BY: FAZAAD BACCHUS
The last time you rented a car you would have noticed that the rep offered you liability insurance. If you decided to decline you were required to check the box and initial the fact that you declined. Why is it important that you must sign off saying that you decline? Well, the answer is that if you got into an accident and you decided to sue someone for not offering you insurance here would be proof that you were offered. What kind of risk would you be taking when you make sure that your car has insurance but you don’t.
Let us consider some forms of insurance and how valuable they are:
1. Life insurance. Let us consider the case of a man who has three children and dies leaving his family with a mortgage that his spouse cannot afford to pay. What becomes of this home and lifestyle he has created for this family? Should the home be taken back by the bank? What of the livelihood of the family on a monthly basis? All of these need to be taken into consideration. You are better off trying to get an insurance policy which has a guarantee rather than the bank’s mortgage protection policy. Have you considered that this type of insurance is a must if we are to protect the ones we love?
2. Critical illness insurance. Should you suffer a critical illness you might not be able to work for approximately one year or more, what happens to your bills for that year and how do you cope financially? Typically people draw down on their RRSP Investments which is the biggest savings. If you withdrew $100,000 from your RRSP you will end up paying approximately $40,000 in taxes. Have you considered a critical illness policy which covers your expenses for at least one year? Did you know you may even get a critical illness policy which refunds all of your premiums if you don’t make a claim?
3. Disability insurance. It’s possible for a person not to suffer a critical illness but suffer a short-term disability or worse yet a permanent disability. Should this happen one can apply for CPP disability benefits; however it may not be enough to cover the mortgage and all your bills. If you are part of your employee group plan’s disability program, this will help. Have you considered that you can buy a personal disability policy?
4. Long-term care insurance. What would you do if you live to a ripe old age, and then cannot do two things of daily living, such as bathing or eating for yourself? You would definitely need someone to help take care of you. Have you considered long-term care policies to help?
5. Estate planning. Have you an estate with RRSPs and investment properties such as a rental property and or a cottage? Upon your passing, your beneficiaries will have a tax liability due on your final return. You may be able to roll over some assets to your spouse but eventually, taxes will have to be paid, either capital gains or income deferral taxes. Have you considered buying a life insurance policy which will offset the capital gains that needs to be paid?
Start some insurance planning conversations with an advisor today.
