It's a well-known fact. There are some things in life we can't change. One is death. Unless we plan to kill ourselves, we don't know where, when, what, or how our lives will end, nor do we have any control over it. Accidents and illnesses are the same. We don't know when they'll come after us. Death is the worst of these three risks because it changes our family's future in a way that can't be fixed.
Does this mean that we have no control over how to handle this situation? Actually, no. Even though we don't know when we'll die, there are things we can do to make it less painful. We can organise. We can make sure that we are ready for death if and when it comes.
This is what life insurance is all about in the end. It's a good way to deal with a bad risk. But for this answer to work, we need to make sure it's the right one.
Simply put, our life insurance policy can only guarantee the future of our beneficiary as much as we let it. So, we need to make sure that the one we buy is the right one for us. The most important thing is that we need to know what our policy says.
This is a hard lesson that Barry Norman learned too late, as shown in the case of Avco Financial Services Realty Ltd. v. Norman, which was decided by the Ontario Court of Appeals.
In 1988, Barry Norman and his wife, Yvonne, got a one-year second mortgage loan from Avco and added a life insurance policy to it. He thought that if something bad happened to him or his wife, the policy would pay out. At first, everything went well. In 1989, the mortgage and insurance were renewed for another year, but Norman's wife could no longer get the insurance in 1990 because she no longer met the requirements. She got sick with cancer, and the next year she died. When Barry Norman didn't pay the loan, Avco sued him to get the money back. He sued Avco for negligence, saying that they didn't tell him that the insurance was only good for one year and had to be renewed every year. The judge decided in Avco's favour. When Barry Norman renewed his insurance for another year, he should have looked into the details.
The lesson is easy to understand. Don't just buy a policy of life insurance. Talk to a licenced expert and make sure you get a policy that fits your needs and that you understand everything it says. Don't sign up for life insurance from your mortgage lender if you have a mortgage. This is not what they care most about. If you're worried about your mortgage, get a higher amount of coverage that will cover both the mortgage and your family's needs. Handle your insurance policy yourself. This is something you need to be in charge of in your life.
