The Financial Impact of Critical Illness or Disability: A Necessity for Young Canadians

Financial liabilities can be a significant burden for many Canadians under the age of 45, who often carry mortgages, dependents, and student loans. However, many are hesitant to invest in additional living benefits insurance, citing a belief that they are unlikely to fall ill or experience a disability. According to experts, this misconception can lead to devastating financial consequences, particularly for families. The risk of a critical illness or disability is higher than one might think, and the financial impact can be significant. Experts recommend that clients consider additional living benefits coverage to fill gaps in employer-provided benefits and protect their financial well-being.

Key Takeaways:

• One in three Canadians will face a disability lasting longer than 90 days at least once before they reach the age of 65, according to the Canadian Medical Association Journal.
• Critical illness and disability insurance can provide peace of mind and financial protection, particularly for families with income-earning parents.
• Employer-provided benefits may not be sufficient to cover all expenses, with many plans having caps on annual income that benefits will cover.
• Those earning more than $100,000 are generally more in need of disability insurance to make up for lost income.
• Cost of premiums can be a major roadblock for many younger clients, with one-third of Canadians citing high premiums as a reason for not purchasing insurance.
• Critical illness and disability insurance can be a cost-effective way to fill in the gap while building emergency savings.
• Insuring one's livelihood in addition to assets such as a property or vehicle can provide additional peace of mind.

Statistics:

• 1 in 3 Canadians will face a disability lasting longer than 90 days at least once before they reach the age of 65 (Canadian Medical Association Journal).
• 36% of Canadians cite high premiums as a reason for not purchasing insurance (source not specified directly in the article, but implied by the context of cost concerns).
• Critical illness and disability insurance premiums are generally cheaper now than they would be in 5-10 years, assuming availability (Elke Rubach, CFP and president of Rubach Wealth).
• The risk of colorectal cancer before age 50 has increased among Canadians compared to previous generations (source not specified directly in the article, but mentioned in the context of rising breast cancer diagnoses).

Sources:

• Canadian Medical Association Journal
• Iaconetti, John, CFP (and financial advisor with the McClelland Financial Group at Assante Capital Management Ltd.)
• Rubach, Elke, CFP (and president of Rubach Wealth)
• Marques, Cindy, CFP (and president of MakeCents)