How Critical Is Critical Illness Insurance For Your Business By Tina Tehranchian, MA, CFP, CLU, CHFC
Imagine one day you have a massive heart attack and can't come to work for weeks. What would happen to the day to day operation of your business? Who would pay the wages, write the cheques to pay the bills, deal with client concerns and most importantly generate new business? While you may be in perfect health now, a critical illness could be right around the corner for any of us. According to the Heart and Stroke Foundation, "About 50,000 strokes occur each year in Canada and over 15,000 Canadians die as a result. Three hundred thousand Canadians are living with its effects. Stroke costs the Canadian economy about $2.7 billion a year....cardiovascular diseases cost the Canadian economy over $18 billion a year." The fact of the matter is that there are over 70,000 heart attacks in Canada each year and heart disease and stroke are the underlying cause of death for one in three Canadians. While the prevalence of these diseases in Canada is at an astoundingly high level, the good news is that the number of people who die from heart disease, stroke and cancer has decreased in recent years. For example, according to the Canadian Cancer Society, while women have a 1 in 9 chance of developing breast cancer, they only have a 1 in 27 chance of dying from it. In men's case, while there is a 1 in 7 chance of developing prostate cancer, there is only a 1 in 26 chance of dying from it. As a matter of fact, according to Manulife, you have a greater chance of getting a critical illness before you reach 75, than you do of dying. This means that from a risk management perspective, insuring yourself against the risk of coming down with a critical illness is just as important and could be even more important than insuring yourself against the risk of dying during your working years. A critical illness insurance policy can provide a lump sum tax free payment to help you pull through the financial hardship that a critical illness can create for you, your family and your business. In addition to needing funds to replace your lost income (which may or may not be covered by your disability insurance policy, as you may not be able to qualify for the 90 or 120 waiting period that most disability insurance policies impose before starting to pay the claim), you may need money to pay for the following: * Drugs or a course of treatment not covered by your provincial health insurance plan * Treatment in the U.S. or abroad * Cost of lodging and travel to and from treatment centers outside your area of residence * Renovating your home to accommodate a wheelchair or chairlift * Hiring a nurse to take care of you at home If you have a partner in your business, you should seriously consider funding your partnership or shareholder agreement with critical illness insurance policies so that the business can receive a lump sum benefit to compensate for the loss of a key person during the period of medical treatment. Most critical illness policies allow you to add a rider at an extra cost that will enable you to cancel the policy after 15 years and get a full refund of your premiums if you have never made a critical illness claim. Many companies also let you add a rider at an extra cost that will ensure your beneficiary gets all the premiums you paid for the policy in the event that you die while the policy was in force and before making a claim on the policy. The pricing of critical illness policies depends on your age and health. However, your family's health history also plays an important part in the underwriting decision. Therefore, if you are in perfect health yourself but have two or more immediate family members who have been diagnosed with cancer, stroke or heart attack at early ages, you may end up having to pay a higher premium for your policy as the insurance company will consider you at higher risk of coming down with one of those illnesses due to your family history. Therefore, the sooner you look into assessing your need for critical illness insurance, the higher the chances that you can get approved at more favourable rates and of course the sooner you can transfer the risk to the insurance company.
Dave Shortill President Family Integrity Corporation Victoria B.C.
Living is easy with eyes closed, misunderstanding all you see.... - John Lennon
