Are You Prepared For The Unexpected?

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Getting sick or injured is common and it can often mean missing work for a few weeks or for a prolonged period of time. To cover any missing income, people tend to turn to credit to survive, leading to more debt than they can handle. I'm joined by Promod Sharma, an actuary at Taxevity in Etobicoke, Ontario. Promod is here to talk about life and health insurance, why everyone needs to have it and how to decide which coverage is best for you and your family.

Disclaimer: As always, Debt Free in 30 is not a commercial for the products discussed on the show and none of my guests are being paid or have paid me to be interviewed. I choose guests based on the practical information they provide to help you with your finances and debt.

Types of insurance

There are many types of insurance and each kind of coverage serves a different purpose. Promod's focus is on life and health insurance. Life insurance is fairly straight forward: it pays out if the insured individual dies. Health insurance can, however, give you coverage in three different categories:

  1. Disability Insurance - replaces your income, up to approximately 60% or 70%, if you're unable to work because of illness or injury. The pay out cap for disability insurance ensures that people don't try to profit from being ill.
  2. Critical Illness Insurance - a lump sum is provided if you are diagnosed with a critical illness such as cancer, heart attack or stroke.
  3. Long-Term Care Insurance - Generally for people later in life who are unable to accomplish daily activities like eating or bathing, and those with cognitive impairments like Alzheimer's.

What kind of insurance is right?

Promod explains that the kind of coverage you choose depends on many factors including age, health, the risks you're facing and any financial obligations. He points out that

what people tend to do, which is backwards, is they tend to focus on getting life insurance first. And life insurance can be very beneficial, I'm not dissuading people from getting it, but if you're single then you don't necessarily need it. And people tend to get it because it looks cheap, but that's because the chances of it paying out are very small.

Simply put, your insurance coverage should be tailored to you.

Should you acquire insurance through your bank?

Promod suggests that going to your bank isn't always the best option. He argues that

generally, you're better off buying insurance from an insurance company instead. What happens is if you buy from a bank, you're buying what is called creditor insurance. It is designed to protect the creditor (the bank), but you are paying the premiums. And you may want to benefit your family instead.

Using the example of a mortgage with a five year amortization, Promod clarifies that through a bank, your rate will stay the same while your amount of coverage decreases as you pay down your mortgage. He offers an alternative like Term 20 Insurance that maintains a level premium and offers protection for a 20 year period.

How do you choose an insurance advisor?

Just like choosing the right trustee, it's important to choose an advisor that will help you make the best decision for you and your family. Promod lists three elements to look for when researching an insurance provider:

  1. Personality - Do you like the advisor?
  2. Qualifications - Are they able to do the work and recommend a product that's right for you? Look for things like designations, experience and whether they're keeping current with their learning. For example, do they frequently update their website if they have one, do they have a podcast, videos or other mediums that showcase their knowledge?
  3. Heart - Do they care about you or are they looking to make a profit?

Why you should prepare for the unexpected

We don't like to think that illness, injury or even death could happen to us at any time. The reality is that we're human and not indestructible. All we can do is plan for the worst case scenario in the event that it happens to us. Unexpected events can lead to debt. In fact, illness, injury and health related problems is cited by 15% of all insolvent debtors as the primary cause of their bankruptcy. I often advocate for the creation of an emergency fund to deal with unexpected expenses, and having life or health insurance is another possible option; it's a financial safeguard you might want to explore. Listen to the full podcast for more information about:

  • Post Claims Underwriting
  • Term Life Insurance vs. Permanent Life Insurance
  • Actuary designations

Read the full transcript below.

Resources Mentioned in the Show:

Doug Hoyes interviewed about debt relief options by Promod Sharma:

FULL TRANSCRIPT show #76 with Promod Sharma

prepared-for-the-unexpectedDoug Hoyes: What causes financial problems? In many cases it's as simple as overspending, but when we do our Joe Debtor study and look at the numbers 15% of our clients tell us that the primary cause of their financial difficulties is illness, injury and health related problems. 15% is a significant number but it's probably a much larger number than that because we're only tracking the primary cause of their insolvency. So, we're looking at people who had a significant illness or injury and missed many months, or even years, of work.

It's very common for someone to get sick or injured and only miss a week or two of work, but if you're living paycheque to paycheque that can put a significant dent in your finances. Despite that fact that we have free healthcare here in Canada we all know that if you have medical problems there are lots of costs you incur personally, like medication and other supplies. And if you're off work your income can be reduced if you go on sick benefits and if you're self-employed you may not have any income at all when you're not working.

So, what happens? Well, during your period of convalescence you use credit to survive and cover your day to day expenses. Once you return to work you've got more debt than you can handle or maybe you can't return to work full-time and you don’t have the income to deal with your debts.

So, what's the solution?

Well, an obvious answer is that you should have insurance to cover those unexpected life events. We all understand life insurance. If I have a young family and a mortgage, getting life insurance to pay off my mortgage if I die is a prudent strategy. Medical and disability insurance also sounds like a good idea, but what's the cost? Is it even affordable if you can't get it through work? And what are other strategies that you can use to plan for unexpected life events?

That's the topic here on Debt Free in 30 so let's get started with my guest. Who are you? Where do you work and what do you do?

Promod Sharma: My name is Promod Sharma, I am an actuary and I work at Taxevity in Etobicoke.

Doug Hoyes: Great, well thanks for being here today Promod. And we are actually recording this in your office here in Etobicoke. You said the name of your company is Taxevity. So, you're going to have explain that to me. So, is that like. you know, tax and levity; we're all happy about paying tax? What's this taxevity thing?

Promod Sharma: No, it's not quite that. If you look at the four actuarial risks there's mortality, morbidity, disability and longevity. Taxevity is basically built on those words because if you look at life insurance in particular it also helps with a lot of tax issues.

Doug Hoyes: Got you so that's where it comes from taxevity. And that's also your website, right taxevity.com?

Promod Sharma: Yes it is.

Doug Hoyes: So, let me start by giving my standard disclaimer this show is not a commercial for Promod or his company or insurance in general. None of my guests pay to be on the show and I don’t pay any of them to appear. I choose the guest based on who I think has practical, valuable information for my listeners. So, with that disclaimer, let's talk about insurance. So, I'm going to talk about the easy, softball questions and then we can get into the tougher ones, okay. So, first question do we all need insurance?

Promod Sharma: Yes.

Doug Hoyes: Okay, that was pretty easy, quick and to the point. So, let's get into some details, then. What kind of insurance do we need? So, you kind of talked in the intro there about the different types. So, there's life insurance, I mean obviously there's insurance like car insurance and things like that. I mean that's the law you have to have that, house insurance, we all understand how that works. But in your area of expertise there's really two main categories, right, life and health?

Promod Sharma: That's right. So, we're looking at the asset being a human life.

Doug Hoyes: Okay and so life insurance I think we can all conceptually understand what that means; it pays out if you're dead. That's what life insurance is. Let's talk about health insurance, then. So, what are the different categories of life insurance?

Promod Sharma: Well, the big ones are disability insurance which replaces your income, critical illness insurance, which provides a lump sum if you get cancer, heart attack or a stroke, something like that. And also long-term care insurance for people who in their later years when they're unable to do activities of daily living like eating and bathing or have cognitive impairments like Dementia or Alzheimer's.

Doug Hoyes: So, does my age matter in what type of insurance I should be getting or is it no, you should have all of these three types no matter what your age?

Promod Sharma: Well, age is certainly a factor. For someone who is younger and has a family then life insurance would be pretty important. For someone who's retired life insurance may not matter as much. For a working person disability is important because their ability to earn an income is often their greatest asset. When someone is retired they don’t necessarily need that. But long-term care insurance could be beneficial. So, there is some overlap, but you don’t necessarily need all types of insurance at all times.

Doug Hoyes: And I guess that's why I need to talk to someone like you to figure out what do I need? So, if I'm 20 years old, 40 years old, 60 years old, 80 years old there's a different span there.

So, let's start with disability insurance then because when people come in to see me as I said in the introduction they've got a lot of debt and I ask what happened and they say, well unfortunately, I got injured at work; I had some major illness, I was off work for a period of time. And even though I didn’t have to pay be in the hospital, I had to pay for all these other things and as a result I didn’t have the money, I didn’t have any insurance, I ended up racking up a lot of debt to do that. So, disability insurance would be a way to give me some income while I'm not working, am I explaining that succinctly enough?

Promod Sharma: Yes, that's a pretty good description. If you're not able to work because of illness or injury then this is a way you can get some money. And so, there's a limit to how much insurance you can buy because insurance companies don’t want you to profit from being ill. So, the most you could get in disability insurance might be say 60 to 70% of your income. But that can be expensive. You might want to have a small baseline of maybe say a couple of thousand dollars a month just as a precaution in case something does happen. And if you're working for a company you might have some insurance there too.

Doug Hoyes: So, we're going to get back into the nitty gritty but let's kind of pull back and look at the big picture here. So, I come to you and I say I want to be prudent. I want to look ahead to all the things that can go wrong and be prepared for them. So, that's what insurance is for, obviously.

Promod Sharma: Yes.

Doug Hoyes: If everything goes perfectly I guess I've spent all this money and I didn’t need it. But if things don’t go according to plan then it's a good backstop. So, if I'm a multi-billionaire and I have 100 million dollars sitting in the bank, disability insurance probably not a big deal, right? And so all those people who are listening to us today who have a multi-billion dollar bank account I guess you don’t have to listen to the rest of the show. But for the rest of us, the thought process you're going to go through when someone sits down with you is to start by looking at what they've got and what their needs are? Is that the starting point when it comes to determining how much of these different types of insurance products they'd need?

Promod Sharma: Yeah, basically what I would do is sit down with people and look at the risks that they're facing. And you can estimate those based on their ages for instance. And what you can do then is look at the biggest risk, which for people in their working years is typically disability, and then you can look at what it would cost to cover that.

What people tend to do, which is backwards, is they tend to focus on getting life insurance first. And life insurance can be very beneficial, I'm not dissuading people from getting it, but if you're single then you don’t necessarily need it and people tend to get it because it looks cheap but that's because the chances of it paying our are very small. People just don’t die the same way that they use to in the past.

Doug Hoyes: So, if I'm 20 years old - I guess no matter what age I am the chances of me dying this year are pretty low.

Promod Sharma: Yes. 'Cause what happens is when people reach retirement, they don’t necessarily keep their insurance. So, if you look at risks during working years, then a disability or a critical illness would be much more likely and those kinds of insurance would cost more because the chances of a payout are much higher.

Doug Hoyes: Now, professionally you're actually an actuary, is that correct?

Promod Sharma: Yes. I've spent my whole career in the world of life and health insurance, designing products, helping advisors sell them and now helping the public directly.

Doug Hoyes: And so, you can crunch the numbers and look ahead to see to kind of prove the point you just made that somebody who is 20 years old has a much greater risk of having a medical problem than of dying.

Promod Sharma: Yes, exactly. And when people think of disability they think of, oh, I got into an accident. But big causes of disability are things outside of our control for instance cancer, who can predict against that? And also things like musicale skeletal issues like arthritis.

Doug Hoyes: And which limits my ability to work.

Promod Sharma: Absolutely.

Doug Hoyes: And as a result will hamper my income. So, okay so looking still at the big picture then I come in to see you and I say to you here's my age, here's what I earn at work, you also care about what my living costs are, then.

Promod Sharma: Absolutely. And what are your obligations. So, if you've got a mortgage for instance that may be something you may want to cover. If you have children then there's money you may want to set aside in case something happens to you.

Doug Hoyes: So, let's make the plan then for the mythical person who's listening to us today. So, you mentioned mortgage so let's start there. I have a mortgage, so, what's your advice related to that? I assume your advice is going to be well just call your bank and get them to give you mortgage insurance. Is that correct or is that not a good idea.

Promod Sharma: Well, you could call the bank to get an idea of what mortgage insurance would cost, but generally you're better off buying insurance from a insurance company instead. What happens is if you buy the insurance from a bank, you're buying what is called creditor insurance. It is designed to protect the creditor - the bank, but you are paying the premiums. And you may want to benefit your family instead.

Doug Hoyes: And that's a very key point then. So, I want something that benefits me, not benefits somebody else. So, what you're saying is if I go to the bank that holds my mortgage and I get them to sell me life insurance on the mortgage, what I'm really doing is protecting the bank.

Promod Sharma: Yes. They want to make sure that if you're not able to pay then they get their money. But you've got other obligations likely if you've got a mortgage chances are good that you have a family. And you want money to protect them also rather than just have money to only go to the bank.

Doug Hoyes: And so, if I get mortgage insurance through the bank, the mortgage insurance covers the mortgage, which reduces every year as I pay off the mortgage.

Promod Sharma: And the good news is that you get to pay paying the same premium even though the amount of insurance is the same every -

Doug Hoyes: That's how it works, eh?

Promod Sharma: Yeah.

Doug Hoyes: Oh okay. So, if I've got a mortgage with a five year amortization for example, the bank will say to me okay well we're going to tack on an extra I don’t know what it is, 10 bucks, 20 bucks a month, whatever the number is. That number's going to stay the same for the whole five years?

Promod Sharma: Yes, even though the amount of benefit that would be paid out would be decreasing.

Doug Hoyes: Because I'm paying off the mortgage.

Promod Sharma: Right.

Doug Hoyes: So, you're saying a better option would be to investigate getting life insurance outside of the bank.

Promod Sharma: Yeah so something like Term 20 insurance could be a really good choice. So, that way you're paying a level premium and you have protection for a 20 year period.

But the big issue with insurance from the banks is that they do what is called Post Claims Underwriting. You don’t really know if you are insured until the time you make a claim. If you buy insurance from an insurance company, they do the underwriting upfront. And so, if you qualify you've got the peace of mind of knowing that you have the insurance in place.

Doug Hoyes: So, that makes no sense to me what you just said there. I don’t - I'm paying the insurance, but I don’t know if I have insurance until I'm dead?

Promod Sharma: Yeah, it doesn’t make a lot of sense, but what happens is to do underwriting on someone costs hundreds of dollars.

Doug Hoyes: And what is underwriting mean?

Promod Sharma: That's the process of deciding what to charge for the risk. And that means having to maybe have a paramedical fill out medical questions, go to the doctor, get an attending physician statement etc. So, that takes time and money. So, insurance companies go through that process because they want to know that they're charging the right amount for the risk.

If you look at a bank they sell lots of mortgages. If they had to spent several hundred dollars extra on each time - on each situation where someone's buying mortgage life insurance then that adds to their costs. And very few people die anyway. They find it more economical to do the underwriting at the time of the claim. And if it turns out that they would not have covered you then you get your money back. But that's not the same as getting a death benefit.

Doug Hoyes: Wow, so you're saying it's possible that I go to the bank, I pay my X number of dollars every month and then when I get hit by a bus the bank might say, sorry you're not covered.

Promod Sharma: Yes, they wouldn’t say it's because you got hit by a bus, but maybe there's something that if they had done underwriting that issue it would have excluded you from getting coverage. And if you read Ellen Roseman's column, then she covers cases like this where people think that they have insurance from the bank because they've been paying premiums and then it turns out they don’t. And that's a very bad situation.

The other thing is that it's probably cheaper to get insurance that is not from the bank anyway. We know how great the banks are at making profits but -

Doug Hoyes: We do, we do. I don’t know, I guess I'm hung up on this point that I'm paying for something that I don’t get. So, what you're saying is it could be that after the fact the bank says oh wait a minute in that 50 page form you signed, there was a clause on page 32 that says because you smoked as a teenager you're not qualified for insurance. Is that an example of how it could happen?

Promod Sharma: Yeah, I don’t have a specific example like that. But yeah there are criteria that they use. And the reason I don’t know is because that's a product that I would never touch. And it's one of those products where you wonder why it's even legal to sell that. 'Cause you figure that if you're paying for something then you're getting some sort of protection, you don’t want to find out after the fact that no, you don’t have the protection after all.

Doug Hoyes: So, instead of that I can go to someone like you and I can actually buy life insurance and the proceeds of that when I die will be paid either to my estate or my beneficiaries, my wife, my kids, whatever.

Promod Sharma: Yes, you have control over where the money goes.

Doug Hoyes: I get to decide. And I'm deciding what the amount is, obviously I pay more if I'm getting more insurance, but if I decide, okay, I've got a mortgage that right now has a couple of hundred thousand left owing on it, I could go and get life insurance for $300,000 for $400,000.

Promod Sharma: Or maybe even a million because if you look at your family then there could be a large amount of money that's needed to help them get through life when you're not there.

Doug Hoyes: And even a million dollars of life insurance it's not going to cost me massive amounts of money. Life insurance is relatively inexpensive. Is that correct?

Promod Sharma: Yeah there are two forms of life insurance. There's term insurance, which is for temporary need, that tends to be quite affordable. And there's permanent insurance, which is more for estate planning. So, for a younger person the term insurance is generally what they need. It gives them the most benefit for the lowest cost.

Doug Hoyes: And term insurance would be kind of analogous to what I have on my car. I pay for one year and at the end of the year it's not worth anything. And then the next year I buy it again. It's the same with term insurance, is that right?

Promod Sharma: Yes, it`s the same idea. But what happens with car insurance is that your premiums can change. With life insurance the premiums are usually guaranteed. And generally they will be level for say a 10 year or a 20 year term or a 30 year term. And that makes the cost that much more affordable because if you had to pay on a one year basis each year, the price will go up because our chances of passing away are higher as we're getting older. What insurance companies do to make the products more affordable, is they average out the cost say over the first 20 years and charge that all the way through, rather than charging more every single year.

Doug Hoyes: Got you, so it spread it out then. Okay, so life insurance we understand, disability insurance, then, the thought process that you would go through if you were advising me is what are my expenses that I would need to cover and then what other resources do I have if I have other sources of income, maybe my wife also works something like that. Then I would factor all those things into it. And you said I could never buy too much disability insurance?

Promod Sharma: That's right because the insurance company doesn’t want you to be worth more when you're not working than when you are. So, if you were able to get 150% of your income by being disabled, why would you ever go back to work? That's why the most you could get would be maybe 60 or 70%. So, there is some pain, but at the same time you're covered pretty well.

Promod Sharma: Got you. So, if I have a job now where I make $3,000 a month, then maybe I'm going to get disability insurance that would pay me $1,500 a month or $2,000 a month or something like that. So, it's covering my basic costs, okay at least I know the rent is going to get paid, the groceries are going to get paid. But I also need to have some other resources, some other savings to cover that extra or I've got to cut my expenses during the period that I get disabled. That's really what the whole thought process is, then.

Promod Sharma: Yes. And some people can be disabled until they retire. So, it might be $2,000 a month but look at that over a year, that's $24,000. Over 10 years that's $240,000. The numbers get really big fast.

Doug Hoyes: And that's why these other types of insurance exist. So, you said critical illness insurance. So, that's where I get diagnosed with a critical illness. Something in your example was cancer for example.

Promod Sharma: Yes.

Doug Hoyes: And so I get diagnosed with cancer and I get paid a lump sum of money?

Promod Sharma: Yeah what happens is - so, it has to be the right cancer that meets the definition in the contract, naturally. And then you survive 30 days and then you get a lump sum to use as you wish.

Doug Hoyes: Got you, okay. And so that protects me against the catastrophic things. And then long-term care is something that will be more important as I age then.

Promod Sharma: Yes 'cause what happens, what can happen, is that as we get older we may not be able to perform the activities of daily living, things like eating, bathing etc. And if we look at what support is provided to us from the government, then it may not be of the amount or quality that we want. If we have some extra money then maybe we can get more home care or we can go into a better facility, etc.

Doug Hoyes: And I guess to sum up the segment again, I guess that's why you recommend that someone talk to an advisor who can pull all these pieces together. How much life insurance do you need, disability, critical illness, long-term care based on your circumstances and figure out what the right package is for you?

Promod Sharma: Yes, I know that's self-serving to say but you, if you go online you will find some information but you won't get the advice that lets you combine all of these things to make the optimal decision for your case.

Doug Hoyes: And that's why you need to pull all the pieces together. Excellent, we're going to take a quick break and come back to wrap it up. But just before we do so the website is Taxevity.com. Is that how you pronounce it?

Promod Sharma: Yes it is.

Doug Hoyes: Tax for tax and then evity for -

Promod Sharma: The tail end of longevity.

Doug Hoyes: The tail end of longevity. So, you're kind of incorporating both the tax end of it and the longevity end of it. Taxevity.com. Thanks for being here. We'll be right back with the next segment here on Debt Free in 30.

Let's Get Started Segment

Doug Hoyes: It's time for the Let's Get Started segment here on Debt Free in 30. I'm Doug Hoyes and my guest today is Promod Sharma who's an actuary with Taxevity. His experience is in the area of insurance products, which is what we've been talking about today. And in particular how do I protect myself so that I don’t end up with a whack load of debt because I was off work for a period of time and had to use credit to survive?

So, in the first segment we talked about having an advisor, and so, obviously, I can go online and find a cheap life insurance and buy it that way. But you're of the opinion, and as you said it's kind of self-serving, but you're of the opinion well no, there's an advantage to having an advisor because they can look at the whole picture. Maybe life insurance isn’t your priority when you're 30 years old, maybe it's disability, critical illness or so on. How then should I go about picking an advisor? Is there a process? How do I know whose good? Is there licensing? What's the process there?

Promod Sharma: Yeah, it's not that straight forward to pick an advisor. There are lots of them available. What I suggest people do is look at three different elements. First of all personality; do they like the advisor? If not, just don’t bother because there's lots of other choices if your gut is telling you there's something about this person that's maybe off.

Another element that's maybe important is do they have the ability to do the actual work? Because you are hiring them to do something and this is where designations can make a difference. So, there are people who are CFP's, Certified Financial Planners or Chartered Underwriters etc. Those are signs of education because to sell insurance all you have to do is pass a multiple choice exam. The requirements are pretty low. And then also, they've got their experience but have they passed their best before date? You want to look for signs of current learning. And that you could see by seeing whether they have a blog or a podcast or videos etc., something that demonstrates their abilities.

And then the last part is probably the most important, their heart. If you look at financial literacy in Canada we know it's an issue. And insurance is even more complicated. So, is the advisor being transparent in helping people make better decisions or is the advisor profiting from the ignorance that the public has? If someone has the right heart then you know that they're doing things for you.

Doug Hoyes: And so, how do I profit from the ignorance of the public if I'm in your business.

Promod Sharma: Well, one of the ways would be to sell the wrong product. So, for instance to sell permanent insurance rather than term insurance; permanent insurance is much more expensive and it pays higher compensation. And in permanent insurance there's whole life insurance, which pays more than universal life insurance. So, there are different things like that or there can be add-ons that are put onto policies that cost a lot but don’t provide much benefit.

Doug Hoyes: So, your commission is higher if you sell permanent insurance as opposed to term insurance.

Promod Sharma: Yes.

Doug Hoyes: And I'm paying more obviously for that. And you explained this in the first segment but term insurance is okay, you know, for the next 10 years here's what the premium is and if in 10 years you don’t die well the insurance is worth nothing.

Promod Sharma: Yes.

Doug Hoyes: But it's much cheaper, then, whereas permanent insurance - does it build up a value as you go?

Promod Sharma: It does but I come across cases where people do not have disability insurance or critical illness insurance, things that will help them today. But they have life insurance for estate planning, which is decades out. That's a situation where an advisor sold something.

Doug Hoyes: Got you. And so, I guess asking around is also a good way. But I agree with you, your approach is similar to mine. Well, check me out. Go on the internet, look at my website, see what I've done. And if the copyright date on my website is 2009.

Promod Sharma: [laughter] Be cautious.

Doug Hoyes: Yeah, that probably indicates I haven’t updated my website in awhile. So, obviously having a blog isn’t the be all and the end all but is there current information being promoted? So, on your business card you've got a bunch of initials after your name. So, what does - I know what BFC means it means you went to university. What does FSA, FCIA, what do those things mean?

Promod Sharma: Okay, so that means, FSA means I'm a fellow of The Society of Actuaries. And FCIA means that I'm a fellow of the Canadian Institute of Actuaries. So, a full actuary would have those designations and there are several thousand in the country but do. But very few help the public directly with insurance.

Doug Hoyes: 'Cause a lot of them are doing the back end stuff.

Promod Sharma: Yes.

Doug Hoyes: Now the other thing you said in the first segment was that in some cases my claim won't get paid, and you were speaking specifically about mortgage insurance through the bank. Are there cases in any of these other types of insurance that we talk about where I have to worry about whether or not my claim is going to get paid?

Promod Sharma: With life insurance it's not so much of an issue, it's pretty easy to tell if someone is dead or not and whether they died in conditions that the policy would cover. With health insurance it's different. If you look at something like disability or critical illness there is more ambiguity and you want to deal with a company that is good at paying claims. And sometimes that means buying from a company that charges a little bit more. 'Cause a company that's charging less may be making up the profits by being tougher on the claim payment side. And that's not what you want.

Doug Hoyes: And that's something again that an advisor can talk to you about and you can understand okay this is what I'm getting, this is why I'm paying for that, this is why it makes sense.

Promod Sharma: Yes, the solution is not to buy the highest price, but there will be a price and a company that's a good combination for paying out the benefits as promised.

Doug Hoyes: Excellent. And I think that's a great way to end the segment. Ask questions, do your research, think about it and deal with an advisor who understands what your situation is and you're going to stay out of trouble. Promod, thanks for being here.

Promod Sharma: Thanks for having me as a guest.

Doug Hoyes: Thanks very much that was the Let's Get Started Segment, I'll be back to wrap it up right here on Debt Free in 30.

Doug Hoyes: Welcome back, it's time for the 30 second recap of what we discussed today. On today's show Promod Sharma and I talked about life insurance and the three types of health insurance. And how appropriate insurance helps you reduce the financial risk of a serious medical issue. That's the 30 second recap of what we discussed today.

I suspect that many of us think of insurance as a boring topic. But I'm glad I had Promod on today as a guest to give us an insider's view of insurance because I gained some valuable insights. For example, if you had to choose between buying life insurance or buying health insurance, which is more important? I suspect that many of us have life insurance, often through our bank or through work, perhaps because it's relatively inexpensive, but that's only because the chance of us dying in the next year is relatively small. If you're alive today there's a good chance you'll be alive next year.

But there is a chance that you'll have an accident or have an illness or become disabled and for many people that may be a greater risk than sudden death. I'm not saying we should all rush out and spend every last dollar on insurance, but I do think it's a subject that we should actually think about and not just ignore. As I said at the start of the show, unexpected life events can lead to debt. So, talking to a knowledgeable insurance advisor today may save you a lot of financial pressure in the future.

That's our show for today. Full show notes are available on our website including links to Promod's website and his information videos, so please to go our website at hoyes.com, that's h-o-y-e-s-dot-com for more information. Thanks for listening. Until next week, I'm Doug Hoyes, that was Debt Free in 30.