation, because the premium was just too high of a cost for him. So, this left him with many holes in his plan. He does have coverage but by waiting, it has really affected his retirement.

Remember this story, as it happens time and time again. Chances are it may happen to you. What can you do to ensure it doesn't? If an individual plans ahead when they are younger they can avoid all this nonsense at retirement. When I sit down with a client in their early years, we look at having a life insurance plan that becomes paid for by the time the person is ready to retire. I do understand that there are family years to which cashflow is limited, but there are also years where the kids grow up and leave the house to which cashflow does improve. These can be the years when we really can magnify savings and should be sitting down to look at the available options. It's really sad when a retiree is forced into either not having coverage, lower coverage or just having the same coverage but paying very high premiums for it. The answer once again is to plan ahead. It takes a little effort but the savings and the peace of mind will be worth it. Trust me!

If you would like additional information on this valuable coverage, please don't hesitate to contact me.

-Russ MacDonald
Heritage Insurance Ltd.
(306) 631-9738


Read Part 1 of this series.

Make sure your family's future is protected. Call Heritage Insurance LTD at (800) 667-7640 for a free Moose Jaw SK life insurance quote.

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