There is a great book I can loan you which is called Unintented Consequences by Lenord A Reiner (he is a financial advisor in the US). Even though this book was written in the US the taxes are similar to Canada. On page 115 he talks about the pitfalls of term insurance (it does have a place!). The best return on term is insurance is the first day you buy it paid your monthly premium and die! What a great return! Most poeple don’t think that way though. Lets say you pay $500 per your for your term insurance (at age 25). Had you not bought the term an invested the the $500 got a average return of say 5% by age 65 that would be $3,679 by age 85 that would be $9,980. What if you could have both, the coverage and the money? And get the money tax free? The media tells us to buy term and invest the difference but they don’t tell us that there is opportunity cost because the worse day of term insurance is when you stop paying and you die (for your beneficiaries)! The reason term is so cheap is the insurance companies only pay about 1% of all term policies! It’s like accident insurance, it’s cheap because the claims are under 1%! Anyway drop me a e-mail if you want the book. The lost opportunity costs (besides insurance) is not talked about in the websites I have seen. Most people believe saving more or spending less is the answer, yes it helps but what about other things that cost a lot of money over time?

cheers,

Brian

I don’t know if this blog talks about risk management (disability… pitfalls of some term insurance etc.) If you are interested drop me a line.

regards,

Brian