Life, Critical Illness, Disability Insurance, Or All Of The Above?
As Canadians try to determine how to protect themselves and their families financially, they need to look at life, critical illness and disability insurance and determine what combination of these will meet their family’s needs.
- Paying off debt on the premature death of either spouse regardless if a breadwinner or the home parent is an obvious risk to cover. As is providing funding to replace the departed partner’s lost income earning ability, and to fund children’s further education.
- The question is, what is the greater risk faced by a young individual or couple; death, disability or a critical illness? Looking at a 30 year old non-smoker male, he has a 7% risk of dying, a 36% risk of being disabled, and a 27% of suffering a critical illness prior to age 65. Putting all three risks together and there is a 51% probability of him either dying, becoming critically ill or disabled before age 65.
- The biggest lifetime financial risk a wage earner faces is the loss of their future income earning ability. Inadequate disability or critical illness coverage could result in a crisis. Very few Canadians have group benefit plans offering life or disability coverage and even fewer have critical illness coverage, especially as many employers today are trying to reduce expenses.
- Current consumer surveys show a very significant number of Canadians have either no life insurance or are drastically underinsured and a much greater number don’t have disability or critical illness protection.
- I run across lots of self employed business owners or contractors who don’t have disability or critical illness coverage. They may have Worker’s Compensation coverage while at work, but this is not much use if they injure themselves skiing, snowmobiling or any activity outside of work.
- The reality is that most Canadians are paying more for insurance for their vehicles than for their life, disability and critical illness combined. My big concern is that the ever increasing debt levels Canadians are taking on is not being matched with adequate financial risk protection.
- Products that are now available that combine these coverage’s into one plan built around buying a pool of insurance from which you can be paid out a premature death benefit, a tax free monthly disability income steam or lump sum critical illness payout. This means you don’t need to try to guess what coverage you need, because one policy protects you in all three ways.
I have all three coverage’s; so if I get sick there will be a big check to help cover all of the recovery expenses not covered by Alberta Health Care, plus pay my staff and office overhead costs. It would give me time to recover without financial stress, or to plan for the sale of my business. My life insurance payout would do the same, plus ensure that my wife would not have to suffer any financial hardships for the rest of her life.
So please don’t leave it to chance that your family’s finances will recover if you became disabled, critically ill or died prematurely. If you need help figuring out affordable options for you and your family, please sit down with a qualified insurance professional to help determine the best combination for your individual situation.
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