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This is part 1 of a 12 part interview with Dennis Crawford, certified financial planner.

Dennis Crawford InterviewDennis Crawford – Certified Financial Planner

Andrew: Hi this is Andrew with, I’m sitting down chatting with Dennis Crawford today, how are you?

Dennis: I’m doing good Andrew, thank you.

Andrew: Good yeah. So I wanted to ask you a few questions about the financial industry and some of the things that you do. So why don’t you begin by telling us what it is that you do.

Dennis: Sure I guess for an official title you would call me a certified financial planner. An expanded definition of that would be I work with individuals and families to help them reconcile their long term financial goals and objectives with their present reality and help provide them direction and product to take them from where there are to eventually where they want to go, whether that’s respect to items like retirement or funding children’s educations or other objectives.

I also do work in the risk protection side of that which is a fancy new word for insurance products, we have expertise in that area as well. And then from there, sort of auxiliary basic advice services extend from there so I might discuss people in a meaningful way. Items like their mortgage renewal even though I don’t directly handle mortgage products from my position as a financial planner. We have working expertise in many areas of your financial everyday life so to speak.

Andrew: What are some of the advantages of the risk management or the insurance that you mentioned?

Dennis: Well the focusing specifically on risk protection or risk management, the advantages.. you maybe have to spin that a little bit and say it’s more about protecting advantages from some of your other activities so in this context say risk management in the context of life insurance or disability insurance would be protection for your stakeholders in your life, your wife, children this sort of stuff is usually what that means.

With respects to your untimely disability or death or what have you, so while you’re building your kingdom or your empire so to speak, building your wealth, moving towards your goals. Risk protection is a mechanism that would protect those aspirations to some extent financially speaking in the event that you died or became disabled or something like that.

Maybe the easiest way to equate it would be something that we all understand and that would by.. why do you insure your car? You insure your car in part at least against catastrophic loss by theft or fire or damage in an accident to that car so you pay a little bit of premium is what we call it, to protect a possible outcome that could be quite catastrophic. Obviously if you buy life insurance product you don’t really want to capitalize on that premium investment, it’s a maintenance protection thing. So that’s where the word ‘risk protection’ can be used rather than the traditional insurance handle. It’s a little bit of a friendlier term to describe what it actually is.

Andrew: Practically everyone has auto insurance and house insurance and things like that, but is it something everyone should look at and have outside of those two areas?

Dennis: To the extent of your exposure. Probably the best way to ask that question of yourself, say if you consider yourself somebody Andrew, somebody your age and single with your income and wealth demographics and so forth, probably the best way to answer that is to.. lets focus on life insurance here for a minute, that’s where most of my expertise is and in various insurance areas I outsource car insurance and things like that, I don’t handle that stuff directly but many people in my network do.

So probably easiest way is to ask yourself a question, say simply I don’t come home tomorrow, today’s my last day, who has financial exposure to that event and what does it mean? And beyond that.. what sum of money being delivered would soften that financial risk or exposure? The idea with insurance whether it’s your auto insurance or home insurance or life insurance is to protect against risk or in the case of life insurance, catastrophic risk. Where if you really examine that question deeply, there would be implications.

So say if it applied to you, you don’t come home after this interview it would probably be fair to assume someone is going to take a bit of a financial hit whether it’s just dealing with final expenses what have you.. when you get married and have children such as myself and you’re raising a family and you feel some degree of responsibility for providing for them and their future education.. you can see the clear need for a bridge that if I’m unable to deliver on what I self-impose on myself as my responsibilities, I would want a back stop against that could financially help bridge that. Of course there wouldn’t be any sort of emotional replacement, no sum of money could make Andrew or Dennis come back and that’s not really what it’s about but it’s protecting some of your interests and in this example the interests of those around you, those who you love and care about basically. It’s a very individual question, occasionally in my business staying on the insurance side of things, because insurance is only about 10 percent of what I do.

My other 90 percent is really in the wealth creation side of the ledger but, I think that the best way to come at that like I said is just to ask yourself that question. What does it look like for the people I care about if I just cease to exist today? And what does that mean? And in almost every circumstance a liquid cash injection is going to help bridge, even if it is just final funeral circumstances. I mean even to go through that on the economy class fare is still probably a ten thousand dollar hit, so if you happen to be something who’s carrying debt, consumer debt, you have people that rely on your income to a certain extent or fulfilling your obligations to some extent, then it has a place in your life. How much and what type and all those things buries fruit with every individual there’s no one size fits all on this.

The home insurance and the car insurance risk protection from that side that’s a little.. that’s a little more cookie cutter so to speak, because if you have a house worth half a million dollars and you want to.. I mean nobody insurances their half a million dollar home for 250 just because they’ll pay for the rest, you sort of insure the replacement cost of the house right? Now life insurance it’s a bit more subjective and the interesting thing is people will quite often insure their home and their automobile or even maybe a precious family heirloom without any consideration or thought of not insuring it but many people will minimize the value of protecting those around them from the early loss of life. We’re all going to die, that’s one thing that’s a given so in one respect it’s one of the types of pure insurances because there’s only eventual outcome.

My house may or may not burn down, so all the years of me paying fire and home insurance, thousands or tens of thousands of dollars over the year, it may bear absolutely no financial fruit other than the peace of mind it’s giving me while I hold it. Life insurance can have a bit of a different twist on it because depending on the type of insurance product you’re looking at, you can set it up so that you have a eventual outcome no matter what. The question is does that come now, ten years from now, twenty years from now, thirty years from now, and that’s where the insurance element comes into it. You don’t know the outcomes and that’s basically the nature of insurance.