Longevity

Jun 26, 2020 | Problems | 0 comments

While insurance professionals are always mentioning the need for coverage to protect one from a premature death, they are rarely building in solutions to cover the risk of living too long – longevity risk.

 

Source:  World Bank

The average life expectancy for a Canadian in 2017 was 82 years.    We have to remember however that this means that half of the Canadian will die before 82 years, the other 50% will live beyond 82 years.     And nobody is winning financial planner of the year award if half their clients run out of money.

As a result many plans are built to account for an age 90, and more recently even an age 100 assumption is used in cash flow planning models.    The result is an income level that is significantly below a retiree’s expectations.    Basically, not knowing when you will die results in you having to live much less as you plan for a worst-case scenario of becoming a centurion.

What if you could build a better plan that allowed you to spend down your assets in retirement to age 85 and have all of that money replaced by your cash value insurance should you live a wonderfully long life.

Term insurance is a great tool to replace your income if you die prematurely.   But permanent cash value insurance can both replace your income if you die prematurely as well as replace your income if you live too long.

You need a better built plan.

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