Clients usually come to me with laundry lists of goals. Or they come to me with vague desires that we turn into a laundry list of goals.
But some clients come to me with just one particular goal. And because the world of insurance can be tricky to navigate, that goal is often to “make sure I’m adequately protected from whatever life may throw my way.”
Having too little coverage is not something you want to discover when you need it most. Having too much coverage is a waste of your hard-earned money. Having the wrong type of coverage creates a false sense of security and will lead to big disappointments.
So, what kind of insurance coverage do you need?
As a Certified Financial Planner®, my response will always be: that depends!
Insurance coverage should be part of your overall financial plan. Before deciding, you should look at the different types of insurance available and figure out what types of coverage you should explore. Here are some options to consider:
Term Life Insurance: a tax-free lump sum benefit is paid if you die within the term period.
This benefit can replace your income for your family, so they don’t have to uproot their lives while reeling from grief. It can help pay off the mortgage, so your spouse isn’t left holding the bag. The benefit can provide a lump sum for retirement, so you don’t have to worry about how you will save enough now if you’re on your own. It can cover funeral and other expenses.
Permanent Life Insurance: a tax-free lump sum benefit is paid when you die, no matter how far in the future that may be.
This benefit can help with similar things as with term life insurance: replacing income for your family, a lump sum for retirement, and paying off funeral expenses and final taxes. It can also help you to leave far more of your assets to your beneficiaries – rather than the government – when you die. Depending on the type of permanent life insurance you get, your policy may double as an investment where you can supplement your retirement income and increase your coverage over time to match your growing estate tax liability.
Disability Insurance: a monthly tax-free benefit to replace 60—85% of your income if you cannot work due to illness or injury.
The “illness or injury” does not only mean you got in a car accident or broke your arm. It also can cover extreme fatigue, stress, and mental health disorders. There are short and long-term disability insurance options. The benefit is meant to help cover your expenses until you are able to return to work.
Critical Illness Insurance: a tax-free lump-sum benefit paid if you are diagnosed with 1 of the 25 critical illnesses that plague Canadians.
Critical illness insurance allows you to receive a benefit if you suffer from one of the covered illnesses, even if you’re still able to work. Illnesses covered depend on the policy but can include heart attack, stroke, Parkinson’s, Alzheimer’s, Cancer, MS, and more. This lump-sum payment can help with high medical expenses not covered by OHIP – things like medical assistive devices, home renovations, and hospital parking. It can also help replace your and/or your spouse’s income while dealing with your health.
Long-term care insurance: a monthly tax-free benefit paid when you can no longer care for yourself.
If you need to enter a long-term care facility because you are having trouble feeding, bathing, dressing, transferring to and from bed, or struggling with toileting, this benefit can help. Although there are many public facilities, the lists are extensive, and wait times are astronomical. This benefit allows you to pursue a private option, bring care partners into your home, and offset the “extra” costs — even at a public facility. It eases the financial burden on your family and allows you to make value-driven decisions rather than financial ones surrounding your care.
With these insurance types now in mind, consider the following questions:
- What type of insurance coverage is most important to you now?
- Is there coverage you can get now to reduce the overall cost of the coverage significantly?
- Should you explore a coverage type to extend your work plan?
This is something I can help you with, even if we aren’t working on a comprehensive financial plan together. Book a strategic session, and we can look at your current coverage gaps and ensure you aren’t overpaying. Book a call today and take your health into your own hands.