Tuesday, September 18, 2018

The importance of critical illness insurance.

Being proactive and prepared are among the traits of persons who may overcome a life-threatening situation. This leads us to our topic of critical illness insurance. The critical illness insurance product is one in which the insurance carrier is contracted to make a lump sum cash payment if the policyholder is diagnosed with a terminal illness as predetermined in the terms of the policy contract. The key here though is to have the policy in place prior to the first diagnosis of the terminal illness, that is, when you are healthy. You will also need to ensure that you keep your premium payments up to date since a lapsed policy is of no benefit in the time of need.

Some may argue that if they are healthy, why bother with critical illness insurance? Or, they may say it's not a priority since they eat well and exercise or they may have some other reason to avoid this critical aspect of their financial and family planning. While eating well and exercising is good and recommended, it may only reduce the risk of terminal illness and not totally avoid it since sometimes we are genetically predisposed to these illnesses. A critical illness insurance policy can ease the stress that is associated with seeking treatment upon such diagnosis.

Let's look at a real-life scenario (not the real names of the individuals). Mr. Winge was an Insurance Advisor who happens to reconnect with one of his long-time friend Mr. Tulloch. Mr. Tulloch was a 55 years old married man who had no interest in insurance. Furthermore, he does his annual medical checks and he was fine. Mr. Winge informed him of the benefits of having a critical illness plan in place even while he does his annual checks. After much consideration, he reluctantly agreed that if such misfortune should occur he would not be able to fund his treatment. So in 2014, he took out a critical illness cover with a Sum Insured of $3,000,000 JMD with a monthly premium of $3,500 JMD. In October 2016, Mr. Tulloch was diagnosed with early stage Prostate Cancer having done his usual annual checks. This was exactly two and a half years after he took out the critical illness policy. Immediately, he made a claim and received the sum insured of $3,000,000 JMD in full and was able to fund his surgery. The treatment was successful and Mr. Tulloch was happy he had the policy in place.

While some may never be diagnosed with a critical illness, some will and that's the uncertain event. So it is best to plan for it and not need it than to need it but didn't plan for it. There are a lot of persons not with us today, not only because they were diagnosed with a terminal illness but most importantly, they couldn't afford the necessary treatment to overcome the illness.

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Monday, April 9, 2018

Retirement Crisis... Are you at risk?

For the sake of this post, I want to speak specifically to the mistakes of the working population and the realities of retirees in Jamaica. Hopefully, this information may prevent or curtail the situation where an individual is headed towards a retirement crisis.

So what is retirement? Retirement is the act of ceasing to work, whether voluntarily or involuntarily. In Jamaica, the normal retirement age ranges from 55 years to 65 years. However, an individual may opt to retire at any time given that they have made provisions to sustain themselves after retirement. Also, an individual may retire involuntarily resulting from a situation whereby they are disabled and can no longer work to provide a means of income for themselves.

Having said that, after retirement, there are still living expenses to service which may become a problem if an individual didn't plan for this eventuality. These expenses may include but not limited to household bills, food and the largest expense for elders after retirement is medical expenses. For those who had made provisions by way of setting aside a portion of their earnings during their working years would have the means to receive a pension from the sums invested in a pension plan. A pension is a regular payment made to retired persons who had made contributions to a pension scheme. The pension received now becomes their source of income.

Here are some mistakes made by employees during working life and the realities after retirement:

MISTAKES during working life:
  1. Started saving towards retirement late. (Start as early as possible, preferably at first job.)
  2. Investing only 5% of salary every year. (Consider investing more than the minimum.)
  3. Failing to reinvest retirement savings when changing jobs. (Cashing out all or part when changing jobs will adversely impact retirement income.)
  4. Failing to do periodic review of retirement savings after initial sign up. 
  5. Failing to seek professional advice about your retirement saving options.

REALITIES after retirement:
  1. Pensioners can barely make ends meet, while others don't even have a retirement income.
  2. Pensioners don't have enough funds to cover medical expenses - one of the biggest expense after retirement.
  3. Pensioners are unable to save towards an 'emergency fund' after retirement due to the pressures of other expenses.
  4. Some pensioners are still in debt after they stop working and still have adult dependents to support.
  5. Pensioners today would strongly advise the youth to start their saving and planning for retirement EARLY.

If you have not yet started saving towards your retirement, you can start now. Whether you are self-employed or the company to which you are employed don't have a pension arrangement, you have the option to start saving in an Approved Retirement Scheme (ARS) for individuals. Don't delay, get started today! FREE Consultation, Click Here.

Retirement can be a wonderful experience or a rude awakening... it's all up to you.
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