Insurance band-aids

The widows of CF members killed in the line of duty are going to get their mortgages paid, I'm certain. Put enough PR pressure on a bank or insurance company, regarding what is really, REALLY small potatoes to them, and numbers with a few zeros behind them get written off pretty darn quickly. That's what's happening here; I don't expect any further problems for these particular women.

But the widows shouldn't have had to go through all this hassle in the first place. They should have been told up front by the lending institution that also sold them the mortgage insurance that they wouldn't be covered if their spouses were killed in Afghanistan, so they could make alternate arrangements. Perhaps they were and don't remember; I can't speak to that.

Even then, "alternate arrangements" still constitute a band-aid solution - have you priced out life and disability insurance on the open market, when you're forced to disclose there's a chance you'll be headed to Kandahar? Let's just say it's beyond the means of most ordinary soldiers' family budgets.

No, the real solution here is revamping SISIP. For those who don't know, SISIP is the financial services company contracted by the CF to serve the Canadian military community. Here's their mission statement:

Our Mission

To be the provider of choice of high quality financial products and services desired by the serving and released members of the CF and their families at a cost/benefit advantage in comparison to that available in the marketplace.

Let's be clear here: they're not the "provider of choice," they're the only practical option in many cases for CF members. But there's at least one big problem with the SISIP options, one you've seen raised recently in the case of a reservist surgeon thinking of volunteering to serve in Afghanistan. SISIP only offers $400,000 of coverage.

Given the fact that the rule of thumb for determining the amount of life insurance you need is five times your annual income, plus outstanding debt, plus any special funding needs (e.g. child's education), that maximum amount available is quite frankly ridiculous. Imagine a MCpl at the top of his pay grade: making around $66,000 a year, with a $100,000 mortgage, and two kids he hopes to send to college or university in ten years at a cost of $80,000 per child for four years each. He needs at least $590,000 worth of life insurance, and he can't get it through SISIP.

The Department of National Defence employs over 110,000 Canadians, so it should be able to strike a better deal with a private service provider than it currently has. So to Gordon O'Connor I say: keep beating up on the private sector to deal with the current group of military spouses caught between a rock and a hard place, but also start negotiating a better deal for CF members through SISIP.

Disclaimer: I'm not a licenced life insurance agent, so don't take my word for any of this. Instead, I'd recommend you speak to a licenced agent, preferably one with a Chartered Life Underwriter (CLU) designation, to determine your financial needs. I happen to know a good one, if you're looking for a name - just drop me an e-mail.

Update: A good discussion of this issue over at Army.ca. Note the distinct lack of victim status here:

Navy_Blue: Would it be to much to ask Canadian tax payers to pick up widows tabs??

Bruce Monkhouse: Yes, it would be too much.............then what, police, fire, corrections? Where does that line stop?

whiskey601: Yes, that is asking far too much of tax payers, who also work very hard for their money and have every right to expect that members of its armed forces make informed decisions about their chosen career paths and the risks associated therein, including the risk of dying and leaving your spouse with an unpaid mortgage.