Which cover to choose?
It is up to everyone to calculate their insurance needs, and the Canadian Life and Health Insurance Association (CLHIA) suggests below the questions you should ask yourself to do so. If you are lucky enough to have access to long-term disability insurance at work, you should have the right to choose from a few options. “You can choose the type of coverage you want, which normally covers a maximum of 65% of your income, indexed or not to the cost of living,” explains Marie-Hélène Gagné, health management manager at Sun Life Financial. Indexation is essential if the disability lasts several years. The amounts indexed to the cost of living will be adjusted each year according to the rate of inflation.
To get a clearer idea of ​​the kind of coverage we need, we must thoroughly review all our insurance. “Some people have insurance on their car loan, their mortgage loan and even their credit card balance, recalls Ms Gagné. If this is our case, we may not need to take the most generous program offered by our employer. Obviously, the more you are covered, the more it costs in premiums, so the exercise is always worth doing. And as with everything else, if you don’t know much about finance and insurance, it’s worth consulting an advisor who can take stock of your coverage and identify any gaps, if any, or even determine if we are overwhelmed!
If you have access to an employer-sponsored benefits program, renewal is usually done once or every two years. “Take the time to do the exercise, advises Ms Gagné. Know that if you do nothing, your current choice will be automatically renewed. But maybe when you take stock, you will see that you are paying many premiums for paramedical coverage that you barely use when you could benefit from increasing your disability insurance.
And if we lose our job and thereby our insurance coverage, we have to redo the exercise with private insurance. No one wants to need this type of insurance, but “many people have magical thinking about illnesses, it won’t happen to them,” adds Ms Gagné.
The questions to ask
CLHIA advises asking yourself the following questions to determine how much disability insurance you will need:
How much do you need to live? Would you agree to reduce your lifestyle?
How many people depend on you? Are you a single-parent family? Who else depends on you (parents, siblings)?
Would you be willing to change jobs?
Who would pay off your car or mortgage loan if you had no more salary? How long would your savings last?
How much do you rely on your salary? Do you have savings or income-producing investments? How long could you exist on your savings?
What would you do with your life or retirement plans if you became disabled and exhausted your savings?
Read also :
Life insurance: term, permanent… both?
Should you buy critical illness insurance for your child?
Health insurance for every stage of your life
