A product review of Foresters Advantage Plus with the Enhanced Insurance Option, and why I changed my mind about it.

A male 37 non-smoker pays $1,232.80 a year for twenty years. When he dies — at forty or at a hundred, it makes no difference — his family receives $90,000. That is the entire transaction as he experiences it. Twenty payments, then nothing more to pay, and one number at the end.

So he knows exactly what it costs. Twenty-four thousand six hundred and fifty-six dollars in total, three dollars and thirty-eight cents a day, and after the twentieth deposit he is finished. And he knows exactly what it buys: $90,000, guaranteed, whenever it happens. On the premium survey I run, that is the lowest-cost guaranteed twenty-pay available in the Canadian market today. Everything else in this article is about how a company can do that.

Because underneath those two numbers the contract is doing something he will never see unless he reads the fine print. The $90,000 is not one amount. It is $51,426 of basic insurance, guaranteed outright, plus $38,574 of what the contract calls the enhanced amount — and the enhanced amount is bought every single year with a dividend that is not guaranteed.

It started as a sales presentation. Something that commissioned salespeople could use to sell life insurance. A marketing piece if you will. And it evolved to what it is today. An educational approach as a first step to assisting a consumer in understanding what life insurance is. As the regulatory environment evolved so did the requirement to put the consumer’s interests first… so it seemed obvious the next step was providing advisors with the presentation material they need first and foremost, the information the consumer needs to make an informed decision about whether it makes sense for them to allocate a portion of their wealth to life insurance.

My daughter is a scientist. She does systematic reviews for a living. Her work is not to repeat the experiments — it is to ask whether the evidence being cited actually supports the claim being made on it. A great deal of science exists to back a marketing conclusion, and the gap between what a study found and what is asserted on its strength is where she spends her time. That gap only becomes visible because of what has to be on the page. Reporting checklists govern what a paper must state: how the study was designed, how many subjects, what was measured, what was found and with what precision. The checklist makes no claim that anything works. It guarantees only that a reader can see well enough to judge whether the conclusion follows.

For most readers the closer reference is GAAP.

The Diversified Portfolio Approach applies the three principles, and each slide turns on one in particular.

One — the Allocation Method. Three buckets: tax-sheltered savings, everything else you own, and a guaranteed tax-free transfer to the people you name. How much belongs in each? Compared to what, before any product exists. Zero is printed on it as a valid answer.

Two — the DPA. A diversified portfolio approach. One outlay, three shapes, side by side. Compared to what, applied to product. This is the page above.

Three — the ROI. What the same money returns, against what it would otherwise do. Compared to what, expressed as a rate, with guaranteed values kept separate from illustrated ones.

Four — the Product Rankings. Why these contracts. The criteria are contract features — conversion wording, the guarantees themselves, protection of the pool — so this is Review the policy contract, with the weights published in advance and open to challenge.

Five — the Holding Statement. Put it in writing, for a reader who is not in the room and may not be born yet.

Five pages is the whole engagement. What follows is one part of page two.