What living benefits insurance coverage works for you?

We know the unexpected can happen; the key is having a solid plan in place to protect your well-being and financial future.
The type of insurance that is right for you might not be right for me.

To make the right choices for your family and business, you need to become familiar with the types of living benefits insurance
coverage available and what they can offer. There are four broad types of living benefits insurance coverage: disability insurance, critical illness insurance, individual health insurance, or long-term care insurance.

Government Health Plans

Government sponsored health plans give everyone the benefit of access to medically necessary services that are provided either
in a hospital or by a physician.

What would you do if you got into a car accident and couldn’t work for 14 months? Who buys disability insurance? Disability insurance is a smart choice for business owners, self-employed people and even home makers. Even if you have some coverage through an employer or association plan, since individually owned disability insurance offers more flexibility regarding
when and how you receive the benefit.

Why do you need it? For most of us, our ability to earn an income is our most valuable asset and it deserves to be protected. What would happen if you were no longer able to work because of an accident or illness? Disability insurance replaces part of your income for a time if you’re unable to work. Disability insurance benefits are paid when the insured person is unable to work. The definition may be based on whether you’re able to perform your own job, or any job.

There are three basic definitions:
• Own job — able to perform the duties you
routinely perform for your specific employer.

• Own occupation — able to perform the
duties you routinely perform for the occupation
in general, not just for your specific

• Any occupation — able to perform any
occupation for which you are reasonably
suited to perform based on your education
training or experience.

Who buys critical illness insurance? Critical illness insurance is a smart way to protect your financial well-being during the
recovery process. It’s especially important for single people, self-employed individuals or business owners who may not be able to earn a living while they focus on getting better. Even if you have disability insurance to replace some of your lost income, critical illness insurance helps fill the gap between your usual pre-disability income and the amount your disability benefit provides.

Impact of Not Having Coverage

If you had to dip into your RRSP because of a serious illness, your retirement savings could take a considerable hit. Let’s say you suffered a critical illness at age 45 and had to withdraw $100,000 from your RRSP. You immediately had to pay 46% tax on that money leaving you with $54,000 to pay for your treatment.

Good medical advancements mean survival rates are on the rise. The estimated five year survival rate for breast cancer is 87% and
the estimated five year survival rate for prostate cancer is 95%. Canadian Cancer Society/National Cancer Institute of Canada: Canadian Cancer Statistics 2008 (Toronto, 2008)

Because medical advances are commonplace it means more and more people are surviving serious illness or conditions like cancer,
heart attack, and stroke. Critical Illness insurance pays a lump-sum benefit that helps you manage the cost of recovery, which extends beyond the cost of medical treatment.

Survival Rate Myths/Truths

Myth: People usually don’t survive a heart attack or stroke. Truth: Upwards of 90% of people admitted to hospital with a first-time heart attack and more than 80% of those with a first stroke survive.

Proprietors Take Note

If you’re a sole proprietor or partner in a business, disability insurance and critical illness insurance can help you pay outstanding business loans, meet everyday business expenses and protect against financial loss if a key employee becomes critically ill or disabled. It can also provide funding for a partner or shareholder to purchase the business interest
from a critically ill or disabled partner.

As the saying goes, an ounce of prevention is worth a pound of cure. Personal health insurance is ideal for people who don’t already have coverage to help them manage the cost of maintaining their good health and be prepared for unexpected medical expenses.

It’s also a good way for those who already have a health insurance plan through an employer or professional association to get
more comprehensive coverage.

Did You Know?

Myth: My provincial heath care coverage takes care of all my medical costs.

Truth: Government funding currently covers only 70% of total health spending in Canada. The rest of these expenses are paid for out-ofpocket by the patient or by private insurance.

Courtesy of the Canadian Institute for Health Information, Health Care in Canada, 2007

Why do you need it?

Some medical services are only partially covered by provincial plans, while others are not covered at all. An individual health insurance plan can help fill in the gap to ensure you and your family have affordable access to the services you need.

Providing coverage for unexpected medical emergencies or routine health care expenses that aren’t covered by government plans.
Therefore, health insurance puts you in control of your future by having a plan in place to look after your health care needs
without having to rely on retirement savings. Insurance costs less and is easier to qualify for when you’re young/healthy, so don’t wait.

Long-term care insurance

The benefit of owning this type of coverage is enormous, in my opinion. If you can qualify for it, you should buy as much as you can. Long-term care insurance helps pay for ongoing care. Services you may receive in your own home or while residing in a retirement home, an assisted-living setting or in a long care facility. You decide how long you’ll receive the benefit. Most plans offer an unlimited benefit period but some have limited lifetime maximum amounts. Once you start receiving benefits, you stop paying the insurance premiums.

There are two general types of long-term care insurance plans available:

Reimbursement plans — a plan of care is developed that specifies the types and frequency (e.g. hours per day, days per week) of eligible services for the person receiving care. You’re reimbursed for the cost of these services, up to a pre-determined daily maximum.

Income plans — provide a regular income that can be used for any purpose including care received from family members. Some long-term care insurance plans give you the option to pay the premiums over a limited time period (e.g. 20 years). So if you purchase a plan in your 40s, it’s possible to have it fully paid for by the time you retire.

So why do you need it?

With our aging population, our need for healthcare increases. This may mean there might not be government assistance available
for services like in-home nursing or personal care and homemaking. Long-term care insurance provides financial assistance if you need help to perform routine activities; like bathing, feeding or dressing yourself, or if you need supervision because of declined mental ability. While it’s likely that family and friends would be more than willing to lend a hand, taking care of a loved one over the long term often has significant physical, emotional and financial consequences for the caregiver.

Owning long-term care insurance helps with funding our retirement twofold. The first way is if we need to make a claim the insurance company is paying as opposed to us taking money from our retirement savings and helps avoid placing the burden of care on a healthy spouse, their children or other family members.

Things to Remember

The costs of coping with a health event go far beyond getting medical treatment. Health insurance is a way to cover hidden costs and unexpected expenses you haven’t considered: Medical expenses not covered by provincial plans; lost wages for you and/or a caregiver, travel and accommodation for medical treatment; additional child care or home maintenance costs if you don’t have time or energy for these necessary tasks; home modifications to accommodate special needs; special medical equipment; rehabilitative costs; professional counseling services; and personal care. Living benefits insurance coverage gives you greater control over how you manage your family/business’ health and well-being. Advantages of health insurance include: Provides affordable access to the health services you and your family need; gives you more control over the timeliness and quality of care you receive; and prevents you from having to use your savings and investments to cover medical expenses, thereby protecting your
intended plans for the future. As an independent insurance broker, working primary in the corporate and professional
market place we are very familiar with how to package the best products and know about all of the available coverage’s.

I consider myself an educator and like to work with people that want to learn how they can plan for the future they envision. I’d be happy to discuss your estate, financial and tax planning with you. Everyone has different needs, so let me help you tailor it to yours.

Posted by Robyn Latchman

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