A living Benefit: Critical Illness Insurance; Do I need It?

A living Benefit: Critical Illness Insurance; Do I need It?

 

  1. Do I need it?
  2. Isn’t it expensive?
  3. Is it too complex and confusing?
  4. What about the underwriting?

Let’s examine each of these four questions.

 1. Do you actually feel no need for this product?

Research tells us 77% Canadians are concerned with lifestyle and health costs if they became critically ill.  A further 84% were concerned with the government’s ability to fund the current healthcare system.  Those concerns are not unfounded.  A survey from 2014 found that 41% of retirees retired because of personal health.

Just like life insurance, critical illness coverage is likely suitable for people under age 65 (CI coverage is often cost-prohibitive after that age).  CI coverage can help anyone whose illness would cause financial liabilities (e.g., debt, bills) for a spouse or dependent.  Often, the money is used to replace lost income when disability coverage doesn’t pay out, which can happen if the insured’s condition is not severe enough to satisfy a doctor’s opinion of someone’s inability to work for a sustained period.  CI simply pays out upon diagnosis of specific illnesses.  Also, single people who don’t see a need life insurance could benefit from CI coverage as they could use the payout to replace lost income and pay for caregiving services.

2. Is critical illness expensive?

Every person who qualifies for CI insurance should own at least enough to cover a year of lifestyle expenses (salary).  This would give most people up to a year of expense coverage to allow them to make choices that focus on recovery from illness.  A 35-year-old Female non-smoker can buy $100,000 10 – year term  for around $35 per month.

There are various ways to set up your CI policy depending on what you want out of the product.  If you want the product to cover you short term while your family is young and you are concerned about the cost, the 10-year term coverage is a good option.  There are options that allow you to keep the coverage over a longer period, and there is even an option to return all of your premiums if you do not use coverage after a specified period of time.  When looking at this coverage it can be built to fit your needs and wants with regards to cost.

Cheap and expensive are relative terms.

What impact would $100,000 of protection have on your finances?  If you had to withdraw $100,000 from your RRSP, it could cost up to $150,000  before tax, depending on your marginal tax rate.  That $150,000 could have been worth $300,000 or more at retirement, depending on time and growth rates.  Remember that $35.00 a month for 10-year Critical Illness coverage could have change that equation in your favor.

3. Is CI too complex to understand?

The product which was originally designed by a doctor in South Africa to aid patients in paying for treatment upon diagnosis of a life-altering illness.  This idea is somehow deemed to be more complex than any other insurance product on the market.  I think it’s all about understanding why you need this coverage.

Let me ask you these two questions below:

Do you know someone that is close to you that is healthy?

What if they went to the doctor because they have not been feeling well for a little while. But it’s nothing that resonates as a major illness. Remember they live a healthy life and they are healthy.

After a brief consultation with the doctor, blood work and diagnostic tests are ordered. The results come back and the doctor office calls your healthy friend to set up an appointment. During this appointment, the doctor informs them that they now have a Life-Altering Illness.

But they were healthy… how is this possible?  A critical Illness does not pick or choose!

If they don’t have Critical Illness coverage how would they fund the treatment and recovery they will require?

All of a sudden this coverage does not seem very complicated to understand.  As we know life altering Illnesses can happen to anyone and has happened too often amongst our friends and families.

4. Is critical illness insurance hard to qualify for?

Anyone who has a family history of hereditary issues will have a tougher time qualifying.  That is not to say you will not qualify, there is a rating system in place to provide coverage if you are deemed high risk.  The majority of people who apply will qualify for standard offers if they are healthy.

You need to take a holistic, risk management approach and determine all risks so that illness protection and a life insurance plan work together.

The banks are the number one writers of this coverage for their Mortgages and Lines of Credit products.  What you need to know is it always cheaper when dealing directly with an insurance company.  Put the money back in your pocket!  A good Financial Planner will help you find money you have been spending unknowingly or unwillingly. This is just one example of you spending money unknowingly – find an advisor start saving now.

As always if you have any questions regarding Living Benefits Insurance, Financial Security or Financial Planning please contact us at Henley Financial and Wealth Management.

You may also contact us at the following Info@henleyfinancial.ca

Do you really need 10 reasons?

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We live in a world that is filled with the uncertainty of what might happen. Life Insurance protects your loved ones in the event of your death. It can provide future income to your family if you were to passaway during your prime working years, and it may also be used to pay debt, such as a mortgage, final and emergency expenses.

Life Insurance is the most selfless act a person cando for their family, as the person that is insured will never benefit from the coverage.
Before obtaining Life Insurance here are some things to consider.

1. The Best Time is now:
The cost of Critical Illness insurance policies will never decline, the costs will only ever increase. So the best time to get Critical Illness Insurance is now.

2. Receive Cash Back:
In Canada there is a Critical Illness plan that enables you to receive a portion of your premiums to be returned after a specified time frame. Which means if a client doesn’t need to make a claim and feels they won’t, they can cancel the policy and receive repayment based on the percentage of premium paid, all the while having coverage just in case

3. Purchase while you are healthy:
Critical Illness coverage can only be purchased while you are healthy. Once an illness has been diagnosed you are not eligible to purchase it.

4. Tax free lump Payment:
When a claim is made with Personal Critical Illness coverage, it pays out a lump sum, tax free to the insured. The payment is in the amount that has been agreed upon when the policy is taken.

5. One less Worry:
Personal Critical Illness allows the insured to take the time that is necessary to recover without worry as to how the day to day expenses or additional medical services not paid by the provincial health plan. There isn’t a prearranged allocation for the payment, so all of the payout goes to the insured.

6. Additional coverage:
You can purchase Critical Illness coverage on a mortgage, however, these types of plans only cover three illnesses such as cancer, heart attack and stroke. Alternatively, Personal Critical Illness policies cover these three illnesses as well as 22 others; all of which we hear about almost daily.

7. Not included in most employers plans:
In most employee benefit group plans, Critical Illness is not always offered. In the rare instance that it is indicated on a group policy, it is often not near the recommended coverage amount.

8. Best Doctors:
Personal Critical Illness coverage allows you access to Best Doctors. Best Doctors is a group of the best Doctors worldwide that are experts in specific areas of medicine. Once a claimis made, your file is put before a panel of Doctors to review and determine whether the diagnosis is correct and the course of treatment is the best for the diagnosis.

9. Coverage for children:
Critical Illness can be purchased to insure people from newborns and up to the age of 65. Some carriers allow you to insure children for up to five illnesses, where as adults can be covered forup to 25 illnesses.

10: Peace of mind:
Critical Illness policies are underwritten at the time of the application process. Meaning that we will know if the client is covered up front and not left to chance at claim time.
What’s next?

Contact us… http://www.henleyfinancial.ca
info@henleyfinancial.ca