Financial Foundations: Living Benefits

Early in your career, your most significant asset isn't necessarily financial; it's your human capital—the value of your skill set, knowledge, and ability to contribute to your work and to earn money. Protecting this asset is crucial, not just for yourself but for your family's security. While life insurance safeguards against loss of life, critical aspects like illness or disability affecting your ability to work are often overlooked. Living benefit insurance encompasses health and dental coverage, travel insurance, long-term care, disability insurance, and critical illness insurance.

Disability Insurance

This offers tax-free monthly cash payments if illness or injury hinders your ability to work. Employers often provide short-term disability, covering a percentage of your salary for 10 to 26 weeks. Long-term disability extends this coverage, but understanding the definition of disability in your plan is crucial.

Any Occupation Coverage: Stops if you're able to perform any job, potentially not covering the loss of your full earning potential.
Regular Occupation Coverage: Protects your regular job duties, paid if you can't work at any other job.
Own Occupation Coverage: The most comprehensive but costly coverage pays if you're unable to perform your specific job but doesn't prevent you from taking another role.

Considering additional own occupation coverage, even if not provided by your employer, might be wise to safeguard your earning potential.

Critical Illness Insurance

This tax-free lump-sum payment upon diagnosis covers major illnesses like cancer, heart issues, and multiple sclerosis, providing financial support regardless of your ability to work. While the term sounds ominous, many diagnosed individuals recover, yet still incur expenses not covered by healthcare. Certain treatments may not be covered by government plans and time off work during treatment may have a big impact on earnings.

Purchasing critical illness insurance early in life has benefits as premiums tend to be lower. In Canada, adding a rider to the policy can pay off the entire policy after a specified period or return all premiums paid. This flexibility serves as an interest-free savings plan with valuable insurance components, especially vital when your income is pivotal for your family's welfare.

Young professionals often overlook insurance needs, but living benefits like disability and critical illness coverage might be even more critical than life insurance. Without proper coverage, illness or disability could create a large burden on your family. Consulting a financial advisor or benefits specialist about these coverages is prudent, ensuring protection for your most valuable asset—your ability to work.