May 31, 2010

Your Most Valuable Asset

Filed under: Financial Planning — Tags: , , — MikeT @ 5:03 pm

As a financial planner, I’ll admit that insurance is not the most interesting topic.   Not surprising; who really wants to talk about death, critical illness or being disabled!?  For fear of losing you too quickly, I’m going to throw out some stats to think about:

  • 35yr olds have a 50% chance of disability lasting longer than 90 days; 40% for 45yr olds (1)
  • the average length of disability for a 35yr old is 2.8yrs; 3.2yrs for a 45yr old (1)
  • 1 in 4 Canadians will develop heart disease during their lives; with 1 in 2 before age 65 (2)

Canadians tend to consider life insurance before disability insurance but I think the above stats show why it’s also important to purchase disability insurance or make sure the coverage you currently have protects you properly.  Many people fall into the latter, where they already have coverage at work, but the policy payout isn’t enough to cover monthly family expenses or it only covers for 2 or 3 years (not to age 65 like you may need it!)

A colleague of mine recently shared her own personal experience with her husband’s disability.  He worked for a large company in the oil & gas industry and was given group benefits that included disability insurance as part of his typical employment package.  One day he was involved in a car accident that left him disabled and unable to work.  His group disability policy covered him for two years after the accident but that was it.  Without his pre-disability income or disability coverage, my colleague’s family struggled to make ends meet.  Canada Pension Plan payments, which took over four years to get approved, helped to replace some of the missing income but even that wasn’t enough.  It has been over twenty four years since the accident and he still is unable to work.

Having the proper disability coverage in place would have helped this family avoid the financial hardships they experienced as a result of the accident.

Many people would say their house, cottage, or retirement portfolio is the most valuable asset they have but I would argue it’s their ability to make a living.  If you or someone you know feels that they would benefit from a disability insurance coverage review, I am more than happy to help.  I recommend that this be reviewed as soon as possible.

(1) 1985 Commissioners Individual Disability Table A
(2) Heart & Stroke Foundation

 

 

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