Sometimes I have to remind my clients that I am not just an investment planner, I am a financial planner also. I look at every way in which available funds can be used to benefit clients and their families. Investment is usually at the top of their minds as they walk through my door, because there’s a lot of drama attached to the markets these days. But there are far less dramatic aspects to managing money which are equally important. One of them is — please don’t yawn as you read this — insurance.
Most people back away from the idea of insurance. They buy as little as they think they can get away with — home, automobile, life insurance maybe. I think that is a mistake, because a well-planned insurance program can deliver something of great strategic value — a swift supply of cash to help the family deal with a sudden disaster or emergency. Many people consider money spent on premiums wasted, if they never make a claim. On the contrary, I think it buys something extremely valuable. It buys peace of mind, and the confidence necessary to make sound investment choices and stay with them for the long term.
There is a relatively new type of insurance on the market here in Canada which answers a specific need of parents and others who carry large responsibilities. It is called Critical Illness Insurance.
Critical Illness Insurance fills an awkward gap between Life Insurance, which provides money for survivors; and Disability Insurance, which makes good part of your earnings if you are unable to continue working as you did before. Critical Illness Insurance pays you a tax-free lump
sum if you are diagnosed with any of a number of serious disorders. Life-threatening cancer, for example, or Alzheimers, or heart attack. It’s a living benefit, because it is only paid if you survive.
You probably know, personally, people who have suffered heart attacks, cancer, strokes and other potential killers but who are now living healthy and productive lives. They have all gone through expensive treatment, lengthy convalescence, and perhaps severe disruption of their living and working arrangements. Advances in medical science make it more and more probable that people will not succumb to these critical illnesses. That’s good news, but it brings major expense and loss of earnings.
That’s what Critical Illness Insurance is for — to give you cash when you need it. The investment portfolio can remain intact, the RRSP doesn’t have to be liquidated.
Considering the value of the coverage premiums are surprisingly low. There are a number of providers in Canada, and I suggest that you consider Critical Illness Insurance as part of your personal financial program.