Use Multiple Insurance Products to Support Your Financial Strategies
Although millions of Canadian residents have health and life insurance policies, many others lack protection because they aren’t sure what types they need, if any. Understanding each category’s advantages can help you select the best combination for you and your family.
Life Insurance
The Canadian Life and Health Insurance Association (CLHIA) reports that Canadians pay nearly $13.5 billion annually for life insurance. When contemplating this option, decide why you need such coverage. If your goal is income replacement, a lump sum can support your surviving mate and dependent kids after you pass. But if your offspring are adults, life insurance could offset any taxes they must pay upon receiving your estate..
Your family situation can help you select the right coverage, advises insurance expert Sally Praskey. When buying a home as a single person, your lender may require you to have a life policy disbursement that would settle your mortgage if you died. But Praskey cautions that some single-income couples protect just the spouse whose earnings pay the bills, forgetting to cover the other one at home with the kids. If that partner dies, the survivor will need extra funds to afford child care and other services.
Base your life insurance amount or face value on your reason for buying it. To replenish your earnings, consider multiplying your annual income by 10. But estimate the fees to cover your survivors’ taxes for transferring capital property.
An Alliance Financial advisor can guide you through your Toronto life insurance options. Term life involves a preset time such as 10 or 20 years. Those policies don’t accrue cash values or pay dividends, so they provide the lowest premiums for high coverage levels. Because term life is temporary, base your duration on your circumstances. If your income supports small children and a sizable mortgage, consider a 20-year term. But a shorter period may be appropriate for a household with teenagers and a small remaining mortgage.
Permanent policies stay in effect until you pass away. Whole life guarantees premium plus face and surrender value amounts. Universal life combines life insurance with tax-sheltered investments that can set you up nicely for retirement. Although Term 100 provides coverage for life, premium payments end when you reach age 100.
Supplemental Health Plans
According to CLHIA, around 21 million Canadians have supplemental health insurance plans for help with services their provincial health plans don’t cover. Your employer may offer various options that encompass health consultations to medical procedures for common expenses like prescription drugs, eyeglasses, dental care, and unforeseen emergencies.
Disability
Like over 10 million Canadians, you can get a disability policy to provide regular tax-free payments if a serious illness, injury, or disability makes you unable to work. Choosing a plan that covers a sizable percentage of your earnings should enable you to pay your mortgage, utilities, groceries, insurance premiums, and other regular bills. Consult Alliance Financial Group for options with 30- to 120-day waiting periods and durations of two years, five years, or until you reach age 65.
Critical Illness
Any serious illness can put a great financial burden on you and your family. Praskey recommends critical illness insurance for all parents with dependent children, including those without incomes. Because non-working parents can’t qualify for disability, critical illness coverage can be a financial safety measure if they experience a serious illness. Talk to an Alliance Financial advisor so you can receive a $10,000-$2 million tax-free disbursement upon your diagnosis with any illness that your policy covers.
Long-Term Care Insurance
Shorter hospitalizations, more outpatient treatments, and extended life expectancies for aging baby boomers are increasing many individuals’ future long-term care (LTC) needs. CLHIA advises that 74 percent of Canadians haven’t established plans to cover their LTC expenses, leaving a $600 billion shortfall. A study showed that the average Canadian at age 60 or up has over $69,000 in unsecured debts, making impending long-term care a financial hardship.
The Canada Health Act doesn’t insure facility-based LTC publicly the way it does physician and hospital services. Provinces and territories govern LTC facility funding, so offered services and cost coverages vary by region. A long-term care policy will pay a tax-free monthly sum after a 30- to 180-day waiting period. Acquiring LTC protection through Alliance Financial can make at-home or in-facility rehabilitation and/or nursing care more affordable.