Jack W. Larmond
Consultant, The Benefits Company
1. What type of life insurance do you own?
I own the following life insurance and living benefit insurance policies: Term 10 Life Insurance policy, Universal Life, Disability Insurance, Critical Illness Insurance, and Long Term Care Insurance.
2. What factors did you consider when determining the coverage amount?
I purchased a term life insurance policy because I have some debt obligations, and I understand the need to protect my future insurability in the event of having a change in health. I am definitely over-insured for the next few years, although for the small premium based on my age, it made sense for me. I do not want to be left in a position where I can’t get insurance when I have kids in a few years and have a larger mortgage obligation if I have a change in health between now and then, so over-insuring myself for the time being makes sense to me. I know I will need that amount of coverage to cover debt obligations and to replace income, so buying it now while I am young and healthy makes sense to me.
I own a critical illness policy, as I know firsthand the impact. I have lost an aunt, and recently an uncle, to cancer. My grandmother was also diagnosed with cancer in the last couple of years and, thankfully, she is doing better. My fiancée also owns a critical illness policy, and here are a few reasons why we purchased this coverage:
I specialized in Long Term Care Insurance during the first year in my career and truly understand the need for it. I know how costly care in the future will be, especially with the onset of Baby Boomers and the shrinking tax-base, so I am not relying on the government to be there for me if I make it into my 70s, 80s, or 90s.
When I first got into the business at the age of 23 years old, my brother convinced me to buy disability insurance. I looked at the cost of $100 per month at the time and I thought that was a lot. Being young and with my low-risk occupation, I also thought the likelihood was low. My older brother, Chad, who is also in the business, used an analogy that has stuck with me ever since — “If you had a money machine in your basement that printed $50K or $100K every year, would you pay for insurance that cost you $100 per month to $200 per month to insure that money machine in case it broke?” I have owned disability insurance ever since.
I own some permanent life insurance, and I will eventually convert some of my term insurance to purchase some more permanent insurance in the future (especially if I have a change in health). I use my Universal Life policy also for investment purposes, as I keep an emergency fund in the tax-sheltered part of the policy.
3. Do you believe in life insurance for children?
I believe in first protecting the breadwinners (the parents) of the family and ensuring that all of their insurance needs are addressed. If cash flow permits to cover the children, then I certainly recommend covering the children (in most cases). I am currently dealing with a couple right now who purchased a child term rider on their life insurance, and now that the child is 25 years of age, he is no longer able to be covered on their policy for the $50 per year premium. The child has cerebral palsy and is not able to buy coverage medically in the marketplace at a reasonable premium. The coverage the parents put on him is now affording him the ability to get ten times the benefit offered through the conversion feature built into the child term rider they put on the policy.
For those who have employee benefits through work, most benefits plans offer some dependent life insurance, which can help cover the cost of burial in the event of losing a child. People do not like to think of this, but unfortunately, it is a reality that can sometimes happen. For $3 to $5 a month, parents can add a Child Term Rider onto their life insurance policy to cover their children (this one price covers all kids) for approximately $10K of coverage. For those who do not have a benefits plan, which offers dependent life insurance, I always recommend the Child Term Rider on their policies.
For those whose cash flow and incomes allow, I do recommend Child Critical Illness Policies and paid up life insurance policies because the premiums are so inexpensive and this coverage protects the children’s future insurability. What many people fail to realize is that if a parent, or both parents, of the child have a change in health, this could affect the child’s future insurability or the option to buy coverage at a standard rate in the future. If the child contracts a major critical illness, to have the ability to go to the states for treatment next day, or afford the parent (or parents) the money to take more time off work to help be there for their child is invaluable (at least to me). It is also likely that they may want the flexibility to take some time away from work to just be with the family.
4. What is the biggest life insurance mistake people make?
There are a few that I see commonly, and here they are in order.
5. Outside of life insurance, what other types of individual insurance are often overlooked?
Disability Insurance, Critical Illness, Long Term Care Insurance, drug coverage, and for those who travel, having adequate emergency out-of-country coverage.
Jack W. Larmond, B. Comm. (Honours B.A.), GBA, is a consultant at The Benefits Company, which specializes in Employee Benefits and Pension Plans (www.thebenefitscompany.ca). Jack is also the principal and owner of J.W. Larmond Life Insurance & Benefits, where he is able to assist clients with Life Insurance, Disability Insurance, and Critical Illness planning (lifeinsuranceadviser.com). Jack is committed to being a specialist and expert in the areas of employee benefits and assisting business owners, professionals, and families with their life insurance and living benefits needs. As a broker, Jack is able to help clients plan by having access to all options in the marketplace.
Jack is very close to his family and friends. He is a true believer in working hard but having a solid work-life balance. Jack is an avid skier, hockey player, and golfer. He has a very positive outlook on life: “What you believe, you will become.”