Getting married is a large life commitment and there are so many things to think about. Many people think about the invitations and the flowers. The Groom thinks about his tuxedo, while the Bride thinks about her dress. There is food and venues and honeymoons that come to mind and need to be planned.
Before getting married, however, I have learned that finances should be put alongside the cake and confetti. For, just as marriage is a time to celebrate the coming of two people, it is just as important to remember that two different ledgers are being merged. So, financial goals are important.
Just think about it. If your spouse and you buy a house and they pass away, one question is left: is there enough money to allow for continued ownership of the house? Building a strong financial foundation can answer that question; and, often times that means reviewing the life insurance portfolio. Or, in a few cases, creating one. After over a decade in the industry, I have three reasons for this opinion.
Firstly, it is cheaper. Given that the average age of first marriage is 31 for men and 28 for women, one can easily say that life insurance is cheaper today than it will be tomorrow. We know that this is true because for two reasons: mortality and inflation. Insurance Companies, for time and memorial, have tried to reflect the chances of dying in the insurance premiums they charge. So, as one ages, the chances of one’s death increases and this is reflected in the prices of policies.
I will take one company as an example. If we were to have a time machine, we could buy the same policy for a person at the ages of 25, 45 and 65 years of age. What would be interesting is that that same person would see cost increase at each of those milestones. In 2016, their non-participating, whole life (i.e. permanent) insurance plan was called Sun Limited Pay Life. At that time, a 25 year old, non-smoking male, would have been $44/mth for it. The plan would have had a face value of $50,000. At age 45, the same plan would have cost you $87/mth; while at 65, the same policy would have cost $187/mth.
However, the second reason is just as important: increasing cost of policies over time. Many people are not aware of this but from year to year, insurance companies will increase their premiums for a variety of reasons. Let’s call it “policy inflation”. Sometimes, policy price can change because of mortality expectations. Other times, it is a reaction to the introduction of new features or corporate profitability. With that being said, more often than not, changes in prices reflect overall price changes in the economy.
Just look at 2011. On August 16th of that year, the Toronto Star reported that SunLife Financial was one of many companies that would be increasing the cost of their products. While, on October 13, 2011, the Globe and Mail reporter Roma Luciw, in an article entitled “The cost of life insurance is set to jump”, noted that Manulife was increasing its rates on Universal Life Insurance “by as much as 12 per cent as of Oct. 15, 2011”. These increases were larger than the average rate of inflation from 1986 to 2015. That rate was 2.3%. Now, in defence of those same companies, the reason for the increases, at that time, was record low interest rates.
We can also use the property insurance market to find evidence of price inflation. In 2014, in the property insurance world, Intact Insurance, according to Canadian Underwriter magazine, “saw their rates jump by 15% to 20% in early 2014”. While, Money Sense.ca noted that “the year before that the chief underwriter for TD Insurance announced rates would rise by 10% to 15%”. In fact in 2016, Globe and Mail noted that “higher prices for purchases such as electricity, passenger vehicles and home insurance” drove up inflation. Consequently, it is safe to assume that “life insurance inflation” can be as much as 5-10% each year. Therefore, couples should move quickly toward creating an insurance portfolio.
The second reason for married couples to get their insurance reviewed comes down to the fact that many married couples will get older together. Accordingly, most couples need to look after their insurance portfolio before illness strikes. As was noted before, the 2011 Census found that married couples represent 67% of families and that the average age of the first marriage is 31 for men and 28 for women. Additionally, the average of delivering a first child crossed the threshold of 30.
Compare that to the average age of illness. Many medical journals note that the Multiple Sclerosis begins to show itself between the ages of 20 and 40 with an average onset age of approximately 34. Schizophrenia seems to have an average onset age of 18 in men and 25 in women; while the CDC, in 2012, noted that “adults aged 45 to 64 were the most diagnosed age group for diabetes”. These are just a few examples of illnesses that can burden a family. Having an insurance portfolio sooner rather than later, ensures that a policy will be issued, your family will be covered and a safety net for your family will be created.
The last reason is just as important. One or both members of a couple will likely come to the marriage with some debt. This might include student loans or money loaned by a parent. This means that if someone gets hurt or disabled, one is likely to have little capacity to pay that existing debt back. Given that no one wants to go back to family or to charity to resolve issues, one should have a life and sickness insurance portfolio to ensure that a safety net is there.
After a decade, I have come one conclusion, life and sickness insurance is for the living. It allows loved ones to carry one in spite of one’s mortality. It buys the survivors’ time to reorganize their lives when the worst tragedies show their face. So when you get married, most people make time to see a lawyer, an officiant, a banker and wedding planner. From my experience, book one more appointment: see your insurance professionals (i.e. Property and Life Insurance Agent). You won’t regret it.
Before getting married, however, I have learned that finances should be put alongside the cake and confetti. For, just as marriage is a time to celebrate the coming of two people, it is just as important to remember that two different ledgers are being merged. So, financial goals are important.
Just think about it. If your spouse and you buy a house and they pass away, one question is left: is there enough money to allow for continued ownership of the house? Building a strong financial foundation can answer that question; and, often times that means reviewing the life insurance portfolio. Or, in a few cases, creating one. After over a decade in the industry, I have three reasons for this opinion.
Firstly, it is cheaper. Given that the average age of first marriage is 31 for men and 28 for women, one can easily say that life insurance is cheaper today than it will be tomorrow. We know that this is true because for two reasons: mortality and inflation. Insurance Companies, for time and memorial, have tried to reflect the chances of dying in the insurance premiums they charge. So, as one ages, the chances of one’s death increases and this is reflected in the prices of policies.
I will take one company as an example. If we were to have a time machine, we could buy the same policy for a person at the ages of 25, 45 and 65 years of age. What would be interesting is that that same person would see cost increase at each of those milestones. In 2016, their non-participating, whole life (i.e. permanent) insurance plan was called Sun Limited Pay Life. At that time, a 25 year old, non-smoking male, would have been $44/mth for it. The plan would have had a face value of $50,000. At age 45, the same plan would have cost you $87/mth; while at 65, the same policy would have cost $187/mth.
However, the second reason is just as important: increasing cost of policies over time. Many people are not aware of this but from year to year, insurance companies will increase their premiums for a variety of reasons. Let’s call it “policy inflation”. Sometimes, policy price can change because of mortality expectations. Other times, it is a reaction to the introduction of new features or corporate profitability. With that being said, more often than not, changes in prices reflect overall price changes in the economy.
Just look at 2011. On August 16th of that year, the Toronto Star reported that SunLife Financial was one of many companies that would be increasing the cost of their products. While, on October 13, 2011, the Globe and Mail reporter Roma Luciw, in an article entitled “The cost of life insurance is set to jump”, noted that Manulife was increasing its rates on Universal Life Insurance “by as much as 12 per cent as of Oct. 15, 2011”. These increases were larger than the average rate of inflation from 1986 to 2015. That rate was 2.3%. Now, in defence of those same companies, the reason for the increases, at that time, was record low interest rates.
We can also use the property insurance market to find evidence of price inflation. In 2014, in the property insurance world, Intact Insurance, according to Canadian Underwriter magazine, “saw their rates jump by 15% to 20% in early 2014”. While, Money Sense.ca noted that “the year before that the chief underwriter for TD Insurance announced rates would rise by 10% to 15%”. In fact in 2016, Globe and Mail noted that “higher prices for purchases such as electricity, passenger vehicles and home insurance” drove up inflation. Consequently, it is safe to assume that “life insurance inflation” can be as much as 5-10% each year. Therefore, couples should move quickly toward creating an insurance portfolio.
The second reason for married couples to get their insurance reviewed comes down to the fact that many married couples will get older together. Accordingly, most couples need to look after their insurance portfolio before illness strikes. As was noted before, the 2011 Census found that married couples represent 67% of families and that the average age of the first marriage is 31 for men and 28 for women. Additionally, the average of delivering a first child crossed the threshold of 30.
Compare that to the average age of illness. Many medical journals note that the Multiple Sclerosis begins to show itself between the ages of 20 and 40 with an average onset age of approximately 34. Schizophrenia seems to have an average onset age of 18 in men and 25 in women; while the CDC, in 2012, noted that “adults aged 45 to 64 were the most diagnosed age group for diabetes”. These are just a few examples of illnesses that can burden a family. Having an insurance portfolio sooner rather than later, ensures that a policy will be issued, your family will be covered and a safety net for your family will be created.
The last reason is just as important. One or both members of a couple will likely come to the marriage with some debt. This might include student loans or money loaned by a parent. This means that if someone gets hurt or disabled, one is likely to have little capacity to pay that existing debt back. Given that no one wants to go back to family or to charity to resolve issues, one should have a life and sickness insurance portfolio to ensure that a safety net is there.
After a decade, I have come one conclusion, life and sickness insurance is for the living. It allows loved ones to carry one in spite of one’s mortality. It buys the survivors’ time to reorganize their lives when the worst tragedies show their face. So when you get married, most people make time to see a lawyer, an officiant, a banker and wedding planner. From my experience, book one more appointment: see your insurance professionals (i.e. Property and Life Insurance Agent). You won’t regret it.
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