INSURING YOUR BUILDING
The purpose of this book is to provide you with a step-by-step template that you and your advisor can use in putting together your retirement income blueprint. Although it is not the intent of this book to go into detail on health-risk management, it is necessary to make reference to this issue because of the potential impact on your retirement income and your income-producing assets. Assume that you have a $400,000 home and $400,000 in investments. In the morning mail, you receive the renewal for your fire insurance. The policy’s premium is $1,500. You could turn to your spouse and say, “You know the premium is $1,500 and we’ve never had a fire in our home. In fact, there has never even been a fire in this neighbourhood. Let’s not spend the $1,500 on insurance. If the house burns down, we’ll just replace it by taking the $400,000 we have in our investment account and building a new one.” That evening as you are watching TV, you see smoke coming out of the kitchen. I assure you that if this happened, you would run down to the insurance company with the $1,500 cheque in hand.
It’s not logical or financially practical to put $400,000 at risk when $1,500 per year would cover that risk. Why is it any different with loss issues related to critical illness, long-term care or life insurance? As it pertains to health at age 65 and beyond, there is “smoke in the kitchen.” This is the time that health-related risks are the greatest, and yet I find people not ...