Understanding the Advantages of Disability and Critical Illness Insurance Benefits
Good health is one of the most important things an individual can have. It’s something that many of us take for granted, but it’s important to have a strong insurance plan that insures your greatest asset.
It’s not something you think about, but your health is essential in your career. Without it, your ability to earn an income and grow your career can be severely jeopardized. Without an income you and your loved ones could face some major economic challenges. A strong disability plan will protect you and your family against any unplanned health issues.
A disability can be caused by many different factors including a prolonged illness, an injury, or a mental health issue. The duration of the disability can be either short-or-long-term.
Short term disability is designed to provide instant income to those experiencing an illness or injury that leaves them unable to work for a short time-frame. A typical short term disability will last for four-to-six months. If the term is longer the benefit will transition to a long-term benefit structure.
Essentially, a disability plan will guarantee you a percentage of your regular wage in the unforeseen event of you missing work due to an injury or prolonged illness. This percentage will vary from plan to plan. A experienced advisor will sit down with you and establish an insurance plan that suits your needs and budget. Many are factors are taken into consideration when designing an optimal disability insurance plan. We strongly recommend taking a look at this online disability insurance calculator. It does an excellent job at calculating your insurance needs.
Most of us understand the importance of insuring our homes, automobiles and even life, but many Canadians are lacking adequate insurance coverage against an accident or illness that could prevent them from working. This is often true with younger workers. Studies have found that a typical 30-year-old is four times more likely to become disabled than to die before the age of 65. That’s a scary stat if you’re not properly insured.
Many workers are protected by a company-run disability insurance plan. These plans will pay you a percentage of your average income if you are unable to work. The payments cease once you return back to work, hit 65-years-of-age or die. It’s also important to note that an estimated one in six Canadians will be disabled for three or more months before the age of 50. Those who are self-employed, or employees of a smaller company may not have any insurance at all.
Basically there are two main types of income protection: long-term disability and critical illness insurance. Both options will protect you, but the payouts greatly differ. Disability insurance provides a regular monthly payout for those who claim it, while critical illness insurance offers a one time payout that may be tax-free.
Lump sum benefit payouts will typically range from $10,000 to $2 million. There are many factors taken into account when determining the amount. The goal of any critical illness benefit is to provide the plan holder the ability to focus on their recovery without the burden of financial stress.
We’re lucky to live in a world with excellent advances in modern medicine. Illnesses that would have offered limited hope now have much better odds of survival. With that being said, there are many potential out-of-pocket expenses that people facing cancer, stroke, heart disease and other traumatic health issues deal with during their treatment and recovery. A well put together critical illness plan will provide assistance in funding health-care expenses that are not typically covered by government benefits.
When making a critical illness claim the insurance company will make claim decisions based on the degree of severity and estimated impact of an illness. It’s possible that illnesses with shorter recovery windows will result in a claim being denied. Coverage typically cannot be purchased for a pre-existing condition although can be occasionally covered for a premium or rating. With so many details it’s important to work with an experienced advisor who can fully explain and breakdown your plan.
At the end of the day you’ll need to determine if you have enough protection with your employer-run disability plan. A great first step is to add up your monthly expenses. Make a list of all your monthly and annual expenses and make sure your insurance will have you and your family’s financial security covered.
Many plans will cover up to 60 percent of your average wages. This will typically work for families with children. Those living without dependents may be able to manage with 40 percent of their wages. Also, many plans have a cap on benefit payouts. This information is especially important for higher income earners.
Throughout our years helping both individuals and companies in Toronto design and manage effective insurance plans we’ve learned that no two scenarios are the same. It’s important to balance affordability with the desired function of an insurance plan. An experienced advisor will take all disability and critical illness insurance features into account to create a plan that works.
Planning for the worst can be uncomfortable, no one wants to think about life after a horrible health event. If you suffered from a crippling accident or received word that you were facing a horrible illness, would you and your family be able to cope and manage your day-to-day expenses? An effective insurance provides peace of mind, this allows people the ability to focus on their health and recovery.
Since 1999 we’ve been helping Toronto and area clients find insurance solutions that meet their needs and fit within their budgets. Our experienced and talented staff are eager to address any questions you may have regarding your insurance coverage