5 Ways Critical Insurance Can Protect Your Family

Couple hugging

When you or a loved one suffers from a critical illness your life turns upside down. Unfortunately, many Canadians who suffer a serious health event, experience a financial impact as a result. Having a plan and the protection of critical illness insurance can provide some comfort and financial relief when you need it most.

If you are diagnosed with a life-threatening condition that’s covered in your policy and you survive the waiting period, critical illness insurance will pay you a tax-free lump sum to use in any way you wish. Advances in medical science are consistently improving the chances of survival after the diagnosis of a serious illnesses which means there is a heightened need for insurance benefits designed to help protect your lifestyle after the onset of a critical illness insured condition.

This insurance benefit can help alleviate some of the financial concerns surrounding an illness, helping you focus on family and healing during a time when you need all your physical and mental strength to recover. There are other benefits a critical illness policy may include which provide access to medical specialists or second opinions that can be invaluable after a diagnosis.

How critical illness insurance coverage can help you and your family:

1. This insurance benefit is designed to maintain your lifestyle when you are unable to work. The realities of daily life do not necessarily pause after a diagnosis; your mortgage and/or bills still need to be paid and the influx of money from critical illness insurance can be used to address these types of financial stressors.

For many Canadians, living off savings for a long period of time isn’t feasible. A 2018 study conducted for the Financial Planning Standards Council found “one-in-three [Canadians] rarely or never set aside savings at the end of the month.”[1] A critical illness diagnosis may mean having to reduce expenses, go into debt, withdraw from your retirement savings or ask a family member for help.

Critical illness insurance can complement any disability insurance you may have to ensure your income is fully covered and can allow the proper amount of time off from work to go through treatment or rehabilitation after an illness.

2. If you or a loved one would like to take a leave of absence or extended time off from work to take care of a family member that is covered, the benefit can help support this decision. While some employees can take personal days off, paid time off is limited for most Canadians and many working Canadians (i.e. self-employed and contract workers) don’t have the benefit of any paid time off. Many parents protect their children in the event of a critical illness to ensure they have the ability to take as much time as they can without the financial worries.  

3. When the unthinkable happens, the benefit can provide you access to treatments that may have been out of reach financially. Some treatments and medication are not covered by insurance or medical coverage. You may also need to travel out of province or country to get access to specialists, alternative treatments or shorter wait times. Knowing you will have the funds to consider all options may provide peace of mind now and in the future.

4. Coverage can help pay for unplanned expenses that can arise like hiring a nurse, retrofitting your home, parking, travelling, meals, additional childcare, or a family vacation. Unlike reimbursed health care expenses, you decide where to spend the benefit.

5. Critical illness policies can go beyond the lump-sum benefit to provide additional benefit programs that offer access to medical specialists around the world, second opinions for diagnosis and treatment plans, support navigating the health care system as well as counselling services. Some plans even extend these services to immediate family members. These services save you from spending unnecessary time researching doctors and treatments and more time focusing on treatments and recovery.

Critical illness is a specialized product and your decision to buy coverage should be made with the help of financial advisor who knows the product and the options available. For more information on critical illness insurance and how it can complement your financial plan, please connect with us.


[1] http://fpsc.ca/docs/default-source/FPSC/news-publications/fpsc-cross-country-checkup.pdf

Non-traditional options for non-registered assets

Non-traditional options for non-registered assets

Whether you have accumulated a portfolio of non-registered assets or are simply looking for alternatives to RRSPs and traditional investments, life insurance may be a great option to complement your overall portfolio.

Life insurance in a portfolio of assets, can be used to both build long-term growth and maximize your estate. Many investors may not think of cash value life insurance as an investment option and are not aware of the ability to grow investments within a policy to help support your financial goals.

Part of determining what types of investments you hold in your non-registered portfolio depends on the tax advantages of each. Your financial advisor should look at the tax consequences of investments to determine what the best options are to protect you from tax and diversify your portfolio.

Life insurance is an extremely valuable tool in tax and estate planning. If you have specific savings earmarked to leave behind in your estate or if you are accumulating assets for use in retirement, either way life insurance can tax shelter these investments and provide an estate benefit for beneficiaries.

Benefits of cash value life insurance in your portfolio:

Tax advantaged growth: Depending on the type of insurance, you can build cash value within a life insurance policy. If the cash value stays in the policy, it allows for tax-advantaged growth. The cash value accumulation within a policy’s prescribed limits is only subject to tax if it is withdrawn from the policy. This allows for tax efficiencies within your portfolio and potentially higher savings for you in the future.

Provides access to funds when needed: Life insurance can help replace income if something happens to the income earner in the family. You have the ability to access the policy’s cash value to generate additional cash flow for personal use. The death benefit would also provide an immediate tax-free benefit for potentially less cost and risk than many other asset classes.

Provides income to your family if you can’t: The payout from your insurance can go directly to your beneficiaries tax-free when you die and provide a tax-free benefit for potentially less cost and risk than many other asset classes.

Provides an alternative to traditional fixed income investments: Consider cash value life insurance – specifically participating life insurance – as a complement to your fixed income portfolio. It is a unique asset class that can add stable growth, risk management, balance and tax advantages to your portfolio. Tax efficiencies can create opportunities in asset efficiencies and growth in the long term.

Leave a legacy:  The tax-free death benefit can be paid out to whomever you choose. Whether it is your family or a favourite charity you can feel confident that your estate will be preserved and your beneficiaries will receive a tax-free benefit.

Life insurance is designed to reduce risk and deliver long-term value. Talk to one of our financial advisors to discuss your portfolio and determine if life insurance fits in your plan.