Even in today’s high-tech, AI world where robo-advisors and investing platforms make it easier than ever for folks to manage their own financial planning, there is still value in a professional advisor relationship. Someone who knows your personal situation and the nuances of your life can provide customized advice, saving you the need to determine if it’s applicable for you.

Insurance protection is a pillar of any financial plan, and the value of a professional insurance advisor is often overlooked. People can call a phone number for “guaranteed coverage” and make uninformed decisions regarding their life insurance protection in the moment, not thinking of the long-term consequences that may arise.

One such story was relayed to me by a client recently regarding a friend who lives out of province – a tragic case of decisions that were made and consequences that resulted from them. For the purposes of this illustration, personal details are changed or left out, but the message remains impactful.

 

Why NOT to cancel your insurance coverage

Kate and Tom, parents of two teenage kids were proactive in protecting themselves. They each had a whole life policy with some nominal cash value they had purchased when they were first married. They went through their home and auto insurance carrier, without any type of insurance analysis or relationship with an advisor developed. They didn’t think about it again until Kate was diagnosed with cancer. With new healthcare costs and the loss of income, it was a struggle to juggle everything. Tom decided to cancel his life insurance policy in order to access the cash surrender value to help out with mounting expenses.

Fast forward almost two years and Kate was cancer-free, with things returning to “normal.” They never revisited Tom’s insurance coverage, however, as they were getting themselves back on track financially.

Then, the unthinkable happened. Tom suffered a fatal heart attack at work one day. He was 52. Now, without his life insurance policy and still trying to dig the family out of debt, Kate is devastated.

Had an insurance professional been consulted in the decision-making to cancel Tom’s policy, they would have been better informed of their options, of which there were two:

1. take a policy loan out against Tom’s policy (and potentially, Kate’s), to access cash immediately and keep the coverage in force
2. if Tom’s health allowed, immediately replace the whole life policy with a cost-effective term coverage prior to canceling the coverage so that he’s not without that protection for a day. This would have continued coverage at a lower monthly cost, while allowing them to access the cash value as planned.

 

What could have protected them further

Often overlooked because we often feel like we’re invincible is Critical Illness Insurance coverage. While it only pays upon diagnosis of applicable critical illnesses, we see how this would have also helped this family to help with those initial medical expenses and avoid some of the debt and financial stress. It’s worth taking a look at incorporating this into your insurance protection planning as you review life insurance coverage.

Don’t think you’ll ever need it? Talk to me about how one company’s critical illness coverage can be a retirement plan protector.

Read more about the impact of disability and critical illness insurance.

 

On a personal note

I didn’t know this family at all, but it’s devastating to hear of the hardships this family is experiencing when there could have been alternative solutions. A family is now faced with navigating such a loss and having to turn to their family and community for assistance.

It’s true, that life insurance eases the pain of death for your loved ones exponentially. It not only protects your family, but it offers choices.  Professional advisors can help you navigate through those most difficult times so that you stay in the best possible financial position and make informed decisions. Under stress especially, we can make hasty and uninformed decisions out of desperation.

 

Know someone who may be at risk of something similar happening? Share and learn more about the value of life insurance.