Your own needs, priorities, or health situation may be a good fit for a number of risk management solutions. These can include life insurance, disability insurance, critical illness insurance, long-term care insurance, and extended health insurance.
Life insurance is one of the insurance products familar to most. Even so, it's worth a detailed look since it can be used in more ways than you might automatically think. At its core, life insurance is used to provide a lump sum death benefit when the insured passes away. The uses of the funds are diverse and can include protecting against the loss of income of an income earner, especially early in life, paying off mortgages and other debts, or funding children's education. There are also situations where life insurance is a powerful estate planning tool to pass money through to beneficiaries in a tax-efficient manner.
It can be purchased on a temporary, or term basis akin to renting coverage. The premiums pay only for the cost of insurance for a set period. After the period or term is up, premiums will increase. There is no cash value for these kinds of policies. There are also kinds of permanent coverage that may have more level premiums and may build a cash value inside the policies. Think of these kinds of insurance more like leasing or owning a property.
A significant asset many forget to consider is their ability to work. What happens if you are injured or sick to the point that you can no longer work? Essentially, disability insurance insures your ability to earn an income by paying a monthly benefit. There are many different coverage options that can ensure that household expenses are met.
Critical Illness Insurance:
Critical illness insurance has only been on the market since the 1980s and isn't as widely known. Upon diagnosis of a life-threatening critical illness (ex: cancer, heart attack, stroke etc) and what is usually a 30 day waiting period, the lump sum insured is paid out. This can be used at the insured's discretion to pay medical expenses, mortgage payments, or even a vacation to promote healing.
Long-term Care Insurance:
The cost of long-term care is on the rise as Canadians age. Often, an unexpected or even gradual need for more support is a significant drain on retirement savings. Long-term care insurance can ensure that care if affordable without burdening family members. Benefits can be based on a defined weekly benefit once the insured needs care for the activities of daily living.
Extended Health Insurance:
Paying out of pocket for health costs like prescription drugs, dental work, or paramedical services like massage or chiropractic can be a strain on family finances. By purchasing extended health insurance, you can have a more predictable monthly expense rather than unforeseen expensive medical bills.