Peter Boys, Boys Financial Services

Life Insurance! But Why Disability, Critical Illness or Long Term Care?


Several recent surveys have highlighted that most Canadians have insufficient life insurance coverage, and a significant number don’t have any insurance coverage. When quizzed as to why, the most common reason given is that life’s other financial priorities take precedence. Other reasons given are, they feel they can’t afford it, they have group coverage at work, plus several other common misconceptions.

It’s easy to underestimate the huge financial risks people are setting themselves up for with insufficient or no coverage. Many families today are living paycheque to paycheque with no rainy day savings, in spite of the fact that most people understand the need for life insurance to protect those left behind in the event of a premature death. But very few realize they are at a much greater risk of getting sick or disabled prior to age 65 than they are of dying.

Why disability coverage? Disability insurance provides income replacement if one is disabled by accident or sickness. There are many options of how early payments begin and how long they continue, and premiums are charged accordingly.

Some people have group coverage at work that I liken to Swiss cheese – there are a lot of holes in the coverage. However, these can be filled with personally owned coverage. Advanced coverage such as ‘key-person coverage’ provide funds to hire a replacement while you’re disabled, or ‘business interruption coverage’ can take care of business overhead costs. Yes, disability coverage is expensive, but so would years of payouts to someone who has been disabled.

Why critical illness coverage? Costs while being treated for and recovering from a critical illness can add up very quickly. Having someone drive you to and from hospitals or clinics, motel expenses, home care if needed, not to mention lost income can put a serious crunch on cash flow.

Cancer, heart attack and stroke are the most common illnesses covered, but there are many other conditions that are covered as well. One can purchase a wide range of coverages. I recommend having enough coverage to fund at least one year’s mortgage and other payments.

There are options that return all of your premium paid if you haven’t made any claims. This can be after a certain period such as 15 years or on death. Some policies have the option to be converted to long term care plans.

Why long term care coverage? With longevity increasing with every generation and the ever growing legion of baby boomers now in retirement, our health care system will be hard pressed to keep up. Plus what’s covered by Alberta Health care is a lot less than most of us realize, highlighting the need to have some level of personally-owned long term care coverage.

Don’t leave yourself, your family, your farm or business at risk financially from an unexpected accident, sickness or death, and the devastating consequences of lost income to those left behind. Multiple coverage options and terminology can be confusing, so take the time to sit down with a qualified financial advisor to develop your personalized financial risk management program.
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