Everyone understands the value of life insurance---it provides your family with financial protection in the event of your passing. Yet very few people consider the financial repercussions of having an illness or recovering from a serious accident. Your visions of retirement may include trips to exotic locations, weekday morning golf, and many other relaxing activities. You're probably not thinking about using the funds for secondary health care coverage, for a private care facility, or for renovating your home to accommodate an illness or injury.

"Living benefits" insurance provides you with the security of knowing your portfolio will stay intact and that, no matter your physical condition, you will be comfortable in your retirement years. Think of it as “portfolio insurance”. Living benefits insurance provides you with money if you are unable to earn an income or have to pay additional living costs due to your medical condition.

The following short videos will provide you with additional information on preparing for a period in your life where you may become ill or unable to care for yourself.

Critical Illness - It can happen to anyone - Click here to watch

From where will the money come? Options for health-related expenses - Click here to watch

Long Term Care Planning - Click here to watch

How will you pay for long term care? - Click here to watch 

More information on Living Benefits

There are three main types of living benefits:

Disability Insurance

Disability Insurance replaces as much as 55% of your income if sickness or injury keeps you at home for a sustained period of time, making you unable to work at your occupation.

Unlike worker's compensation, personal disability insurance coverage ensures you are paid regardless of where the injury occurs. That's not to say that only those with hazardous occupations should be covered. The need for this protection is universal. The ability to replace a lost income should be a key part of any financial plan. After all, the ability to earn an income is your most valuable asset. Many employer group plans have a disability component, however, they often have conditions that limit the amount of time you can receive benefits. And if you were to leave your employer you would lose the coverage. Your personal disability insurance will protect you for many years and will not be altered if your occupation changes or if your salary decreases. When premiums are paid with your own after-tax money, the benefits are tax-free.

Critical Illness Insurance

Critical Illness Insurance provides a lump sum of money once an individual has been diagnosed with and survived one of a prescribed number of illnesses, including cancer, Parkinson's, or Alzheimer's diseases, or such events as a heart attack, stroke, or bypass surgery. Some plans cover as many as 25 different illnesses and events.

The lump sum benefit you receive may be used in any way you see fit; seek advanced private health care at home or in other parts of the world, fund renovations to your home in accordance with your condition, or enable your spouse to stop working and help care for you. There are no regulations as to how you use the proceeds. Critical Illness Insurance can also provide protection for your business. In the event you are unable to run your business due to illness, the benefit can be used to help maintain your fixed costs until you are able to return.

Long Term Care Insurance

Long Term Care Insurance is the newest type of living benefit available in Canada. It provides the necessary funds to pay for additional health care once you are no longer able to care for yourself. Funds are paid as a daily benefit to cover the cost of either home visits from a qualified individual or for care at either a public or private care facility.

Anyone with personal experience with paying for care at a private care facility can appreciate the value of long term care insurance. With a maximum benefit of $300 per day, individuals can receive up to $110,000 per year, tax-free, to cover the cost of their care. If you are thinking about long term care insurance for yourself, you may also want to consider paying the premiums on a policy designed to cover certain older family members whose future care may one day become your responsibility. Policies can typically be obtained for individuals between the ages of 18 and 80. Premiums may be payable for a maximum of 20 years for benefits that can last a lifetime.