Lost Life Insurance Policies

MFG Financial Dispatch is our monthly email newsletter designed to keep you up to date on timely financial issues that may affect you and to pass on timeless information and advice regarding financial issues. Articles are generally brief and to the point but you’re always welcome to call or email us for more detailed information. Archived issues are available in the Client Centre on our website (macintoshfinancial.com).

We hope you enjoy reading our newsletter and find value in the information provided. If at anytime you would prefer not to receive these communications, please reply to the email with “Unsubscribe” in the subject line and you won’t receive another one.

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Breaking News

Win One of Two $25 Starbucks Cards

We want to congratulate our two Starbucks card winners from our June draw. Lindsie Seed and Dale Robins each received a $25 Starbucks card just for reading our newsletter and correctly answering four questions.

Maybe it’s your turn to win now. Just click on the word “WIN” and it will take you to a very short (four questions) multiple choice knowledge questionnaire on our website. (All the answers to the questions are found in the articles in this newsletter.) Once again we’ll make a random draw from all the correct entries and award a $25 Starbucks card to each of the two winners. Good Luck!

GIC Strategy For All Times

Guaranteed investment certificates (GICs) are appropriate short term investments when you have a specific financial need at a specific time because they are can be set to mature just at the time that you know you’ll need the money and there is no risk of losing your money. Even so, in and of themselves, GICs are not particularly good long-term investments as they offer very little return. They may however, be a beneficial component in a long-term investment portfolio in that they are fully guaranteed and they help to diversify your portfolio.

When buying GICs for the long term, the question becomes: “how long a term should it be invested for?” First of all, in a normal interest rate environment, the longer you commit your money for, the higher the interest rate you’ll be paid.

If interest rates are higher than they have traditionally been, locking in for a longer term to get a higher interest rate may seem to make the most sense. If interest rates are low when you’re ready to invest (as they are right now), you may decide to take a shorter term – say a one year GIC. The problem with either strategy is that you don’t know what will happen with interest rates during the time it’s invested or where they’ll be at the time the GIC matures and needs to be reinvested.

If you plan to use GICs as a long-term, strategic allocation for a portion of your portfolio there is a strategy that will solve this problem. It’s called “laddering” your GICs.

The theory is this: If you invest ¹/₅ of your GIC funds in each of one, two, three, four and five year terms, regardless of what happens with interest rates, you won’t have all your money maturing at a time when interest rates have either reached the bottom or reached the top. Every year, ¹/₅ of your money will mature and will be automatically re-invested into a five year term (which as mentioned earlier normally gives you the best rate). After the fourth GIC matures, all of the money will be invested in five year GICs and ¹/₅ of the total will continue to mature each year. This strategy will reduce the volatility of the interest rates earned on your GIC portfolio year to year.

The diagram below gives a visual illustration of the strategy:

YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

1 YR GIC

2 YR GIC

3 YR GIC

4 YR GIC

5 YR GIC

GICs are not the best option for everyone but if your risk tolerance has been tested recently and you think GICs may have a place in your long term investment portfolio, this is a strategy that works. We have access to GIC products from numerous financial institutions and we generally can get better rates for our clients than what the institutions post in their branches, so please contact our office for more information.

Lost Life Insurance Policies

When someone passes away, amidst the grieving there are many practical issues that must be addressed and if you find yourself the executor of someone’s estate, the bulk of that responsibility is yours. One important thing to determine is what, if any life insurance the deceased person had in place. This is relatively easy if they have kept all their records and documents well organized for you. More often than not, that isn’t the case, and some research and digging around is necessary.

The Canadian Life and Health Insurance OmbudService (CLHIO) has put together the following list of tips to help you in your search:

Collect all the deceased's papers and carefully examine them for any policies, premium notices or any other communication from an insurance company that indicates that a policy exists.
Explore possible storing places (e.g. safety deposit boxes, strong boxes, etc.).
Review bank accounts and banking records to see if there is any evidence of automatic premium withdrawals, or other premium payments.
Contact the deceased's life insurance agent (if known), and other advisers like lawyers and accountants. Sometimes, policies are stored in their files.
If a policy is found, check the application form (which may be attached to the policy, or may have to be requested from the insurer). It often includes details on other life insurance previously purchased.
Contact the deceased's employer, or former employer if the deceased is retired. The Human Resources Department would have information on group life insurance for active or retired employees.
If the deceased was receiving group disability benefits through his employer or an association, contact the providing insurer to determine if there was any group life insurance.
Contact any associations to which the deceased belonged. Many offer members the opportunity to purchase life insurance. There is a huge variety of associations. A partial list includes professional associations for accountants, lawyers, dentists, engineers, etc.; the Chamber of Commerce or Board of Trade; and the Canadian Automobile Association.
Check with credit card issuers to see if the deceased had purchased life insurance or accidental life insurance through the card.
If death occurred while travelling, check to see if special insurance had been taken out for the trip and includes a death benefit.

If you can’t locate a policy but you have good reason to believe the deceased person did have life insurance in place, the CLHIO may carry out a search on your behalf. If you would like more information on this it’s available on the CLHIO website: http://www.clhio.ca/policysearch.html

Perhaps now is a good time to make sure you have your own life insurance policies together in a place where they will be easy to locate for your own executors. Please contact our office if we can be of assistance.

Breaking News

AIC / Manulife Announcement

On August 12, 2009, Manulife Financial and AIC Limited announced that Manulife had signed an agreement to acquire AIC’s retail investment business, subject to regulatory and securityholder approval.

If you own AIC mutual funds, what does this mean to you? It means that, on or around September 25, 2009 your AIC mutual fund investment will be managed by Manulife Mutual Funds. AIC Investment Services Inc. will remain as sub-advisor to many of the funds so they will continue to be managed by AIC’s in-house portfolio management team. Some of the funds will be managed either by other sub-advisors or by Manulife as part of the Manulife Mutual Fund family.

Both AIC and Manulife have assured us that this fund management transition will be entirely seamless to you. The investment mandate of your mutual fund(s) remains unchanged throughout this transition period. Your investment account status remains unchanged.

If you have any questions regarding this change, please contact us at 604-737-8886 or toll-free at 1-888-737-8886.

Personal News From Peter MacIntosh

My wife Jacquie and I are very pleased to announce that our daughter Rebecca was married in July to Alistair Crosbie. The newlyweds are happily making their new home in Sechelt on the Sunshine Coast.

Our website address is macintoshfinancial.com . If you are on your smart phone you can also find our contact information on our “.Tel” page at macintoshfinancial.tel.

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