Michel Landry

To you dad...

In a rush of emotion, my father then aged 70, said to me: "Young man, you should calculate, if it’s more profitable to take a few thousands of dollars annually in RRSP, or take a life insurance policy on my head at the age of 70". I am not telling you to cancel your RRSP but only to have a look to both possibilities. Taking your RRSP and a life insurance on my head. I fell off my chair, I even spilled the glass of wine he had just served me! I looked at him and smiled, he said: "Make your calculations my boy". My father had spent his last 20 years studying the stock exchange markets and analyzing the curves, graphs, outputs, tendencies and the influences of the markets. He often told me: "It’s curious young man, that the financial analysts all went to the same school and have different thoughts. The high financial ones, managers of funds, recommend a market in particular and the others recommend the opposite. These recommendations done at the beginning of the year, change every three months, and us, the small investors, are obligated to have confidence in the stock brokers, financial advisers, financial planners etc., with different visions, all paid on a commission basis. I discovered ROLAIDS! It’s obvious, the markets are so unforeseeable that it takes nerves of steel and stomach burns!

"The Stock Market is not what it was. In the past, we invested for the long run and kept our portfolio. Now, for already several years, Daytrading has arrived. So, anybody buys anything, and dreams that the small shares called Pennies stock at 2 cents will go up to 60.00 $, this, helped by the technological bubble of the analysts with recommendations of STRONG BUY (strongly recommended purchase). "Young man, you, who works in that circle, do you know many people who have made fortunes?" No, I know more people who have lost fortunes. That’s the stock market. People buy when it goes up, and sell when it drops because they get scared shitless, helped by the financial analysts who had recommended that title, and now recommend to sell it. That’s it.

I had heard enough to start my calculations. I then analyzed an investment in a RRSP versus a life insurance on the head of my father. Say 5 000 $ annually invested in a RRSP, against a life insurance of 100 000 $ with a 5 000 $ premium, for a man aged 70, non smoker. I calculated a tax return of 40 %. I then calculated the sum invested with a return of 6 % during 20 years. But what about the life expectancy of my father? I had to think of it. I then asked the bank and insurance companies to provide me with the life expectancy table, and I quickly realized that this document was rather difficult to obtain. I was advised that this was a document for internal use only. You will understand that this document, uniform for all, is the bible of all financial institutions.

The life expectancy of my father was: 13 years and 6 months, according to this table reserved to insurers. Another thing that I had to take into consideration, was that at the death of my father, the capital of 100 000 $ would be non taxable, in my pockets, contrary to the RRSP, which, is accumulated and taxable from the first cent withdrawn. Oups!, I was not to forget that.

But 13 years and 6 months, is an average of the remaining life for my father. He had not yet had medical tests to subscribe to this policy of 100 000 $. The insurance company had not analyzed the medical history of my father, etc... I then informed my father that I was trying to subscribe to a life insurance on his head, on which, I would be the beneficiary and owner , and he, the insured person only. He accepted and added: "At my death, if it can give you more, young man, so much the better, because in any event my RRIF will be taxable, and you will have to pay the income tax". Thank you dad!. My father had a medical questionnaire completed by a nurse at his home. He had to provide a urine test as well as a blood test. The insurance company asked for a copy of his medical record from his doctor.

After a few weeks, I received the policy. My father was accepted standard, exactly as we had asked. Without extra premium. I was happy, and him also, for two reasons: He had just been told that he was insurable, thus, in good health, and he was glad for me because I would have 100 000 $ No tax at his death. I decided to pay the premium of $400.00 on a monthly basis, I had the feeling that I was putting money aside, without being able to withdraw it, contrary to the RRSP. The months passed. Twenty two months to be exact, when, one day, while visiting me at home, he told me he had a problem with his back, it was hurting, "Go see your doctor dad, it does’nt make sense for you to suffer like that". He went to see his doctor who decided to have him pass a lung X-Ray . He was diagnosed : Lung cancer, advanced phase, non operable, with metastasis at the bottom of the back. He died 7 months later,. I paid 29 months at 400.00 $ and received a cheque of 100 000$ in life insurance, thanks to my father. This occured 3 years ago. Today I still smile when I think of my father and I also cry.

Father, thank you for what you were to me, and even at your death you knew how to be preventive. You always said that what’s important in life is to be happy, in good health, with money in your pockets.

Dad. Thank you!

Dedicated to my father.

Michel.