Be careful what advice you take on the internet – Is there a hidden agenda?

by Glenn on February 12, 2012

There’s a lot of self-proclaimed consumer advocates protecting wary consumers out there – but they don’t all know what they’re doing. Consumers need to be very careful about trusting even ‘trusted’ sources.

I recently found a post discussing life insurance on a Canadian financial forum, see this thread don’t believe this site.  A userid ‘brucecohen’ in that thread tells people that 20 year term is cheaper than 10 year term, and advises people to watch for renewability.  This was posted by a member that has over 8500 posts on the site.  I assume the poster is trusted by readers as a result.  Yet the information he gave in that thread was demonstratably wrong.

Since I’m in the business, I took the time to respond and counter the points made.  I pointed to a study I did that showed that in fact 10 year term is cheaper (not 20 year term as was mentioned in the thread) and went into a fair bit of detail as to why renewability doesn’t matter (and pointed to a Globe and Mail article showing the same conclusion).  In addition I pointed out what actually does matter instead of renewability.

The result?  My post was summarily deleted and I received an email implying I was spamming their site.  Huh?  They’ve removed my post which showed factual data proving the info on their site was wrong, and left the incorrect information to stand for their readers?  What’s the agenda there?

But it gets weirder.  Since my email response to them bounced, I looked up the ownership of the website and emailed the owner directly.  That person’s website coincidentally proclaims that they provide unbiased financial advice as a business.  And their response?  They have nothing to do with the ownership of the site.  At this point who’s behind that site and what their shenanigans are is beyond me, I’ve left it at that.

So we have a financial forum with incorrect information that ‘looks’ trusted.  Information countering the fallacies is summarily deleted.  The registered owner of the site provides ‘unbiased’ advice but disavows being the owner of the site.  And I assume Canadians are reading that site and believing it.

So, read and do your research.  But in the financial world in Canada, you’d be well advised to confirm stuff that hasn’t been backed up by facts – even if it comes from someone who seems trusted.

And for anyone that wants to see my response to the points of 20 year term being cheaper and renewability being important, here’s the content of my deleted post in response to user brucecohen:


Bruce Cohen Said:
Normally you can. But check all the fine print. If you’re buying 10-year term make sure that it’s renewable without evidence of medical insurability. Also, a good policy will commit now to the rate for the next 10-year term. Have you checked the cost of 20-year term? Sometimes it’s cheaper and you’d likely need almost 20 years to provide for your child.


InsureCan Said:
The idea of renewability is touted on the internet all the time, and it’s wrong – it hasn’t been correct advice in probably 15 years.  You may have read it online, now it gets posted it here like it’s sound financial information, and someone else will pick it up and read it like it is some sort of consumer advocacy tip and pass it along.

You do not care about renewability.

You care about conversion.  The ability to convert to a permanent policy is absolutely vital in any term policy you buy.

I can think of only one term product in Canada off the top of my head that isn’t guaranteed renewable. You’d have to work at it to buy a term policy that isn’t guaranteed renewable.

So pretty much everyone has renewability – it’s not a big deal.  Doesn’t matter, you’re never going to use it.  If you reach the end of the term and you don’t want insurance, cancel.  If you reach the end of the term and do want insurance, you are either healthy or not. If you are healthy, you are going to shop and buy a new policy. If you are not healthy, you are going to convert to permanent. You have to create an artificial construct to find a case where automatically renewing a current term policy makes sense.  Preet Banerjee summarized this in the Globe and Mail last year: http://www.theglobeandmail.com/globe-investor/personal-finance/preet-banerjee/how-to-minimize-your-life-insurance-premiums/article2220938/

What you’ve described was correct 15-20 years ago.  What I’ve described was false 15-20 years ago, but has been correct since then.  Which is why I find it absolutely bizarre that the idea of renewability is still being run around the web like it’s something to watch out for.

Secondly, 20 year term is not ‘sometimes cheaper’.  See http://www.insurecan.com/term-vs-whole-life and scroll down to the bottom of the page to the tables.  10 year term is cheaper (though only mildly) even over 20 years.  To be fair, up until last year I’d have said (and did say)  20 year term is cheaper than two 10 year term policies. I actually did say it a year or two ago, then realized I was saying stuff based on assumptions not fact – so I ran the numbers so I could base my comments on facts.  And now if you ask me, I do not say that 20 year term is cheaper than 10 year term – even though that’s still what you’ll read on the internet.  Again, the comparison of 20 year term being cheaper than 10 year term may have been valid 15-20 years ago, but is not correct information in today’s Canadian term marketplace.  That does not mean I’m recommending 10 year term over 20 year term – it does mean that I am not recommending 20 year term because it’s cheaper.  There are other reasons for 20 year term.

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