The new for Critical Illness, LT Disability, and other coverages?

[bigbadboss101]

Those who are covered by employer plans probably don't need to be concerned. For the contractors and self-employed people do you guys have critical illness, Long term disability, or extra health coverage?

Health coverage - Blue Cross, Custom Care, and other plans offered
by insurance companies. These would cover dental, eyes, medicines,
medical supplies and more.

Critical Illness - You get a lump sum if doctor proves you are ill for
30 days or more.

Disability - I believe it can be based on your earnings. For example,
if you become disabled and cannot work, you get 60% of your monthly earnings from the provided.

I had a brief discussion with my insurance person. Trying to figure out if these insurance plans are feasible.

Opinions?

[00redLUDE]

Here is an old thread similar to what you are asking

http://forums.beyond.ca/st/151256/life-insurance/

I have term life, critical illness, and disability. My wife has nothing, other than what is offered from her work. I am considered self employed.

Here is my thinking regarding this:

Term life: I have enough, that if I were to die, my family would be taken care of, all my debts would be paid off and there is enough for my family to live on. I am going to reduce this life insurance policy as my debts decrease over the years to the point when I am comfortable enough, financially, to completely cancel it.

Critical illness: I have but I feel it is just a complete medical lottery ie. if you get one of the 17 different illness they list you will get a lump sum. Chance of that happening is small but if you get one of the illness, it will help.

Disability: I feel is the most important one. Why? Because say you are disable and unable to perform your occupation, you will still need some cash coming in, esp if you are the one bringing in the larger income. Also, even though you can not work, you still will need to buy things like toliet paper and food since you are still alive and need these essentials.

Medical/dental insurance: I have it through my wife's work BUT if she was not working and did not have this through work, I don't think I will buy it. Why? It would cost me $90.00/month in premiums for the medical/dental. That's $1080.00/year. I don't think I could spend that much in medical/dental in one year, esp if you are health and have good dental hygeine. So I wouldn't get it unless I developed some chronic medical condition that required expensive meds then I would apply for it later. I don't know if they would exclude that condition or not, but I think they would.

My thinking is this: if anything were to happen to me, then I just want enough to continue living an decent/avg lifestyle for my family. I do NOT expect to continue living the current lifestyle when I was not disabled or alive? Why? That's just the way I think about it. I have a colleague, who has SOOO much in life insurance, critial illness, disablitiy that his premiums are crazy high but he wants his family to stay at the same lifestyle that they are at now, if he were to die or become diabled.

Depends on what you want.

[bg_27]

I agree with 00redLUDE, I dont think that Critical Illness is worth it. You get a lump sum when you get one of their defined illnesses.


Disability is def worth it, because if you get disabled or get an illness that Critical Illness would have covered you still get paid out your monthly amount. It is expensive to get large monthly amounts for disability. So make sure you calculate enough to cover your monthly bills. Yes its somehow based on earnings, they won't insure you to pay you out $50,000/mth if you only make $10,000/mth.

As for Term Life, I like to carry a term life policy for my mortgages. Usually 25 year policies for my mortgage amounts.

If you have high cashflow and have exhausted all other tax saving avenues (RRSP, etc.) you should look into Universal Life policy, and if you have a corporation, and you are a shareholder you can have your corporation take out the policy on you and the life insurance policy will be a corporat expense. The downside is that the insurance payout will be tax free to the corp, but taxable to extract from the corp.

[yohan4ws]

As a licensed insurance agent, I have to say I'm glad to see people are providing accurate information.

Though I agree with much of what has been said above, there's advantages of every product. Really, the only drawback is that we have to pay the premiums for insurance - if it was free, we'd all have it maxed out.


Disibility: Yes if you become disabled and can't return to work for some time, it will pay 60% of your salary (or said amount if setup privately). The reason it uses 60-66% is because that would be your After Tax income. Unless you receive the disiblity insurance as a non taxable benefit, the payout will not be taxable. Most disibility run out after 2 years and in some instances cease if the employer terminates you while on leave. How much would that suck?

Critical Illness: If you become critcally ill say with a certain type of cancer where there's an experimental treatment available in the US or overseas, its a huge bonus that it pays you out a 1 time cash free lump sum. There are 2nd event riders available but they only pay about 50k max and it isn't the same condition twice. The condition is that you live for 30 days after being diagnosed.

Staying on topic, its not a bad insurance to have when you look at the stats of how many people will endure one of the 22 covered illnesses. Buy it young, pay it off in 20 years and you have coverage until age 75. Some products cover til age 100. If you cancel the polciy at age 75, some policies offer return of premium riders so if you dont loose it, in effect, it didnt cost you anything.

Long Term Care : keeping i mind the audience, the #1 cause of people claming on LTC that are under 40 is automobile accidents. I'm not talking about being a safe driver, I'm talking about the other idiots on the road that hit us. Think about this one, this insurance will only pay for a care giver or for you to be in a facility if you can't wipe your own ass somebody will do it for you (in a nut shell). However buying it young(cheaply), you will have that benefit for you rentire life once its paid off and have an unlimited benefit amount. The older we get the more likely we are to end up in a facility. Both of my Grandma's have been through it. Knowing how Alberta is especially with the lack of rooms available in goverment care facilities LTC payouts on a weekly basis would help to pay for a private home thats pimp for me to hang out in rather than my kids/grand kids having to care for me. This is one of those "prepare for the future" insurance.

bg_27: I dont disagree with what you said about Universal Life, the examples you used are great and accurate for corporations. There are other permenant life products, however, that can be just as - if not more - effective than UL. There are many ways to structure corporately owned insurance to collect tax advantaged cash from within a corp. The reason I back away from UL is because the death benefit depends on the cash value amount, in 911 when the stock market dropped 30% all those people were paid out less. A whole life product is guaranteed and one that I offer through Canada Life has dividend payouts greater than 8% per year for the last 130 years (except one year it did 5.9%).



I always like to see when people ask questions about insurance. Really what it comes down to is having a professional sit down and analyze your situation 1 on 1 and shares you a variety of products (use a broker, not an individual representing one firm.)

[Sugarphreak]

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[skandalouz_08]

I'm also a licensed insurance agent and what yohan has said is completely correct as well as the other 2 above him.

One thing to clear up with LTC is that it pays you to have a caregiver but it will still pay you even if you don't need a caregiver. For example, you can still take care of yourself, be eligible to be on claim and be paid whether you are working or not. There are more and more self-employed people who are seeing the benefit of this coverage to complement or replace their disability policies.

Also, ask your broker about ways to pay off your LTC plan in 15 years, have coverage for life and never make another payment after 15 years!

[bigbadboss101]

I have been working as a contractor since 2006 and had only Alberta Health coverage. Finally decided I should get some insurance. Ended up getting a PHSP where one gets a receipt for tax deductions. $295 one time start up fee and with tax write off one would end up saving 30% on health spendings.

www.customcare.ca

Also got the $20 a month travel/catastrophic health coverage.

Decided to get DI coverage which would pay 60% of my regular pay. Kicks in after 90 days from diagnosis.

A bit of $ to spend but it protects financially if some unforeseen illness or accident occurs.

[Sugarphreak]

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