It?s an accepted fact. There are things in life that we have no control over.
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It?s an accepted fact. There are things in life that we have no control over. Death is one. Unless we are planning a suicide, the where, when, what and how of our life?s end are things we simply have no prior knowledge of or power over. The same is true for accidents and illness. We don?t know when they will hit us. Of these three risks, however, death is more devastating as its effect on our family?s future is permanent.
Does this mean therefore that we are completely powerless to deal with this eventuality? Not really. Granted we have no idea when death will befall us, there is something we can do to soften its blow. We can plan. We can make sure that, if and when death happens, we are ready.
This in essence is what life insurance is all about. It?s our positive response to a negative risk. For this response to be effective, however, we must be sure it is the right one.
Simply put, our life insurance policy can only guarantee our beneficiary?s future as far as we allow it to. We need to make sure therefore that we purchase one that is well suited to our needs. More importantly, we need to understand the provisions of our policy.
This is the bitter lesson Barry Norman learned too late as illustrated in the case of Avco Financial Services Realty Ltd. V. Norman, a decision of the Ontario Court of Appeals.
Barry Norman and his wife Yvonne secured a one-year second mortgage loan from Avco in 1988 and arranged for a life insurance coverage as an addendum. His belief was, should anything happen to him or his wife, the policy would serve as settlement. Things went smoothly at first. In 1989, the mortgage and insurance were renewed for another year but in 1990, Norman?s wife no longer qualified for the insurance. She had fallen ill with cancer and died the following year. When the mortgage went into default, Avco sued Barry Norman for payment of the loan. He counterclaimed for negligence, alleging Avco failed to inform him that the insurance expired with each one-year term of the mortgage and had to be renewed. The court ruled in favor of Avco. Barry Norman should have informed himself of the insurance details when he renewed it for another year.
The lesson here is crystal clear. Don?t just purchase a life insurance policy. Talk to a licensed professional and make sure you get a policy based on what you want and that you understand all its provisions. If you are a mortgage borrower, don?t sign up for life insurance from your lender. This is not their main concern. If you worry about the mortgage, then get a higher coverage that will be able to cover both the mortgage and the needs of your family. Take charge of your insurance policy. This is one aspect of your life you need to have control over.