Question—As a subscriber to MacLean's I would appreciate very much your advice regarding my insurance. I am 83 years of age, married, with four children. My income, now is about $4,500 per annum, which likely will increase to at least $5,500 in the next fire years. I have at present, the following insurance: $1,000 20-pay life, taken nut in 1916: $1,000 20-pay life, taken ant in 1919: $15,000 select life, in 1928. I am thinking of taking out another select life policy with the Dominion Life Assurance Company for $10,000 arid within fire years increasing the total to $50,000. The agent has stated that first, after 20 years I can get back the money paid in, also the dividends, and that this would be a profitable investment. Second, according to present records, in 25 to 27 years the face value would be paid itp and thereafter I could draw on this
fare value the dividends as paid by the Company. Are. these statements correct?
Would you advise insuring with one Company only, or would two be better?
Would you please give me your criticism an my plans for insurance which I have outlined? Also please advise me what type of insurance would be best, and what amount I should carry.
Is the Dominion Life a sound company?
What do you think of double indemnity and total disability? Should I take either or both?—R.V., Prince Edward Island.
Answer—In arriving at a determination of the amount of life insurance a business man should carry, the following rule applies. Sufficient insurance should be carried in order that the proceeds of the insurance together with other financial assets, invested at a safe rate of interest, would yield sufficient to allow the beneficiaries or heirs to continue to live on the same standard as they enjoyed when the insured was alive and able to provide for them. You suggest building up your insurance to $50,000. The sum of $50,000 invested at five or six per cent would yield in the neighborhood of $2,500 or $3,000. Would this enable your family to enjoy the comforts and privileges that you have planned for them?
The Dominion Life Insurance Company is a soundly established and progressive concern, and has built itself into a very sound position in the Canadian insurance world. Under normal conditions where profits are left to accumulate, a whole life insurance policy becomes paid up in 26 or 27 years.
As far as safety goes, it matters not a great deal whether you insure with one company or more, that is, companies licensed to do business in Canada by the Department of Insurance at Ottawa. As I assume that protection is your main objective in insurance, I would be inclined to concentrate on the cheapest, as in this way you can get the most insurance and most protection for the amount of money expended. This is usually the whole life or 20-payment life plan. I would certainly incorporate double indemnity features with every policy taken. This adds a little to the cost, but it is worth it.
As pointed out by your agent, a life insurance company cannot guarantee an interest return of more than 3'A %• Usually the rate of interest they pay is much higher, ranging from five per cent upward, but rates are subject to some slight change from year to year and accordingly the companies are restricted as to the amount they can guarantee. Normally, I should say that five per cent was quite a conservative estimate.
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