October 30, 2010


Warning: this post may be scarier than Halloween and encourage you to buy life insurance now. Reader discretion is strongly advised.

Major price increases are coming to some permanent life insurance plans. Manulife is projecting increases of 10% on average on their level-for-life rates. That's hefty. Expect to pay more if you're younger or female or buying for family estate planning. The changes take effect on December 4, 2010. Expect other companies to follow.

Here are three reasons for the price increases
  1. low interest rates
  2. tougher international standards
  3. copycats

Low Interest Rates

Click to see how Pink Floyd's insights help youEach year, we're closer to death (see Pink Floyd's insights on mortality). Your insurance rates should increase annually to reflect this, but if they did, you'd have trouble paying the premiums in future years when a claim is most likely. You see this pattern and problem with Term 10 insurance.

For permanent insurance, a consumer-friendly solution is level premium rates guaranteed for life. This sound choice doesn't seem to be widely offered outside Canada.

Here the insurer charges "too much" now and "too little" later. In the early years, the money which isn't need to cover the year's insurance charges gets invested to cover the shortfall in later years.

In a sense, the insurer is "buying term and investing the difference". Investment returns are important and have been lower than assumed in the product prices. The consequence is higher rates.

Tougher International Standards

Because of the world's recent financial woes, new International Financial Reporting Standards (IFRS) are on the way. The goal is to have companies set aside more capital in safer, lower-yielding investments. The intentions are good, but this increases costs which increases prices.

Canada didn't have problems with dumb money but is getting treated as guilty too. Higher prices for you.


Okay, prices need to increase. What's the right amount?

The answer varies for each company depending on factors like their size, costs, claims experience, target markets, and — the biggest factor — competition. If a market leader like Manulife is boosting rates by about 10%, other companies aren't likely to stop at 7% or go up to 12%.

For an analogy, let's go to the gas pumps. Gas companies are eager to charge more but no one wants to be the first to raise prices. But when one moves, the rest quickly follow. Insurers are the same way.

Unlike gas stations, insurers can't raise prices instantly. The process often takes months because changes are needed to the
  • projection tools used by advisors
  • administration systems
  • marketing material (since other changes will probably be made at the same)
  • reinsurance treaties (arrangements with the insurers that insure the insurers)
So the first company to raise rates gets criticized and loses business. Other companies get rewarded while they scramble to do copy. To minimize the pain, the first mover tends to preannounce rate hikes to give competitors time to prepare.

Versa Vice

It's funny to watch price decreases. Yes, they do happen sometimes.

Here companies are secretive. They don't want competitors to know. They don't want advisors to hold off on sales until the new version arrives. Here the first mover wins since advisors can instantly switch to its products while competitors take months to react.

Competitors are eager to increase prices but sometimes defer price cuts until they see they're losing enough sales to matter.

Term Insurance

If you have term insurance you aren't directly affected … unless you decide to convert to permanent coverage. You pay premiums for the same risk class. So if you were an elite nonsmoker, you'll stay in that class even if your health and habits make you a bigger risk. That's the good news.

You may not realize that the rates on the new plan are based on your age at the time of the change. Also, you can only get permanent insurance from the same company. So you're affected by the whims of the market until you lock in the new rates.

Your Next Step

If you might be affected by rate hikes and have a proactive advisor, you probably already know.

You lose by waiting to get life or health insurance because, you're getting older: your premiums will go up even if your health doesn't deteriorate. Why be like the two who waited? They're no longer insurable.


Podcast Episode 90 (6:03)

direct download | Internet Archive page
PS Happy Halloween

October 23, 2010


Joel falls during hockey (his third time on ice)
Did you read about the financial woes of former hockey players? No, I'm not asking you to bail out NHLers. Top athletes get paid well but usually have short careers. They may not prepare financially for unexpected costs during retirement. If you scan the comments, you won't find much sympathy for the players.

Let's look beyond hockey to the problem of longevity: the risk of outliving your savings. There are three ways we can protect ourselves.
  1. save more money now
  2. reduce the risk of unexpected expenses
  3. find ways to earn more money

Save More Money Now

There's not much to say about this boring but essential option. Saving more is one of the three practical ways to increase your net worth.

Why sacrifice today when nothing bad may happen? Optimism beats pessimism. Yet that's no guarantee that we'll be spared from a major financial setback in the future.

Reduce The Risk Of Unexpected Expenses

We can't tell what's going to happen to us. Our lives can change in an instant no matter what precautions we take. Think of an accident. We could be at the wrong place at the wrong time. We can't tell. That's why they're called accidents.

Archimedes on leverage (click for blog post)The cheapest way to prepare for some risks is with safe leverage: insurance. That's a great option for the costs of disability,  premature death or a critical illness. You could get a payout that's much larger than your investment. That's because your money is pooled and invested to pay the few claims that occur. You benefit from the combined magic of leveraging, compound interest and probabilities. If you think the insurers make too much in the transaction, buy their shares.

If you're among the majority who don't make a claim, it's easy to think that you "wasted" your money when you look back. In a sense you did, but you had peace of mind. Some forms of coverage refund your premiums if you don't make a claim. That gives you a form of retirement savings. You don't get that option with your car or home insurance.

It's sad to see people spending more to insure their cars than themselves. Priorities …

Find Ways To Earn More Money

Ah, the lure of get-rich-quick schemes. Why use the first two options when we might make a fortune by investing in the popular investments of the day? The choices of previous years didn't meet our expectations but this time is different, right? It's easy to forget that risk accompanies reward, and that past performance isn't a floor for future performance.

Finding ways to earn more income is a safer strategy. There are ways to bulletproof your career and insure against the risk of  losing your livelihood. It's tougher for athletes to stay employable when switching to a field for which they have no real training. Tim Horton was an exception.

We can fall on ice without warning. We're more resilient when we're younger and invest in protection.


Podcast Episode 89 (4:05)

direct download | Internet Archive page

PS Don't forget about lottery tickets. Somebody's going to win and it could be you …

October 16, 2010


cookie with bite missing 2976x1748
Most people are close to average, when compared with their peers. That's true by definition, whether you're talking about advisors, coaches, executives, musicians or teachers. Members of a tribe tend to think alike, look alike, and talk alike. You'll spot patterns among nonconformists too.

Yet there are material differences that affect that results you get. How do you pick one over the rest?

Look at their intent. This takes mere minutes to assess but saves you agony in time and money.  Simply look at what they give away for free on their websites, blogs, podcasts or videos.

You're looking for generosity. Unconditional and valuable to you.

You can easily look at their content anonymously and assess the
  • quality: generally reasonable but if it's too professional, maybe they hired someone to create it?
  • quantity:  do they give you a bite or a meal?
  • frequency:  is there a real commitment of resources on their part?
  • consistency:  have they quit giving?
  • history: are they innovators or laggards?

The Experiment

As an experiment, I've been looking for experts who could help my clients become more successful. These candidates create positive first impressions and seem to be worth hiring. There are so many of them. How do you pick one?

Online they've done nothing special. So the results below aren't surprising.

I bought a book from a coach and subscribed to her newsletter but she won't reply to emails (bad intent: not following her own advice). Imagine someone who'll take your money but won't respond to you.

A public relations specialist had no tips on how to approach a well-known group (bad intent: doesn't have the connections claimed).

A professional organizer created a paid event with slow onsite registration in a room with obstructions and lousy refreshments (bad intent: incompetence or low standards).

This one's weird. A coach sent continual emails pleading for free help in selling tickets, rather than designing a must-attend event (bad intent: proving that the techniques he teaches don't work).

Finally, two marketing firms added me to their mailing lists without permission (bad intent: violating the do-not-spam rules). Hire them and what sort of work would you expect?


How you do anything is how you do everything. — T Harv Eker
I wasn't looking for bad examples, but they abound. Online clues to intent could be wrong but  they're surprisingly predictive. What's your experience?

Rather than listen to what they say, watch what they do. You're more than a wallet or credit card. Are they after more than a bite our of your cookie?


Podcast Episode 88 (3:48)

direct download | Internet Archive page

PS If they're not online, that's a bad sign.

October 9, 2010


TED TEDx logos 415x380
I keep meeting people who aren't familiar with TED or TEDx. So highlights from TEDxToronto 2010 aren't meaningful to them. This post provides context.

TED is the best source I've found for consistent, diverse great ideas. Talks generally run 18 minutes or less. Some are less than six minutes long. That's enough to convey a powerful idea but short enough to cut out the fluff.

Bill Strickland

Have you seen Bill Strickland's talk about the revitalization of Pittsburgh, Pennsylvania? He's so low key but draws you in with a captivating story. He attracted unlikely allies like Herbie Hancock who accompanies him on piano. His talk from 2002 runs 35 minutes. Maybe the 18 minute rule was not in place then. You probably won't mind.

Some Speakers

TED speakers include Bill Gates, Peter Gabriel, Malcolm Gladwell, Al Gore, Seth Godin, and Jane Goodall. Those are just some of the last names starting with G.
Bill GatesPeter GabrielMalcolm Gladwell
Al GoreSeth GodinJane Goodall
(Click on a photo to go to their profiles and their talks)

In 2007, TED Talks were put online for free. That's when I learned of TED.

I wanted to attend the TED conference in Monterey, California but this wasn't practical. Admission was restricted to 1,000 and there was a waiting list. Also, tickets cost $6,000 US, which helps this nonprofit fund its activities. Add the cost of transportation, accommodation and time off work. These days TED conferences take place in several cities around the world. You're still looking at a major commitment — if you get admitted.


The purpose of TED is to spread ideas. So content is licensed under Creative Commons, If only events could occur in more places and at lower prices …

With TEDx, they can. These events are organized locally by volunteers. Tickets are generally free thanks to sponsors but some charge to cover the costs. Admission rules vary. For example, TEDxToronto is free thanks to sponsors but applications are approved.

That's the background. If you're interested in TEDx, there's probably an event near you at some time during the year.

Near Toronto, you'll find TEDxBurlington, TEDxGTA, TEDxHartHouse (University of Toronto), TEDxOakville, TEDxIB@York, TEDxRyersonU, TEDxYouth@Toronto. That gives plenty of choice.


Podcast Episode 87 (3:37)

direct download | Internet Archive page

PS Other volunteer-run places to learn include BookCamp, PodCamp and FreelanceCamp. You may find one near you.

October 2, 2010


TEDx started in Toronto last year. Only 100 could attend and my application got rejected. I left work early and watched some of the live streaming. The speakers were thought-provoking and diverse.

This year, I applied again and got accepted! On September 30, TEDxToronto took place at the intimate Glenn Gould Studio, which seats 341.

Here's the video that started the day.
Thanks to generous sponsors (called "partners"), the entire event was free, including refreshments and lunch. This is a wonderful way for a brand to show it cares. Many sponsors were local, which was fitting.


So much happened during the day. Here's are snippets to give you a taste.

Poet Boonaa Mohammed kick-started the day with meaning, emotion and humour. 

Bruce Boon Tip said that in 2009, there were 0.9 billion tourists with 1.6 billion expected in 2020. What will happen to the environment? Developing countries receive about 5% of the money spent. How can they benefit more? When you're on vacation, you want to have a good time without thinking about the environment and local residents. Yet there are externalities, as there were from this year's Canadian Open at St. George's Golf Club.

Graham Hill made a compelling argument for a contentious position in four minutes. Regardless of your view, watch this video to see how he makes his points. You may spot ways to make your own arguments more convincing (regardless of topic)

Drew Dudley, my favourite presenter, told how his gift of a free lollipop changed two lives forever. He didn't know this until four years later. The message? Thank people who made a difference in your life. They rarely know. If you don't already do this, please start. I did years ago. Maybe you were helped by people you’ve never met. Why not tell them too? You can reach almost anyone these days. For example, Seth Godin's writing helped refocus my life but how would he know? So I wrote a blog post and he commented. Now we're even!

Broadway Sleep performed four songs. They also uttered the "how's everyone doing?" cliché but they're forgiven. They gave us a copy of their CD.

Dr. Catherine Zahn shared a lesson she learned in childhood. Some people reap a sad harvest. We who are more fortunate owe them and must pay them back. There's such little difference between us and them. It's easy to turn away but that doesn't help the afflicted.

Neil Hetherington advised us to support existing nonprofits rather than creating our own. In my own "angry young man" phase, I wanted to tear things down and rebuild them. That's the easy answer. Working within existing structures is tougher but leads to better, faster results. You acquire valuable skills. Children and pets teach us this too.
I think I can. I think I can.
— The Little Engine That Could
Kiran Bir Sethi explained how the "I can" bug became contagious in her school and spread beyond. Oh the magic when a child (or an adult) switches from asking "can I?" to saying "I CAN". The tale feels like Slumdog Millionaire but is real. 
Jennifer Luis informed us of a worldwide Design For Change contest in which a child picks one idea and has one week to change lives. There are 50,000 schools participating in 24 countries in 14 languages (including Braille). There's even a theme song by Raffi (listen or read the lyrics).

Sol Guy said that being apathetic is pathetic. These days abundance comes from giving, not gathering. Corporations can use their global reach to help. Imagine if Coca Cola used their logistics and infrastructure to deliver medicine along with their beverages.

Amanda Sussman explained the importance of understanding how the political system works and making change from within. The radicals outnumber the reformers. She pointed out that new doesn't mean better and the process is slow at getting results.

Tonya Surman ditched her prepared presentation two weeks ago to talk instead about a passion that enrages her: the lack of collaboration. That's the DNA of innovation but self-interest intrudes. Ideas also need capital, which can be raised locally through Community Bonds. This innovative approach gives investors social returns in addition to financial returns. Other nonprofits may want to create their own. Her presentation is now on her blog.

Emmanuel Jal was a war child without a future until he got rescued. He now tells his story with words and music.

trey anthony encouraged us to answer our personal calls to action. We each get a call but do we answer? Do we make the world better than we found it?

Dave Meslin explained how the world discourages our involvement through intentional exclusion. Reviews of movies and restaurants give addresses, prices, hours, phone numbers and websites. In contrast, political issues have much more impact over our lives but articles lack contact details. We're treated as spectators but can participate if we choose. 

Robert Bolton, Eric Chan and Andrew Zealley melded words, music and visuals to perform an updated version of Orpheus, covering the years 1986-2019. Experience can't be downloaded and the effect can't be easily described.

George Kourounis explores the extremes of nature. He seeks what others flee. We've only explored 3% of the oceans' depths, which means we know more about the moon. We don't know much about caves either. George said that if he's alive, that's a good day. Don't you feel the same?

Neil Pasricha explained the inspiration behind the 1000 Awesome Things blog and the pleasant consequences. We have so little time to enjoy the special moments. Why not start now?

So ended the talks. What do you think? If you're intrigued, you'll probably find a TEDx event near you or you can launch your own.

Call To Action

Ideas change us but ideas are wasted unless we act on them or share them. Discussions help and we had plenty of time for them at TEDxToronto. Our day started at 9 AM and ran until 4:30 PM. That's 7.5 hours but we got 3 hours of breaks: 45 minutes in the morning, 90 minutes for lunch and 45 minutes in the afternoon.

If you're there, you've got the opportunity to talk to fellow TEDsters. They're open-minded. They have their own perspectives. They're articulate. They're willing to share. And if they're not, just talk to someone else. I only excused myself twice: one person was self-absorbed and the other looked down on those without university degrees.

If you can't attend the live event, the second best choice is a satellite location because you'll be able to talk to other attendees. The last choice is watch from your own computer.

Video for 2010 will be posted on TEDxToronto.com and the TEDxTO channel on YouTube.

I'm looking forward to 2011 and hope I'll get accepted.


Podcast Episode 86 (9:09)

direct download | Internet Archive page