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6 Insurance Policies Self-Employed Professionals Should Consider

April 20th, 2015

insurance products for self employed 00

Being self-employed has its perks. You have a flexible schedule, control your own income potential and make decisions based on your own self-interests. But, when it comes to being insured, that’s where being self-employed can be a little tricky.

Working for an employer usually allows you to be a part of a group insurance plan that covers you and your family for a variety of insurance products. If you decide to take the self-employed route, you will usually be cut off from these group plans and need to seek individual coverage.

If you are currently self-employed, or thinking about going this route in the future, then strongly consider looking at these six insurance products.

Life Insurance

Life Insurance pays out to your beneficiaries in the event of your death. There are two primary types of life insurance policies: term life insurance and permanent life insurance. Term life insurance covers you for a certain amount of time while permanent life insurance guarantees lifetime coverage.

As a self-employed person, it’s important that you take out a life insurance policy in order to minimize the financial consequences of your death to your loved ones.

For example, if your self-operated business owes money to a creditor, that debt would be passed on to your beneficiary who inherits the business in the event of your death. Getting a payout from a life insurance policy would give your beneficiary the ability to clear out your debts. They can then either continue to operate or sell the business without any further hassles.

Disability Insurance

If you are self-employed and end up being unable to operate your business because of a disability, you would have no alternate means of earning enough income to provide for yourself and your family. This can quickly put you in debt as bills continue to rack up.

Keep in mind that you also still have to deal with operating expenses for your business, such as rent, even when you’re not actually working and earning anything.

Disability insurance provides you with a monthly income in case you are unable to work due to a serious illness or injury.

Many people are simply content to take out life insurance and forget about other insurance products. Just a reminder: the chances of you passing away are much, much lower than the chances of you being disabled.

So, for self-employed people, having a disability insurance plan in place is absolutely critical.

Critical Illness Insurance

Like its name implies, critical illness insurance pays out when you are diagnosed with a serious medical condition (eligible medical conditions for this insurance are agreed upon during the underwriting process). Unlike disability insurance, critical illness insurance usually offers a one-time lump-sum payout.

If you are self-employed and operate your own business, having critical illness insurance provides an opportunity to have a fallback plan that entitles you to receive a large sum of money in case of a serious medical problem.

This money could help bring you some flexibility while you decide how to deal with your serious illness and manage your business. For example, you could hire help to manage your business in your place while you focus on treatment.

Segregated Funds

Segregated funds are offered by many insurance companies as an alternative to mutual funds. While these two investment funds are similar, segregated funds have several advantages over mutual funds. Some of these include having a maturity guarantee of 75% of your principle investment, protection of assets from creditors and resetting privileges to lock in growth. Many insurance companies also allow you to put segregated funds into a RRSP or a TFSA.

Having that protection from creditors makes segregated funds an extremely important product for self-employed individuals who are looking to safeguard some money for retirement.

For example, let’s say that you undergo some rough times and have to declare bankruptcy. In this scenario, you stand to lose your assets to creditors. But, if you have a segregated fund set into a life insurance contract in your RRSP, it is fully protected from creditors.

So, by having a secured segregated fund set aside, you have a backup plan in case you don’t reach retirement with sufficient assets.

Personal Health Insurance

If you live in Ontario, your dental and vision treatments are not covered by OHIP. These treatments are generally covered by group insurance plans. But, if you’re self-employed, you won’t receive that coverage.

In this situation, the best insurance product to get is personal health insurance. This insurance protects you from unexpected health expenses not covered by provincial health insurance plans.

Many personal health insurance plans not only cover medical treatments, but also reimburse you a portion of the amount it costs to buy prescription drugs or supplemental health care products such as hearing aids.

Without having a personal health insurance plan in place, you could quickly find yourself in debt if you get afflicted with a medical condition that has expensive treatment costs and is not covered by a provincial health insurance plan.

Travel Insurance

There are generally two different types of travel insurance plans available: travel medical insurance and non-medical travel insurance.

Travel medical insurance covers you in the event that you require medical treatments for an injury or a sickness while abroad. This plan can include reimbursement for hospital stays, medication and even the cost of emergency repatriation. Here is a comprehensive list of items that you need to make sure your plan covers.

Non-medical travel insurance can provide coverage for lost luggage, cancelled flights, rental cars and much more depending on the plan.

If you’re self-employed, then it’s absolutely critical that you purchase at least travel medical insurance when leaving the country. Getting sick or injured while abroad could put you on the hook for thousands of dollars in treatment fees if you’re uninsured. This could set your business back for years.

If you conduct business internationally and are travelling with valuable cargo, purchasing non-medical travel insurance with baggage protection is highly recommended. This plan will protect you in the event that your cargo gets lost, damaged or stolen during the journey.


Weekly Personal Finance Round For April 17th 2015

April 17th, 2015
Weekly Personal Finance Reading Roundup

This week at LSM Insurance, adding to our life insurance experts roundup, we interviewed the principal of Aleph Investments, David Merkel. Chantal also guest posted at Jonathan Chevreau's blog Findependence Hub. Her article tackled the topic of when you should buy life annuities. Our other article for this week included 10 financial planning designations that you need to know about. 

We noticed a lot of great articles this week that asked us questions and made us face reality regarding our personal finances. 

The golden rule of personal finance is easy to understand but hard to implement. Pay yourself first and spend less than you earn. Mark Seed from My Own Advisor gives us a few additional rules to follow. 

Rob Carrick asks whether or not its a good thing that banks are giving us low mortgage rates

Ben Carlson's blog, A Wealth of Common Sense, reminds us that Wall Street is not going to give up to the financial consumer.

Krystal Yee of Give Me Back My Five Bucks asks the question, would you consider buying a pre-constructed condo?

Michael James on Money debates whether it's wiser to invest or pay your mortgage down first. 


10 Financial Planner Designations You Need To Know About

April 16th, 2015
Financial Planner Designations

The financial services industry is home to countless advisor designations, which can confuse financial advisors and their clients alike.

The process required to earn each designation can be different. Some may require you to complete programs of study, pass exams and gain sufficient experience.

Many of the issuing organizations require their designation holders to adhere to certain standards of practice or even a specific code of ethics.

Financial planners who earn designations are generally considered to have greater level of knowledge and specialization over a non-designated advisor.

Designations vs. Licenses

Designations shouldn't be confused with certificates or licenses. For example, the Life License Qualification Program (LLQP) shouldn’t be considered as a designation. However, it’s worth mentioning because completion of the LLQP is mandatory (by law) for anyone looking to sell life insurance products in Canada (with the exception of Quebec).

The LLQP typically consists of a 140 multiple choice questions exam and examinees are given four hours to complete the test. Courses to prepare for the LLQP can be taken both in-class and online.

Passing the LLQP is just the first step to become a credited life insurance sales agent. Once a prospective agent passes their LLQP and obtains a certificate of completion, they have to apply to their province’s insurance council in order to write that province’s licensing exam.

With that said, it's important for clients to know what the abbreviations after their advisor's name actually mean. Let’s take a look at 10 of the most popular financial service designations.

1. Registered Financial Planner (RFP)

A Registered Financial Planner (RFP) is one of the most basic designations available to professionals in the financial services industry.

During the RFP program, students are taught how to create financial plans and help guide clients through difficult financial situations.
In order to achieve the RFP designation, applicants must complete 4 courses: Retirement Planning, Income Tax Planning, Strategic Investment Planning and Risk Management/Estate Planning. Then pass an evaluation course which includes a final exam.

It’s worth noting that prior work experience or post-secondary education isn’t required to enroll into the RFP program. These lax requirements make this designation perfect for newcomers to the industry.

2. Personal Finance Planner (PFP)

A Personal Finance Planner (PFP) is qualified to help clients manage their wealth and maximize their assets. This designation is typically sought after by advisors in the banking sector.

Industry professionals with the PFP designation usually have a strong understanding of insurance, real estate management and business income management. Like the designation’s name implies, a personal finance planner often works one-on-one with a client and offers personalized plans.

In order to obtain a PFP certification, you have to complete either the “Canadian Securities Course (CSC)” or the “Investment Funds in Canada (IFC)” course. After that, students must complete the two required Personal Financial Planning courses and then pass a final certification evaluation.

3. Certified Financial Planner (CFP)

A Certified Financial Planner (CFP) is generally considered to be one of the top designations that a financial planner can earn. It is also usually pursued by individuals in legal, tax and investment professions. Many individuals with RFP credentials also end up attempting to acquire the CFP designation later on in their careers.

A financial planner with a CFP designation is qualified to advise clients regarding their investments, taxes, estates, insurance and retirement planning.

Obtaining a CFP certification isn’t easy. Applicants must successfully complete the required pre-requisite courses and a rigorous exam process.

4. Chartered Life Underwriter (CLU)

The Chartered Life Underwriter (CLU) is a designation usually pursued by agents who sell life insurance products.

Candidates interested in obtaining the CLU certification must complete a course curriculum that includes subjects such as insurance planning, life insurance law, individual life insurance, fundamentals of estate planning and planning for business owners.

Unlike most of the other designations on this list, there is no final comprehensive exam required and completing the necessary courses is the only stipulation to receiving CLU credentials.

5. Certified Health Insurance Specialist (CHS)

The CHS designation is the only one in Canada concentrated on living benefits and health insurance-related plans.

The CHS designation was developed by the Institute for Advanced Financial Education (IAFE) to help licensed agents better advise their clients on every area of health insurance and living benefits.

Products such as Individual and Group Health Insurance, Disability Insurance, Travel Medical Insurance, Long-Term Care Insurance and Critical Illness fall under this category.

6. Financial Risk Management (FRM)

Dealing with finances can often involve a lot of risk. That’s why many clients looking for financial services want to deal with an individual who is well aware of the risks in the industry. This is where the Financial Risk Management (FRM) designation comes in handy.

Financial industry professionals, who have FRM credentials, know how to manage credit risk, market risk, liquidity risk and other market related financial risks. They have advanced knowledge about the state of the industry and know what the safest approach is.

In order to obtain the FRM designation, applicants must pass two comprehensive exams and have a minimum of 2 years of work experience in financial risk management or a related field such as portfolio management and auditing.

7. Chartered Insurance Professional (CIP)

Earning a Chartered Insurance Professional (CIP) is typically a starting point for anyone looking to start a career in the insurance industry as a broker, agent, underwriter, adjuster or risk manager.

A CIP program provides general and technical knowledge relating to the Canadian property and casualty (P&C) insurance industry. It is considered to be the national standard for professionalism, expertise and leadership in the P&C sector.

In order to obtain a CIP, an applicant has to complete 10 courses out of a selection of 30 courses. One year of industry experience is also required to earn the designation.

8. Chartered Financial Analyst (CFA)

The Chartered Financial Analyst (CFA) is one of the most respected designations in the financial services industry and is globally recognized by employers, investors and financial institutions.

An individual with CFA credentials is considered to be an expert in portfolio management, investment analysis, derivatives, accounting principles and other fundamentals of global markets.

In order to qualify for the CFA designation, a person must complete the required curriculum and write three separate levels of exams. Applicants must also have at least 4 years of work experience or a combination of work and education experience in order to be eligible.

9. Certified Credit Professional (CCP)

The Certified Credit Professional (CCP) program is designed to provide its students with the skills required to assume a leadership role in the area of credit management.

During their training, CCP applicants learn about managing a credit department, managing credit with information technology and the Canadian Credit Law.

In order to obtain the CCP designation, applicants must successfully pass 8 assigned courses (each course concludes with a final exam) and amass at least 5 years of related work experience.

10. Chartered Investment Manager (CIM)

A Chartered Investment Manager (CIM) is trained to figure out what the best investments are for a certain client, how to manage wealth from an investment sense and how to read market and economic conditions.

Many professionals with CIM credentials start off as basic portfolio planners in order to complete the two years of work experience required to be eligible for the CIP program. After enrolling, applicants must complete the assigned curriculum in order to achieve the designation.

Life Insurance The Experts Own – David Merkel, Principal of Aleph Investments

April 13th, 2015
Life Insurance Expert David Merkel
David Merkel of Aleph Investments

David Merkel

Principal of Aleph Investments, LLC

1. What Type of Life Insurance do you own?

I don’t own life insurance. My assets grew to the point where I don’t need it, but not to the point where I need to shelter assets from the tax man. Should my assets double or more from here, I will buy some form of life insurance in order to eliminate tax on my estate. There are only two good reasons for buying life insurance: protection and reducing taxes. Other reasons for owning life insurance that you might hear from insurance salesmen, such as investing, can be achieved in other ways that are more cost effective and flexible.

2. What factors did you consider when determining the coverage amount?

When I didn’t have enough assets, I carried $1,000,000 of term insurance on my life. I did this so that my wife could care for herself and our kids, and put them through college if I died.

3. Do you believe in Life Insurance for Children?

There is no good reason to buy life insurance on a child. Yes, I’ve heard the bad arguments made by life insurance salesmen who cheat the naive. Reject all of those arguments. There is always a better way to save or invest. Also, getting underwritten young is does not help a child when they become older.

If you don’t have enough money to fund the rare obligation of a funeral for a child, then your first priority is slashing expenses to the bone and building up a buffer fund to cover six months of expenses. Once you have that, then buy insurance on the husband and/or wife that works to protect the other spouse and the children against the problems that would result from the untimely death of one of the money-earning parents.

4. What is The Biggest Life Insurance mistake people make?

The biggest mistake is buying it as an investment. Life insurance is an expense to be minimized. Buy simple term life insurance where you can compare prices easily. Just take the low premium offer, and if you remain healthy, get a new term life policy every 5-10 years or so as your protection needs change, and let the old policy lapse.

If you don’t want to do the price comparisons yourself, there are often automated services to do it for you. Also note that many insurers have differing underwriting criteria, so if you find it difficult to get insured initially, consult an agent that specializes in getting special life risks insured. 

For US residents, remember, unless you are buying a big policy, the state guaranty funds stand behind your policy, so don’t worry about the financial strength of the company offering the insurance.

5. Outside of Life Insurance what other types of individual insurance are often over looked?

You are more likely to be disabled than die, so consider disability insurance – you’ll gasp at the price, though. Be sure to check whether the insurer pays disability claims readily, or fights a lot of them in court.

If you are well-off, you might consider getting an umbrella policy to cover you against large calamities. We live in a litigious age, and added protection can be useful. Again, be sure to check whether the insurer pays claims readily, or fights you to avoid paying them in court. You want insurance, not the right to sue the insurer to compel payment.

David J. Merkel, CFA is Principal of the equity and bond asset management firm Aleph Investments, LLC, and writes The Aleph Blog. Previously, he was the Director of Research for Finacorp Securities, Senior Investment Analyst at Hovde Capital, and a
leading commentator at RealMoney.com

Before that, he managed corporate bonds for Dwight Asset Management, mortgage bonds and investment risk at Mount Washington Investment Group, after working with Provident Mutual, AIG and Pacific Standard Life.

He holds Bachelor’s and Master’s degrees from Johns Hopkins. In his spare time, he takes care of his eight children with his wonderful wife Ruth

<Back to Life Insurance – What The Experts Own

Weekly Personal Finance Roundup For April 10th 2015

April 10th, 2015
Weekly Reading

This week at LSM Insurance we interviewed Canadian personal finance authorities about books they are reading and their recommendations.

On Wednesday night we attended Retire Rich 2015 hosted by MoneySense. At the event, we learned about what it really takes to be able to retire from Bruce Sellery, Duncan Hood, Preet Banerjee and Dan Bortolotti.

In this week's personal finance roundup we share articles that will help you find employment, inform you on CMHC premiums and give you a money reality check. 

Canadian Budget Binder offers tips to help you find employment and balance your budget according to your lifestyle. 

Preet Banerjee has a video on the Globe and Mail informing us on the increase of CMHC premiums for homeowners with less than 10 per cent down payment.

Barry Choi, from Money We Have, is giving us a money reality check. 

Sean Cooper adds three more costly pension mistakes to his series on Retire Happy.

Alison Griffiths on Get Smarter About Money asks the important question will you run short in retirement?


Money Sense Retire Rich 2015 Recap

April 9th, 2015
Money Sense Retire Rich 2015
Welcome To Retire Rich 2015

Last year, MoneySense hosted an event to inform people on how to generate savings for retirement. You can read the recap of Retire Rich 2014 with guest speakers Bruce Sellery, Duncan Hood, Malcolm Hamilton and Dan Bortolotti. This year, we were able to make it to Retire Rich 2015 in Oakville.

The returning guest speakers were Bruce Sellery, Duncan Hood, Dan Bortolotti and there was new appearance from Preet Banerjee. The event was informative and offered many key takeaways for retirement planning.

We joined in on live tweeting the event using #RetireRich15 sharing the knowledge we learned from Retire Rich. 

Bruce Sellery

Bruce opened the stage with a lively presentation about what it takes to keep your commitment towards retirement. 

One important note to take away is that retirement is not an activity it's a life stage. In his presentation, Bruce gave us four steps to reach that stage.

Duncan Hood

Editor-in-Chief of Money Sense, Duncan Hood, tells us how to make it to a million dollars for retirement. He gave us his four step guide to getting there. 

Preet Banerjee

Preet's talk was on the different ways financial advisors conduct their business. When looking to hire a financial planner, you should know the differences of commission-based, fee-based and fee-only planners.

Dan Bortolotti

Canadian Couch Potato, Dan Bortolotti, gives us his tips and advice when it comes to building your ETF portfolio. 

Ending off the event, Dan reminds us that if you are liking everything in your portfolio, that means there is something wrong:

What Books Do The Top Personal Finance Authorities Read?

April 7th, 2015
Barry Choi

Barry Choi

Blogger - Money We Have


What Personal Finance Books Are You Currently Reading?

The most recent personal finance books I have read were Wealthing Like Rabbits by Robert R. Brown and The Value of Simple by John Robertson

From All Of The Books You've Read, Which Ones Are Your Favourite?

I recommend all Canadians read Stop Over-Thinking Your Money! The Five Simple Rules of Financial Success by Preet Banerjee and Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam. Both of those books are on my list of the top personal finance books for Canadians.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

I'd start with Preet's book, and if you want an actual "primer" then I suggest picking up Personal Finance for Canadians for Dummies

Smolkin Sheryl

Sheryl Smolkin

Blogger - Retirement Redux


What Personal Finance Books Are You Currently Reading?

I just finished reading Second-Act Careers - 50+ Ways To Profit From Your Passions During Semi-Retirement by Nancy Collamer and reviewed it for a blog post for next week.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My all time favourite business books were by David Chilton, The Wealthy Barber and The Wealthy Barber Returns. I also really like Jonathan Chevreau's book Findependence Day.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

I think Gail Vaz-Oxlade's books are very accessible and are a good way to start, particularly for people who are in debt and need to learn how to budget.

Mark Seed

Mark Seed

Blogger - My Own Advisor



What Personal Finance Books Are You Currently Reading?

I’m just finishing up a book by Peter Thiel entitled Zero to One. Thiel was the founder of PayPal and is a venture capitalist for many tech start-ups.

I just started reading One-Page Financial Plan by Carl Richards. This book tries to simplify the financial planning process for folks. I'm going to have a giveaway on my website in a few weeks so make sure to visit.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My three favourite personal finance books are The Wealthy Barber and The Wealthy Barber Returns by David Chilton, Millionaire Teacher by Andrew Hallam and The Investment Zoo by Stephen Jarislowsky.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

I have two sets of recommendations depending upon your age group. For millennials, I recommend Wealthing Like Rabbits by Robert Brown, More Money For Beer and Textbooks: A Financial Guide for Today's Canadian Student by Kyle Prevost and Justin Bouchard. I also suggest reading The Value of Simple by John Robertson and How Not To Move Back In With Your Parents – The Young Person’s Guide to Financial Empowerment by Rob Carrick.

For all age groups, I would start reading The Behavior Gap by Carl Richards, Stop Over-Thinking Your Money by Preet Banerjee and MoneySense Guide to the Perfect Portfolio by Dan Bortolotti.

Jamie Golobek

Jamie Golombek

Managing Director, Tax & Estate Planning with CIBC in Toronto


What Personal Finance Books Are You Currently Reading?

I am currently reading Essentialism - The Disciplined Pursuit of Less by Greg McKeown.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My favourite personal finance book that I've read was The Wealthy Barber.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

I also think that The Wealthy Barber is a great place to start if you are just starting to review your personal finances.

Gordon Pape

Gordon Pape

Publisher: Building Wealth - Author of RRSPs: The Ultimate Wealth Builder


 What Personal Finance Books Are You Currently Reading?

I am currently not reading personal finance books right now.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My favorite book is One Up on Wall Street by Peter Lynch. Its common-sense approach, clear writing, and great investment anecdotes is the reason why I regard it so highly.



Blogger - Million Dollar Journey



What Personal Finance Books Are You Currently Reading?

Right now I'm reading, The Magic of Thinking Big by Dr. David Schwartz and The Success Principles by Jack Canfield.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My favorite books are The Wealthy Barber, The Millionaire Next Door, as an advocate for frugal living to build wealth, and E-Myth by Michael E. Gerber for business.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

The principles of The Wealthy Barber are still sound, but I also like Why Swim with the Sharks. Another great book is, The Beginners Guide to Saving and Investing for Canadians. This book is written by finance bloggers, including myself, and provides are great starting point to personal finance specifically for Canadians.

Sandi Martin

Sandi Martin

Financial Planner @ Spring Personal Finance


What Personal Finance Books Are You Currently Reading?

I'm currently reading two finance books right now. The first one is All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren & Amelia Warren Tyagi. The second book is Pensionize Your Nest Egg by Moshe Milevsky & Alexandra MacQueen.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My favourite book has to be Happy Money: The Science of Happier Spending by Elizabeth Dunn and Michael Norton.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

For people who are starting to review their personal finances I would recommend The Wealthy Barber Returns by David Chilton and The Value of Simple by John Robertson.

Robb Engen

Robb Engen

Personal Finance Expert - BoomerAndEcho


What Personal Finance Books Are You Currently Reading?

I'm currently reading Thinking, Fast and Slow by Daniel Kahneman.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My all time favourite personal finance book is The Wealthy Barber Returns. I find myself constantly going back to it for the great quotes and useful stories.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

It's a toss-up between the original Wealthy Barber, and Millionaire Teacher by Andrew Hallam. I would also consider Wealthing Like Rabbits by Robert Brown as an up-and-comer.

Sean Cooper

Sean Cooper

Financial Journalist - Sean Cooper


What Personal Finance Books Are You Currently Reading?

I am currently reading Pensionize Your Nest Egg : How to Use Product Allocation to Create a Guaranteed Income For Life.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My favourite book has to be The Wealthy Barber Returns by David Chilton.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

If you are starting to get your personal finances in order, I would suggest to read Well-Heeled: The Smart Girl’s Guide to Getting Rich by Lesley-Ann Scorgie right away. 

Ellen Roseman

Ellen Roseman

Personal Finance Columnist - Ellen Roseman

What Personal Finance Books Are You Currently Reading?

I am rereading Helaine Olen's book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry. She makes some excellent points about conflicts of interest and she tears apart some-well-known U.S, icons, such as Suze Orman and Dave Ramsey. She was recently speaking in Toronto.

From All Of The Books You've Read, Which Ones Are Your Favourite?

The Little Book of Common Sense Investing by John Bogle is one of my favourites. It's a quick read, but contains valuable advice from a fund industry icon about the virtues of keeping things simple.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

Stop Over-thinking Your Money: The Five Simple Rules of Financial Success by Preet Banerjee is an excellent guide for beginners.

Moshe Milevsky Professor

Moshe Milevsky

Associate Professor @ Schulich School of Business


What Personal Finance Books Are You Currently Reading?

Currently, I am reading Making Money: Coin, Currency and the Coming of Capitalism by Christine Desan.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?


Weekly Personal Finance Roundup For April 3rd 2015

April 3rd, 2015
Weekly Reading Feb 6

Happy long weekend everyone. I trust you are enjoying your day off today. This week we put together an infographic about mortgage life insurance vs individual life insurance. Then we wrote an article on 10 life insurance tips from 10 personal finance experts. We were able to roundup experts such as Ellen Roseman, Barry Choi, Bruce Sellery and many others. Now on to our roundup of articles for your weekend reading.

The articles included in our weekly roundup includes a reflection of Canadian retail closures, more tax tips, the mental side of debt and a great April's Fool joke. That is all for this week's roundup we hope you have a fun and safe long weekend. 

Golden Girl Finance reflects back on the closure of FutureShop and added it to the list of failed Canadian retailers. 

Frugal Trader From Million Dollar Journey reminds us about claimable expenses when preparing for the personal income tax deadline.

Mark Seed from My Own Advisor writes about the mental side of debt. The article weighs in on the debate of debt repayment vs investing. Mark expresses the stress he has with debt and how he would rather pay down debt over investing because he can control the repayment and not the investment. 

April 1st is better known as don't believe the internet day. Canadian Couch Potato jokingly announced their robo-advisor service.


Top 10 Life Insurance Tips From 10 Personal Finance Experts

March 31st, 2015
life insurance tips experts
10 Life Insurance Tips From 10 Financial Experts

If you are thinking about applying for a life insurance policy, there are a lot of options out there. If you want to make an informed decision, research what you can and then talk to a financial planner or life insurance broker.

To give you a basic idea of the various schools-of-thought when it comes to life insurance, here are some valuable tips from 10 real personal finance experts. No joke!

1. Don’t Avoid Buying Life Insurance

The first step to getting the right life insurance policy is to stop procrastinating and go to an advisor to talk to them about your options, says Barry Choi. He mentions that a lot of Canadians don’t want to talk about life insurance because of the connection with facing the possibility of accidents or their own death. No one wants to think about death all the time, but it’s smart to talk about your life insurance needs and be prepared for whatever life has in store.

2. Fill Out Paperwork Accurately

Ellen Roseman suggests anyone taking out life insurance to make sure that they fill out all of their paperwork accurately. It's a good idea to fill out the paperwork with your medical records in front of you to make sure your application is correct. You may not have omitted a medical issue out of intent to deceive; you may simply have forgotten that you had a health issue many years ago. You don't want any surprises when you go to file a claim down the road. The insurance company can deny you the money if they find undeclared medical problems.

3. Be Weary Of Permanent Life Insurance Investment Returns

The Frugal Trader at Milliondollarjourney.com believes that Whole and Universal life policies will typically provide a lower-than-average return on the investment portion of the premium. He raises some good points. Before diving into permanent life insurance make sure you are aware of your other options, such as buying term life insurance to cover your immediate needs and investing the rest on your own.

4. Calculate How Much Insurance You Need

Sometimes you are offered group life insurance at work and you may not be sure if you need to purchase more to be fully covered. Sheryl Smolkin and financial planner Rona Birenbaum provide a formula to assess your life insurance needs. The formula is this: “The insurance coverage you need = total outstanding debts + funeral costs + education funding for children + (annual cash flow needed by the survivor to remain debt free x number of years cash flow is required.)

5. Calculate the Return on Your Life Insurance

Bruce Sellery suggests that you should crunch some numbers and determine if buying life insurance is truly worth it when you are older. He says that in some cases you could possibly save more by putting the amount of the premium into a tax free savings account to go to your family should something happen to you.

6. When You Shouldn’t Buy Life Insurance

Robb Engen recommends some situations in which you should never buy life insurance. You should avoid buying life insurance when you’re young-unless you really need it. You shouldn’t consider this an “investment.” When you feel pressured because of your health, continue to look around for the right policy. Moreover, you should have a higher base amount of your policy instead of buying expensive double indemnity insurance. You should also avoid buying life insurance simply because the company is well-known.

7. Ask Questions

You should ask lots of questions about your policy, according to Melissa Leong. It's very important that before you buy a life insurance policy you know about your adviser’s experience in the industry and that you fully understand the terms. You should know the type and amount of insurance and how long the coverage should last. You should also know if your policy is convertible or permanent.

8. Factors that Will Cause Your Life Insurance Application to be Declined

Martin Malinski & A. Fox discuss some of the major reasons why your application for life insurance may be declined. They state that having a chronic or serious medical issues such as: obesity, stroke, heart attack, diabetes, cancer, Parkinson’s, Lupus, HIV/AIDS, MS, ALS, Crohn’s/colitis, even heart, kidney or liver disease can result in your application being denied. Other factors that may impact the approval of your application or cost of you policy is if you have a dangerous job, participate in risky hobbies, if you travel to unstable regions of the world or you have or currently have any addiction to alcohol or drugs.

9. The Biggest Mistake People Make With Life Insurance

Alan Whitton (a.k.a Big Cajun Man) says that the biggest mistake people make when buying life insurance is neglecting term life insurance and buying whole life insurance. Remember that insurance is primarily not an investment; it’s meant to protect your family in the event of an accident or death.

10. Keep An Open Mind When It Comes To Life Insurance Strategies

Jon Chevreau on Get Smarter About Money offers up a nice tip for people with aging parents or in-laws. Taking out a life insurance policy on the life of a parent could be a tax-effective way to create a source of income at their inevitable death. As grim as it may be, this could be a smart financial move for children to consider.

Weekly Personal Finance Roundup March 27th 2015

March 27th, 2015
Weekly Personal Finance Reading TFSA Taxes

This week, we interviewed the founder of Canadian Legacy Builder, Kevin Cahill, about the importance on critical illness insurance in our experts roundup series. We announced that we will be hosting a BBQ for Youth Without Shelter this summer. The event take place on June 11th from 4 p.m. to 7 p.m. For more information about the BBQ check out our announcement post here. Lastly, Chantal Marr wrote an article in Forum Magazine all about kids and insurance.

Below are articles I found interesting this week that deal with investing, budgeting and an experience that a new small business went through during tax season. That's it for our weekly roundup and I hope you all have a great weekend.

Young and Thrifty explains why they are paying down their mortgage more aggressively. In fact, Young suggests to put more money towards paying down your mortgage over investing in a high interest savings account or GICs because your mortgage interest rate is higher than the returns from these accounts. 

An interesting guest post was published on The Blunt Bean Counter this week. The article started as a comment on The Blunt Bean Counter's article on Ontario's Retirement Pension Plan and how it affects you as an employee or self-employed. The article is about the trials and tribulations of a small business just getting started. 

Frugal Trader from Million Dollar Journey gives the run down on how he is able to support his family on one salary. Some things he tributes to being able to do this is having no debts, tracking spending and keeping expenses low. 

Your financial advisor often tells you that individual stock picking is not worth the extra time and effort and that you should stick to buying an index instead. Michael James gives a reason as to why this is sound advice. 

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