People buy Life Insurance to replace a financial loss that would result from a death. For example, a “Bread Winners” future income may need to be replaced. Frequently, Life Insurance is used to create an estate for survivors, or to provide a pool of money to pay income tax owed by the deceased.
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People buy Disability Insurance to replace employment income that has stopped as a result of an illness or injury. Disability Insurance replaces a portion of monthly income, and can be paid on a tax-free basis.
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People buy Critical Insurance to replace income that has stopped as a result of a Critical Illness, and to pay for new expenses that may be incurred as a result of the illness. Critical Illness Insurance is relatively new in Canada. It was invented and first introduced in 1983 in South Africa by Dr. Marius Barnard as a top-up benefit to medical expense policies, and has only recently been available in Canada. Dr. Barnard recognized that many people were recovering from surgeries, that in earlier years would not have been conducted. (His brother Dr. Christian Barnard was a pioneer in heart transplant surgery). The additional life expectancy came with a cost, however, as frequently the patient could not continue to work, and had seriously depleted any savings they may have had to find medical and recovery expenses.
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People buy Long-Term Care Insurance to provide cash to fund the cost of nursing care at home or in a facility. This kind of insurance provides daily benefits to fund new expenses that result from a decline in health and the loss of independence.
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Many health care expenses, such as dental work, prescription drugs, eyeglasses, private and semi-private hospital room accommodation etc. are not covered by a Government Health Insurance Plan. If you’re without an employer group plan, these expenses are paid by you directly. A personal health and dental plan can cover these costs, usually for just a few dollars a day.
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While there may be many different options and plan variations available though various group benefits providers, the following are common benefits found in most comprehensive benefit programs, life insurance, accidental death & dismemberment insurance, disability coverage, extended health coverage, dental coverage, and health spending accounts.
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Robin Muir, CFP®, CLU®, CH.F.C.