swanfinancial is thinking about….

You probably have, like me, received several invites for free Accidental Death Insurance coverage.  Mine comes from CIBC.  Have you asked yourself why they are giving it away free?  True, they would like to sell you more than the free portion, but behind it, literally, is another reason.

If you turn the page over, behind the enrollment form is a long authorization form you probably didn’t read. It authorizes to disclose, and I quote: “any licensed physician. medical practioner, hospital, pharmacy, clinic or other medically related facility, insurance company, the Medical Information Bureau, the insurance plan sponsor, any investigative and security agency, any agent, broker or market intermediary, any government agency, or other organization or person that has any records or knowledge or me/us or my health or the health of my spouse, to CIBC Life or its reinsurers or its third party administrators of any information for the purpose of this application and contract and any subsequent claim.”

Wow! But wait there is more. This authorization is valid for seven years after I am dead.

I also authorize for my spouse even without their signature.

And all this medical information is necessary for a death caused by accident. 

Not surprising is that nowhere on these documents does it define the term ‘accident’ even though it says they have  “attempted to explain clearly and briefly the benefits available”.  Looks like whoever wrote that paragraph forgot to include a definition of the single condition for which a benefit would be paid!

What’s clear to me is that the plan sponsor (?) wants my consent to gather information about me and my spouse. The form gives consents for them to ‘consult’ (read ‘link’) such information with my banking records.

Clearly this is a way for the Bank to get my consent to build up a file on me. With the introduction of privacy legislation in Canada, such consent is now required in writing. And they are using this free insurance as a guise to get the consent which if the local branch called you and asked for, you would rightly refuse to give.

Beware of greeks bearing gifts, I say!

Besides, who would a) buy accidental death only insurance anyway and b) why would pay the high prices they Bank charges if they did?

Accept that the amount of insurance you carry should be based on the value of what’s being insured. It’s interesting to see how people judge value. Value is in the eye of the beholder. A photo, which has no monetary value and is irreplaceable, might be priceless. A large building which is being used only because it exists, has an obvious physical value, but might be worthless to it’s owner, it’s loss of no significance. The loss could even be viewed a beneficiary because it was not valued and now has been removed.

When you enter into an insurance contract, value becomes something tangible. The contract will state the basis of valuation, and there are terms such as assessed value, cash value, actual cash value, depreciated value, replacement cost, agreed value, etc. The term used will vary with the type of contract. Life insurance has an agreed upon value. Car insurance has (usually) cash value. Property insurance can be Replacement value, but it can also be assessed value or actual cash value.

People always overvalue an object after it is lost, and undervalue it when purchasing insurance. The reasons for doing this are obvious. What’s interesting is how value can be made to mean anything you want it to be.