Most of us, when we first entered the workforce, never really gave any thought to life insurance. Now, as we are nearing or entering our retirement years – or, if a little younger, entering our peak earning years – we may want to take a look at some insurance protection.
More than likely, you and your family are dependent on your salary to support your lifestyle. Owning life, critical illness, and disability insurance can help protect that lifestyle in the event you become unable to work.
Let’s take a quick look at the types of life insurance available.
1. Life Insurance
If you own a home, have children, or are responsible for other family members, then some kind of life insurance is important. The amount you need depends on factors such as how much debt you carry (e.g. your mortgage). Or, let’s say you have educational goals for your kids’ future and want to be sure those costs are covered. And, of course, any other income needs. You can choose from the following:
Permanent Life Insurance
Known also as whole life and universal life. These insurance policies provide protection for life, as long as your premiums are paid. There are some cases where you can accumulate a tax-advantaged investment, or cash value, that may increase the amount you leave to your beneficiary.
Term Life Insurance.
This kind of insurance provides protection at a guaranteed rate for a specific period of time—typically for 10 to 20 years or to age 65. These policies are renewable at the end of the term, however the renewal rate will be higher.
People often purchase term life insurance to ensure that a specific financial obligation that will eventually be paid off, is covered—such as a mortgage in the event of death of the policy holder.
In Sickness & in Health
It can happen to anyone. All of a sudden you go from being healthy and active to sick and possibly critically ill. Or an event occurs, leaving you disabled.
A critical illness or disability insurance policy are two other forms of insurance that people tend to purchase, especially if they are the sole earner in a family and everything depends on them and their salary.
Although the survival rates for heart attack, stroke, cancer and other critical illnesses are increasing, recovery from such setbacks may require weeks or even months away from work. The extra costs associated with critical illness or disability, resulting from incapacitating health issues, can be astronomical and are often not covered by your provincial healthcare plan.
2. Critical Illness & Disability Insurance
Critical Illness Insurance
This kind of insurance provides a one-time cash benefit if you’re diagnosed with one of the conditions defined in your contract. (The case benefit is paid if you meet the eligibility criteria set out in your contract.) This benefit can support the day-to-day needs of you and your family while you are seeking medical treatments and recovering. In other words, you have funds that you can rely on while away from your job.
Having a disability insurance policy means, in the event of an accident or illness, you are eligible for monthly benefits to help replace your salary or wages after an accident or disabling illness. This type of protection is especially recommended if you are self-employed, the primary source of income within your family, or you run your own business.
And finally, there’s a way to get all three types of insurance in one easy to manage package if you want…
3. Three-in-One Combination
Combination insurance is exactly that – coverage for all three types of insurance in one policy: life, critical illness and disability. It’s a solution often structured to provide a pool of funds to cover the three scenarios should the need arise. It is also more cost effective and simpler to manage than having the three standalone policies.
What to Do With This Information
Although you may already have some insurance coverage through your place of work, are you sure it provides enough for you and your dependents should the need arise to use it? It may not be enough to provide the same standard of living or lifestyle you all currently enjoy. Holding other individual policies will help top up your benefits, plus, they are in place in the event you change jobs — leaving you never uninsured.
Talk to your financial advisor or drop by your credit union and find out more about all these and other insurance options available for you.