Living Benefits
Overview
With increasing life expectancy, living benefits should become an important part of your financial plan. What will you do if you are faced with an accident or illness?
Critical illness, disability, and long-term care insurance address these worries.
Critical Illness Insurance
With advances in medical science, more and more people are surviving critical illnesses. As such, it has become increasingly important to consider the financial hardships that may occur should you be faced with a critical illness in your lifetime.
A critical illness benefit may be paid in a lump sum (often up to $2,000,000) tax-free for any of the illnesses or conditions covered by your policy. Each insurer has specific definitions and waiting periods (often between 30-90 days) that must be satisfied.
Aside from stroke, heart attack, and cancer, there are a number of illnesses that may be covered under a critical illness policy, including (but not limited to) Alzheimer's disease, paralysis, multiple sclerosis, and kidney failure.
Common ways CI benefits may be used
- Lost income: Income replacement after time off work.
- Home modifications: Changes to improve accessibility.
- Medical services: Services not provided by public health plans.
- Debt: Cover debt incurred during illness.
- In-home assistance: Support services during recovery.
Key features and advantages of Critical Illness (CI) Insurance
- Flexible use of funds: With most CI policies, you choose how you spend your lump-sum benefit based on your needs.
- Return of premiums benefit: Provides a refund of premiums paid at maturity when there is no claim during the policy lifetime.
- Return of premiums upon death: Pays your beneficiary a refund of premiums paid if the insured dies while covered by the policy.
- Tax-free lump sum payment: CI benefits are typically paid as a tax-free lump sum (subject to policy terms and definitions).
- Peace of mind: Helps reduce financial stress so you can focus on recovery.
Long-Term Care Insurance
Like disability, long-term care insurance pays a monthly tax-free benefit after a waiting period of anywhere between 30 and 180 days. To qualify, you must be unable to perform two or more daily living activities: bathing, dressing, toileting, transferring, continence, and eating.
Did you know?
- 25% of elderly caregivers: Are also seniors.
- 57% of caregivers: Are employed.
- 78% of care receivers: Continue to live at home.
As we age, our need for care changes. The cost of this care can be staggering and public healthcare plans provide limited coverage, with subsidies often decreasing over time. Long-term care insurance can help cover services such as rehabilitation, nursing care, and at-home assistance.
Key features and advantages of Long-Term Care Insurance
- Waiting period: Benefits typically begin after 30-180 days, depending on the plan.
- Duration options: Depending on the plan, benefits may be paid for 2 years, 5 years, or the rest of your life.
- 20-pay option: In some plans, premiums may stop after 20 years while coverage continues for life (plan-dependent).
Disability Insurance
With disability insurance, you can protect a portion of your income if you are faced with an illness or injury. Depending on your policy, a tax-free benefit may be paid weekly or monthly, usually up to 2/3 of your income prior to disability.
Who can get disability insurance (DI)?
- Professionals
- Business owners
- Executives
- Home-based workers
- Full-time or part-time employees
Like critical illness, disability can add major financial stress. With disability insurance, you can help maintain a steady flow of income while you focus on recuperating.
Key features and advantages of Disability Insurance (DI)
- Partial disability / residual benefits: Some policies help cover the difference if you return to lighter duties at a lower income.
- Presumptive benefits: May pay a benefit if specific severe losses occur (e.g., loss of sight, hearing, speech, or use of limbs), per policy terms.
- Elimination period (waiting period): The time you must be disabled before benefits begin (often 30-120 days). Longer periods usually reduce premiums.
- Own occupation vs. any occupation: Some policies pay if you can't perform your own job duties, even if you could work elsewhere; others require inability to perform any suitable occupation.
- Benefit period: How long benefits are payable (commonly 2 years, 5 years, or to age 65). Premiums vary by option.
Extended Health and Dental Protection
If you don't have coverage through an employer, or an employer group plan doesn't have the coverage levels you want, extended health and dental coverage can help fill the gap.
Extended health plans may include dental coverage, drug coverage, or a combination of both. You can also select add-ons to increase coverage in the areas that fit your needs.
Key features and advantages of Extended Health and Dental Insurance
- Customizability: Select the dental and/or drug plan that best fits your needs and budget.
- Cost effectiveness: Helps cover rising prescription drug costs and supports routine dental care.
- Vision care: May include coverage for glasses, contact lenses, and eye doctor appointments (plan-dependent).
- Homecare and nursing: May support rehabilitation from the comfort of your home (plan-dependent).
- Paramedical services: Registered therapist services such as chiropractor, naturopath, massage therapist, and more (plan-dependent).
- Enhanced senior coverage: Some plans offer enhanced benefits at age 65 in the areas you need most (plan-dependent).