Sean Cooper|Pension Analyst and Financial Journalist


 

Sean Cooper

Pension Analyst and Financial Journalist, www.seancooperwriter.com

1. What type of life insurance do you own?
My employer provides group life insurance and accidental death and dismemberment (AD&D) coverage. The basic coverage is  my eligible earnings times one, up to a maximum coverage of $1,000,000. This means if I make $60,000 a year, I would be covered for $60,000.

I am also automatically covered for AD&D in an amount equal to my basic life insurance. During annual enrollment, I can purchase additional life and AD&D insurance coverage in units of $10,000, up to a maximum coverage of $2,000,000.

2. What factors did you consider when determining the coverage amount?
The group life insurance my employer provides is more than sufficient for someone who is single like me. Besides my mortgage, which I plan to pay off before age 31, I am debt-free – I don’t have any car payments, credit card debt, or student loans to worry about. If I were to pass away suddenly, my parents could sell my house to cover the mortgage. If I were to get married or have children, I would definitely reconsider my insurance coverage at that time.

3. Do you believe in life insurance for children?
Unless you’re flush with cash, I would advise against insuring your children. While I can understand the emotional toll it can take on parents to lose a child, I believe it’s more important to insure the parents. The parents earn the income that supports the livelihood of the family, not the children. You’re better off investing the money in an Registered Education Savings Plans (RESP) for your children’s post-secondary education.

Most employers allow you to take paid time off for bereavement when you lose a family member. If you’re devastated by the loss and you’d like to take an extended period of time off, your employer may be willing to provide you with an additional unpaid leave of absence. That way you can take the time off you need to recover without fearing about the security of your job.

4. What is the biggest life insurance mistake people make?
I’m not a big fan of mortgage insurance. I wrote a blog -- "Why You Should Avoid Mortgage Life Insurance" -- for the Housing Block. CBC Marketplace has covered this type of life insurance many times. I think a lot of homebuyers make the mistake of not opting out when they sign up for their mortgage. They assume they have sufficient coverage with mortgage insurance and forgo buying term life insurance. Then, tragedy strikes -- the breadwinner dies and the spouse is left raising the children on their own. The spouse is relieved he or she has mortgage insurance – until the claim is denied.

A lot of people aren’t aware of post-claims underwriting. If you’re found to have a preexisting medical condition that you didn’t disclose when you signed up, your claim could be denied. The last thing you want is for your grief-stricken spouse to have to go to battle with the big banks when you’re no longer around. If you had simply purchased term life insurance, your spouse wouldn’t have to deal with this headache.

5. Outside of life insurance, what other types of individual insurance are often overlooked?
While most people are aware of the benefits of life insurance, when it comes to disability insurance, a lot of people are still in the dark. The sad reality is that since most people have life insurance and not disability insurance, a lot of people create a situation where they would be better off economically if they died instead of became disabled.

Disability insurance protects our human capital – the ability to earn income. If you became disabled, not only could you have costly medical bills to deal with, you may no longer be able to work. Disability insurance also potentially means you won’t be forced to stock shelves at a supermarket if you suffer a brain injury and are no longer able to work at your white collar job.

Sean Cooper is a pension analyst at a global pension consulting firm by day and a financial journalist by night. He is a first-time homebuyer and landlord passionate about real estate. He was inspired by Income Property’s Scott McGillivray to live in his basement and rent out the upstairs of his house. He is well on his way to reaching his stretch goal of mortgage freedom by age 31. He is on Twitter @SeanCooperWrite. You can request his services and read his blog on his personal website, http://www.seancooperwriter.com.
 

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