Everyone always says, “It won’t happen to me.” We see others around us that have had a mild heart attack or a severe illness and can’t work for six months to a year. If this happened to you, would you have to deplete your RRSP’s or your savings to cover your monthly bills? One-third of all people, now aged 35, will be unable to work for at least six months before they reach the age of 65.

We all think about minimizing risks in our business yet we don’t take the time to think, if something were to happen to our spouse or ourselves how would we deal with it.

One method is to obtain a disability insurance policy that would provide financial security if you or your spouse were unable to work for any length of time. A disability insurance plan is designed to help you meet your income requirements, so you can concentrate on recovery and return to an active life.

The peace of mind you can get from income protection is available for professionals, business owners, business executives, as well as full-time, part-time or home-based workers and new entrepreneurs. Whether you need to secure your main source of income or supplement the coverage you receive from your employer or an association, you should have a comprehensive and portable plan you can rely on throughout your working years.

What does this mean for you? Here are some of the terms associated with income replacement programs and the types of protection that may assist you with your own personal planning.

1. Income Replacement: Your disability plan pays you a regular income each month during your disability. Your basic coverage and premiums are linked to your occupation, income and other sources of insurance.
2. Non-Cancelable: This means that once the policy is issued, and premiums are up-to-date, the amount of your coverage and premiums are guaranteed for the life of your policy.
3. Flexible Terms: Depending on your needs and occupation, you can purchase insurance that covers you for one, two or five years, or until you turn 65.

Many ask what other alternatives there are other than disability insurance. The following may help you cope financially through a time of disability. However, they may not be enough to allow you to return to a full and active life with your financial security intact.

1. Worker’s Compensation: A benefit only for industries that are covered and disabilities that are work-related.
2. Employer, Union or Association Plans: Many group plans provide short-term and/or long-term disability protection.
3. Employment Insurance (EI) Benefits: A Federally run benefit that pays a 15-week benefit if you can’t work due to an illness or an accident, provided you’ve contributed for a specified number of weeks within the past year.
4. Canada and Quebec Pension Plans (CPP/QPP): You may qualify for limited disability benefits under these plans.
5. Savings & Assets: You can sell personal property or use your savings to pay bills.
6. Spouse’s Income: If you have a spouse, you may be able to rely on that income.

We are often reluctant to have these discussions. It can be frightening to think we may need income replacement at some point in our lives. Most of us need not look too far to find someone we know who has had to rely on one type of program or another. Take the time to discuss a plan now - a little planning can go a long way.

This entry was posted on Friday, January 12th, 2007 at 10:01 am and is filed under Article. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.