It’s interesting to recall the number of phone conversations, emails and people who have dropped by to discuss issues with their banks. It makes for interesting conversations regarding banks. Here are a few examples.
- Rising rates on unsecured personal lines of credit. A client brought in a letter from his bank informing him that his line of credit rate was increasing from 4.25 to 7.25 per cent with no real explanation. He was both mystified and angry because he’d always made his payments on time. He is no longer a client of that bank.
- “Safe” investing. An 89 year old client called. She had sold her house and moved into a senior’s lodge. She took the sale proceeds to her bank and asked that this be invested in a safe option. She was told the funds were invested in a “safe” mutual fund, and has watched the principal steadily erode ever since.
- Costly Mortgage insurance premiums. A couple in their mid 40s had a $300,000 mortgage and a $70,000 loan. They were paying $225 a month to the bank for life insurance, which would only pay off the reducing loan balance on the first death and leave the surviving spouse without coverage. An individual insurance policy of $600,000 each of 20 year term coverage fit their planned loan payoff schedule as well as their family’s other financial needs for under $200 a month.
- A proper planning discussion should look at cash flow, current debt, and ways to reduce interest costs. There are innovative cash flow management processes that have the potential to get people out of debt years sooner and pay less interest. Without fail when mortgage discharge documents hit their bank, they get a phone call telling them the bank can offer the same services. Why aren’t they being offered these options at the beginning?
- This leads to another issue that relates to early payout of locked in mortgages. Most people assume they only have to pay three months interest and are shocked to find the penalty can run into thousands of dollars. I would suggest that any one currently in a locked in mortgage check the fine print on their mortgage documents and ask their banker what their payout penalty would be.
The reason for this article is to get people thinking about their finances and to know there are many options available. It’s up to all of us to be better informed consumers, to do the research and ensure that we’re getting the best value for our hard earned bucks.
Unfortunately, bank employees are only able to provide their clients with the products offered by the bank. Seek out an independent life licensed broker with access to many different companies and a wide range of insurance and investment options, who is not tied to promoting any one company's product offerings. They can pick and choose from many different products to meet your individual needs.
There are several major benefits with life insurance investment products, including the ability to name family as beneficiaries, providing the potential for creditor protection. This also bypasses probate allowing prompt payout on death. Payouts are private, and surrender costs are waived ensuring the full value gets passed on quickly to whom you choose.
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