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The Elephant in the Room

Like a good scout, be prepared

The rationale for purchasing life insurance is pretty simple and obvious. You want to make sure that in the event of your premature death your family won’t be saddled with debt or struggle financially.

The gap that exists in the financial plan of many families in Canada (quite sadly) is the absence of critical illness insurance; and this is primarily as a result of many Canadians not being aware of its availability, the flawed perception that it is expensive, and of course the “nothing will happen to me” syndrome.

What is critical illness insurance? It is an insurance product that came into existence as a result of the efforts of a medical doctor in South Africa (not an insurance company) in 1983. His motivation came from the financial hardships experienced by patients affected by critical illnesses such as cancer, heart attack and stroke.

Critical illness insurance pays a tax free lump sum while you are alive, and this money can be used any way you wish, including making sure that there is money to cover day-to-day expenses while you are off work. If you are self employed you can risk financial ruin, especially if your full income is generated like this.

A critical illness insurance policy will not only ensure that there is tax-free cash to cover expenses such as your mortgage, rent, car payments, groceries etc, but will also provide cash to cover drugs and treatments that are not covered by OHIP, plus expenses that may come up like parking at the hospital, or out of country travel for treatment. The last thing you want to worry about in the event you are diagnosed with a life threatening condition such as cancer, heart attack or stroke, is money.

I advise my clients to also ensure that their children are also covered, because not only are childhood illnesses such as cancer, cystic fibrosis and autism rampant in Canada, but many policies provide coverage for life, and have a refund of premium option (adult policies also have this feature) if your children remain healthy and never have a claim. The refund of premium can be used to top up the money you have saved in their RESP (Registered Education Savings Plan). Your policy can literally be a forced savings plan.

Critical illness insurance will also protect your retirement savings, as many Canadians tend to deplete their savings when a life threatening illness strikes.

Deflate the Elephant and be prepared in the event the unexpected becomes reality.

About the Author

Karl Marshall is President of lgbtinsurance.ca (a division of Marmac Financial Services Limited) and specializes in serving the insurance and financial needs of the LGBT Community. On Saturday nights he hosts The Party Mix on G98.7 FM in Toronto. You may reach him at 416-554-0892, www.lgbtinsurance.ca, @insurance4lgbt on Twitter or on Facebook.

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