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A couple weeks ago I spent a morning with HR going through all my benefits. Money Coach nature notwithstanding, my eyes glazed over as I made Xs by my choices, signed my name in triplicate, and submitted forms and more forms.

In light of that, I was grateful when twitterpal Tony Ratcliffe, a health insurance specialist based in Edmonton, offered to help my readers and me take a closer look at what our insurance options are.
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Understanding Living Benefits

What are ‘living benefits’? While the term may not be immediately known, you will likely have at least some familiarity. The living benefits most known to you may be a group insurance plan offered through your employer or an association. Plans vary, but common coverage includes health & dental as well as short and/or long-term term disability. Your risk of incurring unexpected expenses for health reasons is reduced by transferring some or all of your losses to an insurance company. I am going to lead with long-term disability and also touch on a couple of others. These are benefits you need and should appreciate while you are ‘living.’

1.  Long-term Disability

Your financial planning will include savings, investments, and providing for your family or other beneficiaries with life insurance, but how seriously have you considered protecting your assets and income stream while you are sick or injured? How do you ensure you do not have to use your savings or sell assets if your income is suddenly reduced or eliminated? I will dispense with the statistics, but you only need look around you to see sickness and injury affecting the ability to work. It can happen to you!

It concerns me to see employees trying to opt out of long-term care coverage. Depending on the group, this may or may not be allowed. Either way, opting out is not a good idea unless you have a good personal policy. Note:  You do not receive this coverage from your spouse’s plan!  As an employee, you are likely covered by your province’s Workers’ Compensation plan for disability attributable to your work; however, outside of work hours, you likely rely on your long-term disability coverage. Since it is income replacement, it will provide a percentage of your pre-disability earnings. It’s important to take the time to understand this coverage.

Homework:  Please take a few moments to review your benefits booklet which is available from your Human Resources department if you have misplaced yours. Be sure to note

  • how much will be paid
  • when it will be paid
  • and for how long.
  • Pay attention to the definitions of ‘total disability.’ Plans often cover you for one or two years if you are unable to do your own job. After that, you may receive benefits only if you are unable to perform any reasonable job, according to your education, training, and experience. Sometimes a minimum income level is included in the definition, but not always. This will still likely result in a significant loss of income.

2.  Critical Illness Insurance

Less common in group plans is critical illness insurance. It provides a lump sum payment if an insured is diagnosed with a critical illness and survives a stipulated period, typically 30 days.

While the ‘big 3’ covered conditions are cancer, heart attack, and stroke, there are 20 or more other conditions that can be found in critical Illness policies. A larger benefit amount may allow you to travel to the USA or elsewhere for a particular, or more immediate, treatment. However, even a smaller payment may help ease the financial strain while staying close to home with our fine medical services.

3. Long-term Care Insurance
Not likely to be found in group coverage is long-term care insurance. This can pay a periodic benefit, or provide reimbursement for specific costs, when one is unable to perform two of the daily activities of living (bathing, dressing, toileting, eating, continence, and transferring) or suffers a cognitive impairment.
You may have also obtained personal, non-group, coverage for one or more of the living benefits through an insurance advisor, representing a specific insurance company or acting as an agent/broker for more than one company. At the time, you may not have had coverage through work or any other group plan, or you may have determined that your coverage was sufficient for your circumstances. A personal plan has many advantages that can be discussed at another time, but it will certainly fill gaps left by group coverage. I encourage you to review and understand the coverage that you have. Preferably with the assistance of an insurance advisor, determine what your needs would be if you were to be disabled.
Let me end with one point that I am passionate about. Obtaining personal insurance coverage generally requires evidence of good health and is less expensive at younger ages. If the need is there, you should look sooner rather than later.

Antony (Tony) Ratcliffe, is a Registered Health Underwriter (RHU) and operates as an independent life and health insurance broker, Ratcliffe Wealth & Risk Management, in Edmonton, Alberta. www.RatcliffeWealth.com.

Photo Credit: Scattered Sunshine

About the Author


Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com

Guest post: in which someone helps me make sense of my insurance options. Comment

  1. Living benefits are certainly valuable and get overlooked. Not everyone has group coverage. You could find yourself between employers. Also, you may think government health plans will save the day.

    As Tony points out, individual coverage plays an important role. Since we don’t think we’ll ever have a claim, buying insurance can seem like a waste of money. We’re not good at quantifying the peace of mind that comes from being protected. With private Critical Illness insurance, you can often select an option that returns your premium if you have no claims.

    Unfortunately, living benefits are relatively expensive because of the relatively high probabilities of claims.

    Riscario Insider’s last blog post..Dumb Money 2009: What Went Wrong? Thoughts from Daniel Gross

    [Reply]

    Apr 05, 2009

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