Peter Boys, Boys Financial Services

Our Biggest Financial Asset – Ourselves!

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Our ability to earn an income is usually our biggest asset, more valuable than our home or other investments.  This asset is at greater risk than we realize through death, disability or illness.  Simply put, our greatest asset is ourselves and our income earning ability over our lifetime.

Every day we have costs associated with daily living.  Typically our largest debt is our mortgage.  Then add car payments and such things as saving for our children’s education.  These require income.  We don’t think of income earning ability as an asset such as our homes, vehicles or investments, probably because it’s not as tangible.

For young married couples, the risk of one of them dying, becoming critically ill or disabled by age 65 is 75 to 80 per cent.  A critical illness or disability would impact our income-producing asset either temporarily or indefinitely, and the related risks are staggeringly high.

There’s a high chance that something is going to happen to any one of us that’s going to interrupt our ability to earn income and to pay bills.  But the awareness among Canadians of the risks to their biggest asset is low.  Unfortunately there’s an element of “this won’t happen to me.”  Younger people tend to think they’ll get around to doing something about it in the future.

Manulife surveyed 1,000 homeowners across Canada between ages 30 and 50, with a household income of $50,000 to $150,000.  They and found that 92 per cent did not have comprehensive insurance plan to protect them and their families in the event of critical illness, disability or death.  This leads to the conclusion that many Canadians are either underinsured or have no insurance coverage at all.

The survey provided the foundation for a new, comprehensive insurance plan that protects the three risks – death, disability and critical illness – that could interrupt that flow of income, and combines them into one convenient solution.

Up to $500,000 of insurance is available to people between ages 18 and 50 and expires at age 65.  What’s unique about it is that it offers a pool of money for policyholders, providing wider coverage for less cost.  As we don’t know which we may need, this would provide $500,000 of life insurance, or critical illness coverage up to 25% of the policy value or $125,000.  Or a disability claim up to .5% or $2,500 per month could be made.

For example, let’s consider someone who hasn’t made any previous claims.  If they were to suffer a critical illness and submitted a claim, they would get $125,000.  This reduces the available insurance money left in the pool to $375,000.  Then, in the event that they died prematurely, their heirs would receive $375,000.  In another case, if they had a claim for a disability, they could get $2,500 a month, which would come off the remaining $375,000.  It just draws it down as it’s a pool of money and you use it for what you need.

For anyone with lender or mortgage life, disability or critical illness coverage, this could be an attractive option.  Talk to a licensed insurance advisor to see how this could work for you.
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