WHEN YOU FIRST STARTED WORKING, you may not have given insurance a second thought. However, as you enter your peak earning years, you have a lot more to protect. It’s likely that you and your family depend on your salary for the lifestyle you enjoy – and life, critical illness and disability insurance can help protect that lifestyle if you are unable to work.
Life insurance is important for everyone, especially if you own a home, have children or are responsible for other family members. How much you need depends on factors such as your debts (e.g., your mortgage), education goals for your children and other income needs. Here are two of the most common types of life insurance:
Permanent life insurance (also known as whole life and universal life) provides protection for life, as long as your premiums are paid. In some cases, you can accumulate a tax-advantaged investment or cash value that may increase the amount you leave to your beneficiary.
Term life insurance provides protection at a guaranteed rate for a specific period of time, typically 10 or 20 years or to age 65. The policy is renewable at the end of the term, though the rate will be higher. This type of insurance is often used to cover a financial obligation that will disappear in time, such as a mortgage.
Critical illness insurance
Even though survival of heart attacks, strokes, cancer and other critical illnesses is increasing, recovering from such setbacks often requires weeks or months away from work. Extra costs, such as alternative treatments and accessibility modifications to your home, may not be covered by your provincial health plan.
Critical illness insurance provides a one-time cash benefit if you’re diagnosed with one of the conditions defined in your contract.1 This benefit can help support the day-to-day needs of you and your family while you take the time to access treatment, get well and return to work.
Relatively common conditions such as depression or osteoarthritis may prevent you from working for a period of time. So can a serious car crash or back injury.
Disability insurance provides monthly benefits to help replace your salary or wages after an accident or illness. This type of protection is especially important if your job is your family’s primary source of income or if you run your own business.
Three in one
Combination insurance provides all three types of insurance – life, critical illness and disability – in one solution. It’s often structured to provide a pool of money – your amount of insurance – that you can draw on whether you qualify for benefits from the life, critical illness or disability component. It’s a cost-effective choice that’s also simpler to manage than three stand-alone policies.
Do you have enough coverage?
Keep in mind that, even if you have insurance through a benefits plan at work, it may not be enough to maintain your family’s current standard of living in the event of your death, critical illness or disability. An individual policy can help top up your benefits – and stay with you if you change jobs.
Speak with your advisor to help determine which types of, and how much, insurance you need.
1 The cash benefit is paid if you meet the eligibility criteria set out in your contract.
© 2015 Manulife. The persons and situations depicted are fictional and their resemblance to anyone living or dead is purely coincidental. This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value. Manulife, the Block Design, the Four Cube Design, and Strong Reliable Trustworthy Forward‑thinking are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under licence. MK2870E WINTER 2015/2016
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