January 26, 2013


Life insurance quiz
Hurry while the link is still active.

There’s a quick 10 question multiple choice test of your life insurance literacy. It’s from LIMRA, which does research for life and health insurers. You don’t need to register or provide any personal information. No agent will call.

Click here to test yourself now

[If the link stops working, click on the questions to the right and the answers below]

How did you do? The rest of this post consists of “spoilers”.


The questions are relatively easy but only 30% of the 4,000 respondents passed. That means 70% failed. Less than 1% got all the questions right. (Yes, you may congratulate me whenever you like.)

When test results are dismal, who really failed? The students or the teachers?

The Top Three

imageYou’ll find the correct answers in the graphic to the right (click on it to enlarge).

People generally understand
  1. A life insurer invests the money from buyers to pay claims (68% right | 32% wrong)
  2. Group life insurance ends when you leave your job (59% right | 41% wrong); see two types of insurance you cannot own
  3. Term life insurance is for temporary needs (52% right | 48% wrong); see buy or lease
People generally didn’t know that
  1. Life insurers collect medical information to identify pre-existing conditions when a policy is purchased (18% right | 72% wrong); see the pitfalls of mortgage life insurance, which has post-claims underwriting
  2. If a life insurer goes bankrupt, the policies stay in force and the benefits remain (25% right | 75% wrong); see what happens if my life insurer dies?
  3. The life insurance death benefit is tax-free (31% right | 69% wrong); see the overlooked advantages of universal life

Odd Design

true/false or false/true? (click to enlarge)The way a test is designed influences the results.

Normally, the answer choices put True before False. You’ll find that in the Microsoft Office templates and a Google image search. Penn State explains how to construct a True/False test and gives help in spotting flawed designs.

For some reason, LIMRA puts False before True. Who’s ever heard of a False/True test? Also, questions with negatives are more complicated to answer than direct statements.

For instance, here’s the first question (which 69% got wrong):
Beneficiaries do not have to pay taxes on the death benefit from a life insurance policy: False/True
The following may be clearer:
(1) Beneficiaries pay tax on the death benefit from a life insurance policy. True/False
(2) The death benefit from a life insurance policy is tax-free. True/False
(3) The death benefit from a life insurance policy is taxable. True/False
What do you think?

Next Steps

“With life insurance ownership at an all-time low, it is important that the industry not only overcome consumers’ lack of knowledge about life insurance but address the misinformation that is out there confusing them and possibly having a negative impact on their image of the industry."
— Jennifer Douglas, LIMRA Associate Research Director
The public needs help. Where can they turn? This week’s 2013 Edelman Trust Barometer ranks the financial sector as the least trusted in the world for the third year in a row.


Podcast 204

direct download | Internet Archive page | iTunes

PS How would insurance advisors do on this test?

January 19, 2013


piggy bank and coins If insurance were free, how much would you get? [I heard that at a seminar.]

You’d probably get as much as the underwriters would approve based on your physical and financial health. Since cost is a factor, you've got to prioritize. You may skip some forms of insurance, or reduce the amount you buy.

How do you find the money to pay the premiums?

Types Of Money

We mentally put money into buckets. This for groceries, that for vacation. Don’t touch the beer money. We end up with conflicting goals such as topping up your RRSP or paying down your mortgage (Globe and Mail, Feb 2012).

We might spend "found" money such as lottery winnings, bonuses and perhaps tax refunds with less care. Easy-come, easy-go.

Yet money is money. Knowing this lets us stretch our savings by using one pot for more than one purpose.

Universal Needs

You probably have life insurance, especially if you have a family. Inexpensive term coverage is widely available.

There are bigger risks.

We can face a critical illness or disability and survive. Since the probabilities of getting stricken are relatively high, the premiums look high compared with term life insurance. The easy solution is to skip getting coverage. You're winning ... until you're not.

Untapped FUNDS

You probably understand that saving for retirement is important. We can’t rely on governments. We might not have guaranteed pension benefits from work.

What if your health impedes your journey to a financially-secure retirement? If you get a critical illness or disability, you risk higher expenses and less income. You might be unable to work again. You could take some of the money earmarked for your retirement to buy insurance for critical illnesses and disability. You're then protected while you're working.

With permanent life insurance, you get lifelong protection and an envelope for tax sheltered growth. Maybe you put some of your savings here for access later.

Get Your Money Back

If you’re convinced you’ll have a claim, the insurer doesn’t want to cover you. If you don’t think you’ll have a claim, buying insurance may look like a waste of money. We can’t tell what will happen.

What if you could get your money back if you didn’t make a claim? You’d lose the investment growth on the money but returns are unpredictable anyway.

Some critical illness and income replacement plans refund your premiums if you cancel your policy at an age like 65 (assuming you haven’t had a claim). You now have another form of retirement savings. The money comes from the insurer's investments and other buyers who didn’t have the patience to wait.

With life insurance, you can’t get a return of premium when you retire but can at death.

You do pay more to get your premiums refunded. Because of the poor investment environment, the option is becoming more expensive or disappearing.

Ideal For you

Unless you have money for everything, you might want to combine pots for related goals like getting to retirement. You won't get money back from your car or home insurance. You can with insurance on your health and life.

The best insurance is what remains at the time of a claim. [I also heard that at a seminar.]


Podcast 203

direct download | Internet Archive page | iTunes

PS Review your situation with an advisor you trust and be wary of schemes that look too good to be true.

January 12, 2013


Adventures of Pinocchio (1996)I'm at Best Buy to pickup wireless speakers I bought online. Another customer is trying to return a camera. She says she paid $290 but has no receipt and doesn't remember when she bought. The store agrees to give her $190, which was the lowest price during the return period. This seems fair. What if she bought on sale and now wants to earn a quick $100? Maybe she bought the camera somewhere else.

There's plenty of discussion about how the financial sector could improve. In 2012, bank fines topped  $10 billion (CNN Money) or $20 billion (RT.com).

What about the buyers? The customer isn't always right ... or honest.

Time Wasters

Some people get potential advisors to do work without any intention of buying from them. This includes attending expensive-to-host dinner seminars only for the food. The free recommendations can then be shopped around. It’s then easy for another advisor (including the incumbent) to propose a different product — not necessarily better — with a lower price or more features.

Advisors can avoid time wasters by prescreening clients and advising for a fee instead of for free.


Whatever happened to the truth --- the-whole-truth-and-nothing-but-the-truth?

When you go to your doctor for treatment, don't you describe all the symptoms? If not, you risk side effects from the wrong diagnosis. You lose by holding back facts even if you don't think they matter.
Do you give your advisor enough information?

If not, you won't get the best results either. Maybe you're reluctant to disclose because you don't trust your advisor and fear getting sold more. While you may have trouble finding another doctor, advisors are plentiful. You may be further ahead by going through the hassle of finding an advisor who warrants your trust.


You may think a pre-existing condition doesn't matter when you're applying for insurance. You aren't the one to decide. Your role is to answer the questions accurately. The consequence might be higher premiums or a denial of coverage. At least you'll know in advance, which gives you the opportunity to shop around.
click to read CBC News articleTwo seniors are starting the New Year with $100,000+ medical claims denied under full coverage travel insurance (CBC, Jan 7, 2013). We don’t know the facts.

If you don't understand a question, ask for clarification. Using a qualified independent advisor may be better than dealing buying directly from the insurer (or an advisor who's restricted to selling products from only one company).

Better And Better

Logitech Wireless Boombox: the bluetooth pairing didn't work wellI'm back at Best Buy to return the speakers with a receipt. I'm served within minutes. They ask no questions and don't even open the package. They're trusting that the box doesn't contain a brick or missing parts. They’re right.

Maybe better buyers beget better sellers? And vice versa.


Podcast 202

direct download | Internet Archive page | iTunes

PS My favourite Pinocchio was Disney’s 1940 version

January 5, 2013


2012 500x500 SXC 1335434_13714895Welcome to 2013. We’ll start by reviewing what visitors read here on Riscario Insider in 2012.

This blog started in 2006, which is a long time ago in Internet years.

The Top 20 Posts

As usual, there’s repetition in the most popular posts.
  1. Why we switched to Ooma phone service
  2. Quotes related to The Seven Habits of Highly Effective People (down from #1)
  3. Napoleon Hill: The six basic fears from 1937 (unchanged)
  4. How ‘Cake Boss’ Buddy Valastro made bitter batter better at 17
  5. Does Warren Buffett "Buy Term and Invest The Difference"? (down from #2)
  6. The horror of Rogers Ultimate Internet
  7. Why advisors become advisors
  8. Reach your goals with Pick Four from Zig Ziglar and Seth Godin
  9. The risk of financial innovation
  10. Should you switch to an actuarial career? (down from #5)
  11. Secret 7: The best tax sheltering in Canada (down from #4)
  12. What are you doing about your high investment expenses?
  13. The perils of whole life insurance
  14. The problem of “trapped” retained earnings (up from #16)
  15. The Globe and Mail on Canada’s Insurance Loophole (down from #9)
  16. How Lamar Odom’s mom saved his life
  17. Napoleon Hill: Fear #3 (ill health) (down from #12)
  18. The pros and cons of financial leveraging (down from #11)
  19. What happens during a paramedical exam for life insurance? (down from #15)
  20. The foolproof measure of trust
Half these posts were in the top 20 for 2011 (including two of the top three). There are advantages in having a “back catalog”.

Worth A Peek

Here are the 2012 posts by category. We looked primarily at financial literacy, advisors and insurance.
take the money and run?Financial Literacy
  1. How to spot biased referrals
  2. The perils of pyramids and multilevel marketing (MLM)
  3. Tips for first-time homebuyers
  4. Insights from Carl Richards (@behaviorgap) and his napkin drawings
  5. Ellen Roseman makes financial basics lively
  6. How to repay a nonfinancial debt
  7. Repairing your computer vs. fixing your finances
  8. An actuary invests in himself: beyond the Globe and Mail interview
  9. How to spot a fake fee-only financial planner
  10. Where financial bloggers fail
  11. What does your advisor drive?
  12. “Financial doctor” interviews “insurance doctor” (video)
  13. Forget financial literacy: check your pizza literacy
  14. Why we get bad advice
Don't pass the buckAdvisors
  1. The word advisors imply but dare not say
  2. Where is your advisor’s blog?
  3. Why insurance advisors also sell investments
  4. The passion of Guillermo del Toro, Neil Hetherington and your advisor
  5. Why advisors become advisors
  6. Unethical email? Do advisors put your interests first?
  7. When your advisor is on vacation
  8. Imagine your advisor in the Olympics
  9. How musicians and advisors have evolved since the 1980s
  10. Do your advisors help you with your financial literacy?
Imagine James Bond selling insuranceInsurance
  1. The lure of “exclusive” financial strategies
  2. The perils of whole life insurance
  3. What to do about the insurance turmoil
  4. How ‘Cake Boss’ Buddy Valastro made bitter batter better at 17
  5. Exploring the inner worlds of investments and insurance (video)
  6. Imagine James Bond selling insurance
  7. Reinstatement: trying to get your insurance back
the new prescription for trustTrust
  1. The new prescription for trust
  2. Looking beyond TD Bank and the Rothstein Florida Ponzi scam
  3. Three powerful protectors against corporate misconduct
  4. Keeping promises when no one’s watching
  5. How sorry is Jonah Lehrer for his plagiarism and lies?
  6. Lance Armstrong, incentives and behavior
where there's willpower, there's a wayGoals
  1. Where there’s willpower, there’s a way
  2. Reach your goals with Pick Four from Zig Ziglar and Seth Godin
  3. Is the Pick Four goals program right for you?
  4. From bucket list to balk-it list
who's on your side?Career
  1. Can an advocate serve two masters?
  2. Interviewed on Liquid Lunch
  3. Unintended lessons from three entrepreneurs
  4. The new Best/Worst jobs list and you
how your brain works ... against youVarious
  1. How your brain works … against you
  2. When your student leaves home
  3. Why we switched to Ooma phone service
  4. How TEDxToronto has changed
  5. Reminders from disasters like Superstorm Sandy

The Top 5 Podcasts

You’ll find over 200 podcasts. Here are the top five.
  1. Does billionaire Seymour Schulich help you "Get Smarter"? (unchanged)
  2. The three major obstacles to growth according to Brian Tracy (up from #3)
  3. "The Snowball" rolls into Warren Buffett (down from #2)
  4. Outliers by Malcolm Gladwell: Mastery plus Opportunity trumps Talent (unchanged)
  5. Albert Einstein on education and learning

The Top 3 Countries

You read from around the world
  1. Canada: Toronto, Ottawa, Calgary, Vancouver, Montreal (#2 in 2011)
  2. United States: New York, Los Angeles, Chicago, San Francisco, Houston (#1 in 2011)
  3. United Kingdom: Teddington, London, Bristol, Birmingham, Manchester (#3 in 2011)

Sources of Traffic

  1. Search engines: 52% (down from 69%)
  2. Campaigns: 17% (mainly via subscriptions and Marketing Reflections)
  3. Referring sites: 16% (up from 14%) [main sources: The Globe and Mail, Marketing Actuary, Twitter, LinkedIn]


Here are the top keywords typed into search engines to get here.

  1. 7 habits of highly effective people quotes (#1 in 2010)
  2. quotes from 7 habits of highly effective people
  3. buy term and invest the difference
  4. seven habits of highly effective people quotes
  5. rogers ultimate internet
  6. buy term invest the difference
  7. innovation
  8. napoleon hill six basic fears
  9. trust
  10. napoleon hill 6 basic fears

Browsers Used

  1. Internet Explorer: 29% (down from 37%)
  2. Chrome: 25% (up from 20%)
  3. Safari: 19% (up from 14%)
  4. Firefox: 19% (down from 25%)
  5. Android browser: 3% (new)

Operating Systems

  1. Windows: 68% (down from 76%)
  2. iOS: 13% (up from 7%)
  3. Macintosh: 12% (unchanged)
  4. Android: 3% (up from 2%)
  5. Linux: 1% (unchanged)

Screen Resolution

  1. 1366x768: 14% (up from 12%)
  2. 1280x800: 11% (down from 19%)
  3. 1024x768: 9% (down from 12%)
  4. 1440x900: 7% (down from 8%)
  5. 1280x1024: 7% (down from 8%)

Mobile Devices

In 2012, 17% visited with mobile devices (up from 9%). Apple devices rule at 75% (down 1%) with the iPhone and iPad leading. Android is 18% (unchanged) with Blackberry at 6% (up from 5%).
For the first time, mobile visitors stay on this blog longer than computer users.


Podcast 201

direct download | Internet Archive page | iTunes

PS Happy New Year!