I really like your response. You make an especially good point about the typical family's cash flow. Most wont even notice a $100 that otherwise would be spent on Latte's etc. Everything is a trade-off.SteveDfsin wrote: ↑Mar 16th, 2017 12:48 pmYou're absolutely right that I do use some industry standards when it comes to insurance planning, you also do see the importance of life insurance. I think where we disagree is the total number recommendation of life insurance. I think you're over estimating the cost of a term life insurance plan if you feel it would have a large impact on a families finances. I will say this and this is just in my experience when people purchase any time of insurance plan, the money that goes towards premiums usually comes out of a person's disposable cash flow. I've never seen someone scale back on groceries, retirement planning or home bills to buy life insurance.
One of the first things I do with people (before getting to insurance planning) is a cash flow exercise. At the end of every month, there is a surplus of cash without an assigned task (unless there is a deficit which is a whole other topic), that surplus is what goes towards the insurance planning. The entire surplus doesn't towards insurance, of course, there are other important financial goals that must be reached. One thing to note, is that after people work cash flow, they started to naturally get a better control of their day to day finances, less money towards things they don't need, and more towards things they do. I've learned that there is a lot of psychology when it comes to managing money.
That's my .02 when people argue that premiums should be kept low because x, y, z.
Personally we max out RESPs (for 2 kids), RRSPs in addition to both my wife and I having a defined pension and we still save 10% of our net income almost every month. This goes directly into an investment account so any additional life insurance would directly reduce the size of this account.
My life insurance adviser was shocked when I said this, but I also know from personal experience that a smaller financial cushion can be a very positive force when overcoming trauma. Being forced back to work can be very beneficial for recovery.