When we first sat down, I also told him of my past as a financial adviser so he be aware that I may be a knowledgeable client  – to not say difficult, as most knowledgeable clients are…

After fifteen minutes of small talk, we started discussing the details of our cover. It did not take long for the adviser to start pushing the dreaded Investment Linked Program to us. I clearly said that we were not interested in ILPs, but despite my clear requests, he kept pushing ILPs back on the table. I understand that he makes more money from such programs, but if I tell someone we are not interested, he should listen and move on. Otherwise, he may lose us as clients altogether. Which he most certainly did.

So why do advisers not listen to their clients ?

• Most of them lack selling skills and simply learn a script, which makes it difficult to really listen and adapt when needed.
• Their incentives are skewed towards ILPs – commissions for ILPs are very generous.
• They simply don’t care about their clients.

Don’t get me wrong, some agents do behave ethically and will recommend honest products that answer their clients needs and requests. The difficulty is to find them.

Here are a few pointers to help you differentiate between the good apples from the bad.

1. Learn more about personal finance. The more you know, the better you’ll be able to defend your interests.
2. Find an adviser who listens to you. If the one you are sitting down with does not, or handle your objections deftly before coming back to offering you the same type of solution he first approached you with, please, quickly say your thanks and look for a decent adviser. You’ll save yourself a lot of trouble and money.

Good luck !

* TPD and CI are acronyms which respectively mean Term Permanent Disability and Critical Illness

The real question to ask yourself is how long would your company keep you on payroll if you were not fit to work for them anymore? Of course, good employers would keep you on payroll for a few months months to give you time to recover. But at some point, should you not recover fast enough, they have to make a business decision. This is where the income protection insurance kicks in.

How does it work?

Income protection will protect your greatest asset… your income.

It can replace up to 75% of your gross revenue, and kicks in when you need it most: when you are ill or injured and unable to work. Thanks to it, you can focus on recuperating and getting well again while you know a regular income keeps coming in your way.

Technicalities

You can chose your deferred period – the number of weeks you have to wait before your insurance kicks in – so as to manage your premiums. Of course, premiums decrease as the deferred period increases.

You can also chose to insure your income for different periods of time. Usually, you can opt for an insurance covering you for 2 years, 5 years or even, until your “retire” at age 65.

Of course, insurance companies being insurance companies, most of them set a number of exclusions to their policies. Benefits may not be payable for accidents or illness arising because of drugs, alcohol, wars, pregnancy, and self inflicted injuries.

Three Advices

I hope these few lines helped you understand better what insurance protection is all about, and how it can help you. To wrap this up, here are three advices I give on a regular basis to people who think they don’t need it.

1. Don’t assume that you don’t need income insurance (or additional coverage) because you’re young and healthy. If you are under 35,you have 1 in 3 chances to be disabled for more than 6 months during your career
2. Even if your company is generous and provides with an income insurance benefit, don’t assume that it’s necessarily enough to cover all of your income replacement needs. Maybe it is. Maybe it isn’t. Take a little time to calculate your needs appropriately so as not to discover your income protection falls short when you need it. I quite like this calculator: MBF Calculator.
3. If you have a need for insurance, lock in coverage early, when the need first presents itself. If you wait too long, your flawless health history may deteriorate, and your rates will rise accordingly. Worse, should you health deteriorate or you suffer from a serious chronic condition, you may be unable to insure yourself down the road.

Times like these call for cautious decisions. The markets are volatile, and don’t really know where they stand. Many people I meet are reconsidering their investments. They don’t want to risk their hard-earned money. Who would blame them?

Yet, as most long term investors well know, the best opportunities arise over uncertain or difficult times. Seth Godin even wrote about the opportunity of a lifetime – Seth writes way better than I ever will – do read these inspired 10 lines !At the end of the day, we should take a step back and ask ourself what we really want to do in such markets.

Many will back-off and will look for safer opportunities. The long term investors will build positions over the next 2 to 3 years and wait for the markets to get back on track. They have time on their side. At the end of the day, they will be the ones who are rewarded for their boldness!

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful?” – Warren Buffett