Adam is invincible. He is 31, engaged and practices as a chiropractic doctor. Tiffany, his fiancé, is 30 and a well qualified legal assistant for a major law firm in Vancouver. She is also invincible. Both Adam and Tiffany live life to the fullest. They love to travel, cycle in the summer, hike the Grouse Grind on weekends and ski in Whistler during the winter season. Adam has no life insurance, no disability, no long-term care insurance or critical illness. Tiffany has some benefits offered through her work employee plan. Too much to review here so let’s look at critical illness benefits, especially in light of the recent news Adams’ colleague has learned. Susan, also a chiropractic doctor, is 36 years old. She normally joins Adam on the Grouse Grind every Saturday; however, she was recently diagnosed with thyroid cancer and is unable to hike the grind. Susan has asked Adam to locum for her while she undergoes surgery and chemotherapy.
Let’s consider some of the latest predictions from the Canadian Cancer Society, 1 in 2 Canadians will be diagnosed with cancer in their lifetime and 1 in 4 will die from the disease. This is due to the growing and ageing population. Adam felt invincible up until now. He always thought those from his parents’ generation were more likely to be affected by a critical illness. Information about cancer rates show the fastest growing range is those between 19 to 39.
Just this summer, a member of our family was diagnosed with colon cancer, stage 1V. She is 35 years old. Her treatment includes partial removal of the colon, lymph nodes and 3 months of chemotherapy.
The current information from the Canadian Heart & Stroke Foundation is 1 in 4 Canadians will contract some sort of heart disease and more than one third of those affected are under the age of 65 and that number is growing.
Dr. Richard, my optometrist, follows a fit and healthy lifestyle. He is a marathon runner, eats clean, non-smoker and non-drinker. He had a heart attack at age 58, just this last spring.
Who hasn’t been affected by a critical illness within their circle of family or friends?
Anyone who has been off work for an extended period will tell you, the financial cost associated with that circumstance are almost unfathomable. Consider a cancer survivor who is off work for nearly a year with surgery, treatments and physical and emotional recovery. Some costs drop, but there are many more that start and easily fill the short-term void and then some. Even with short term or long-term disability benefits from work, most people don’t recognise there will be many expenses that will follow along with their illness.
Adam and Tiffany have been saving to buy a condo or townhouse in the not too distant future. Interesting, lenders report that more than 50% of foreclosures or re possession are due to an injury or illness. About 45% of RRSP withdrawals are made to cover costs related to an illness. Not an ideal situation as this may create more of a tax burden and additional financial stress.
Let’s consider some of the “sneaky” items: numerous taxi rides, non-traditional treatments beyond the scope of employee benefits, help with shopping, caring for children, babysitter, nannies, help with household chores such as cleaning, meal preparation, costs for toileting and bathing appliances, to name just a few.
There is additional cost of a spouse or family caregiver taking time off work and lost opportunity to save for retirement when stopping RSP contributions.
While nothing can replace the emotional, mental and physical losses experienced in such cases as this, there is something that can be done to protect the financial loss – Critical Illness Insurance.
Critical Illness Insurance provides a lump sum of tax free cash to use at your discretion. Most polices cover 24 illnesses. A few of the most common claims are for heart attack, stroke, cancer, MS and coronary bypass and have been paid out for some as young as 25 and as old as 78. Some polices offer additional benefits as well; locating a general practitioner, a second opinion on test results and recommended treatments, nutritional guidance service and counselling service.
Considering critical illness?
Adam realised he needed some protection in place. He opted for the low cost, affordable plan for $30 per month. His plan is $100,000 of tax free benefit if he becomes critically ill with one of the 24 covered illnesses. It is guaranteed to renew in 10 years without having to provide medicals, however, at the current premium rate at the time. Tiffany decided to make her plan as part of savings strategy and lock in the premium rates with a guarantee. She chose the Term75 with a return of premium at age 65 or upon death. This plan allows for a lump sum benefit of $100,000 for a critical illness or if she does not become sick, she is rewarded her money back. Starting at age 65, she could choose to cancel her insurance and receive cash back, about $32,700. A win win situation. The cost of her plan is $85 per month.
Strongly consider the purchase of even a nominal amount of critical illness insurance while you are healthy. The tax free benefit is paid to you, normally within 30 days after a diagnosis for one of the covered illnesses or accidents.
And remember no-one is invincible – we are all exposed to the same risks.
This article was written by Sindy Billan, SB Wealth Solutions* and Saskia Vermeulen, Southlands Financial. The information in this article are presented for general knowledge and the content should not be relied upon as containing specific financial, insurance, tax or legal advice. Names were changed to protect the identity of persons mentioned. Practitioners must seek their own independent professional advice to discuss their personal circumstances before implementing this type of arrangement. *SBILLAN Wealth Solutions Inc. doing business as SB Wealth Solutions E&O/E 2017