Do aging clients understand their policies?

When it comes to insurance, make sure clients understand what they’re buying. Otherwise, they’ll be forced to pay the cost.

Clients who bought life insurance in the 1980s and 1990s may be paying more for their policies than what they’re worth, due to rising interest rates.

This is the case for 81-year-old Midland, Ont. resident Raymond Ellis, reports Toronto Star’s James Daw.

Ellis bought a $45,000 policy 26 years ago, and says he’s paid as much in premiums as what his policy will pay out.

He says he didn’t realize that if interest rates rose, his premiums would, too.

Because Ellis likely has a few more years under this belt, his best option is to either approach a family member for financial assistance, or cancel his policy and put his money in the bank, says James Bullock, officer of The Peel Institute of Applied Finance.

The staff of Advisor.ca have been covering news for financial advisors since 1998.

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