There are many life insurance policies out there that people purchased years ago, but the agent who they bought it from has long since retired, left the business, or become unwilling or unable to provide service. These end up as what are referred to as orphan policies, because there is no insurance advisor assigned to it.
Adding to this is the huge consolidation that has taken place in the life insurance industry in recent years, with many small players swallowed up by the big three; Manulife, Sun Life and Great West life. The reality of this is that 50% or more of Canadians with life insurance, disability, critical illness, or long term care coverage could be considered an orphan policy holder.
I would suggest that for anyone holding one of the above policies and who have not been contacted by an advisor in a long while, that you seek out a qualified professional in your area to review the coverage that you have.
I regularly run across people who cannot remember what they bought, or are not aware that because it was a 5 or 10 year renewable term policy that their monthly premium has gone up significantly. Plus, many are not aware that their term plans may have the option to be converted to permanent coverage without any medical underwriting. And many may be unaware that their term coverage terminates at age 75 or 80.
If your insurance policy has been transferred to another advisor, how would you know, as the insurer or your old advisor may not have informed you of this! If you get a letter from a stranger claiming to be your new advisor, how can you be sure? You can check them out online (e.g. LinkedIn) and chat on the phone. Or you can call the insurance company. When you’re satisfied, why not meet? Insurance coverage requires maintenance and a new advisor may be more diligent and consistent than the previous one.
In the 20 years that I have been a financial advisor, the cost of term coverage has trended downward quite dramatically, so Canadians with these plans would benefit from a review to see if there would be significant savings with a new policy. Permanent products are going up in price for a number of reasons, so it’s best to buy these when one is young and healthy.
As with all things financial, it’s up to you to ensure you review the coverage you have on a regular basis with a trusted professional. That $250,000 of coverage you bought 20 years ago probably isn’t enough to provide adequate protection based on today’s ever increasing costs and debt loads. Meet with you financial advisor on a regular basis, as everyday life changes can change your insurance needs.
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