Mark Twain is rumoured to have said "Denial ain't just a river in Egypt." As a matter of fact, denial is prevalent when it comes to financial and estate planning.
Sixty per cent of Canadians die without a will. Without a will in B.C., the Estate Administration Act dictates
how your estate will be divided. If the government is put in charge of your estate, you can rest assured it will not turn out well.
While you're thinking about the need for a will, consider the mayhem should you lose the capacity to sign off on important financial decisions. A properly drafted enduring power of attorney solves this problem.
If you don't know where to start, send an email to [email protected] and I'll gladly send our will planning guide. Once completed, you should then make an appointment with a lawyer and get this done.
Let's also deal with the last thing on your mind: insurance.
Manulife Financial conducted a survey last year with 1,000 Canadian homeowners between the ages of 30 to 50 and annual household incomes of $50,000 - $150,000.
Almost six in 10 respondents said they were concerned about providing for their family if they were to die. Seven in 10 were concerned about the financial impact of being unable to work for an extended period of time because of injury or illness.
Ironically, less than 60 per cent of respondents said they have an individual life insurance plan, only 21 per cent have individual disability insurance, and only 13 per cent indicated they have individual critical illness protection.
Altogether, 92 per cent do not have a plan that includes all three risks - disability, critical illness and death.
There is a huge disconnect here between people's concerns and the actual risk. For example, the risk of critical illness, disability or death before age 65 for a 30-year-old non-smoking male is 62.6 per cent. For a woman, it's 58.2 per cent.
Most people understand the value of proper planning, of drafting a will and taking out the right amount of insurance. However, the statistics show we do not act on that knowledge.
It's getting easier though. For example, one insurer has recently created a simplified category of coverage called "combination insurance." It involves only one application and can cost a lot less than applying for all three coverages separately.
It's time to come out of denial and end the procrastination. All it takes is a proper action plan. A well-qualified financial planner, together with your other advisors, can help you to quantify your "human capital" value, demystify the financial industry and design a plan that deals with life's dangers.
Richard Vetter, BA, CFP, CLU, ChFC, is a certified financial planner and owner of WealthSmart Financial Group (www. wealthsmart.ca).
