Every year, Marty promises himself that things are going to change. He's going to lose weight, exercise more and this year, he will finally meet with a financial advisor to put a plan together.
All lofty goals, but what Marty doesn't realize is that for his last resolution, putting a financial plan together, if he doesn't understand the risks he and his family face, his plan won't be worth the paper it's printed on.
"We know that people don't understand the risks they face. Sure everyone knows they are going to die at some point, but what about becoming disabled or getting sick? Those risks are very real and they affect our greatest strength: our ability to earn an income. If you can't work because you're sick or disabled, your financial plan will go up in smoke. You won't have any money to put towards it," says Josef Frank, Assistant Vice-President, Marketing, Manulife Financial.
Take our friend Marty. He knows he needs a financial plan – he makes the same resolution every year – but he just doesn't appreciate the risks he faces without the proper protection.
"Building a financial plan without having insurance protection in place is risky," says Frank.
That's where InsureRight (insureright.ca) can help. InsureRight is a Manulife interactive website designed to help you assess your risks and then help you determine how much insurance you need to protect you and your family. And, it can help you understand what that insurance will cost.
First developed almost 20 years ago, InsureRight was recently updated to provide you with a more clear and accurate look at life, disability and critical illness insurance protection.
Here's how the website could work for Marty. After watching the video, he's asked to add his age (40) and say whether he smokes or not (he doesn't). With a click, Marty learns that his risk of being disabled before age 65 is 33 percent and his risk of getting a critical illness is 26 percent. And that his risk of dying before age 65 is six percent. Marty always thought he was protected because he does have some life insurance, but now he can clearly see that his risk of being disabled or getting sick is much higher than dying. Marty is married to Sarah so he then uses the InsureRight calculator to assess their risks as a couple. Sarah is 41 and she doesn't smoke either. As a couple, there is a 71 percent chance that one of them will die, get sick or become disabled before the age of 65.
Marty realizes he really shouldn't procrastinate anymore.
"Of the three risks, death is the smallest statistical risk that people face," Mr. Frank says. "It's still an important risk because it can devastate families, but the ability to earn an income is more likely to be affected by a disability or a critical illness."
Marty then takes a look at the second step in InsureRight: he determines how much insurance protection he needs to offset those risks. His income is $80,000 and he has a mortgage debt of $185,000. He and Sarah also want to send their daughter to university. Just to protect the family from his sudden death, he needs $490,000 of life insurance.
Marty learns that for just over $61 per month, he can get term life insurance. But Marty then does the calculation for disability and critical illness insurance. Like a lot of families in Marty's age bracket, money isn't flowing freely from the taps. An alternative, and often more affordable way to obtain coverage for these types of risks, is Synergy, a Manulife insurance product that combines life insurance, critical illness and disability insurance in one cost-effective solution.
Knowing how much the insurance will cost is an important step in the InsureRight process," says Mr. Frank "because it takes away the mystery and puts everything on the table. I believe people think insurance costs too much money and that's a barrier to people wanting to find out more and contacting advisors. There's a belief that these products are very expensive, but it will likely cost less than they're expecting. Hopefully, InsureRight will take away this mystery and people will act."
InsureRight is available on the web (insureright.ca). It is also programmed to work on smartphones and tablets and, if you have an iPad, there is an app. Once you've tried InsureRight, you can link to another tool that helps you find an advisor in your area.
For people who have done the calculations around cost before meeting with an advisor, the conversation can be "much more comfortable," Mr. Frank says.
Marty is impressed. With InsureRight, he knows he can knock one resolution easily off his list. Now, if only there was another way to conquer the other two. Oh well, there's always next year.