Canadians may need to rethink their risk management
In a recent study conducted by the Life Insurance and Market Research Association (LIMRA), it was reported that 61% of Canadians hold some form of life insurance. Surprisingly, it also revealed that only 38% of Canadians own an individual life insurance contract.
In another study of middle class Canadians, Manulife reported that 79% had no individual disability insurance and 87% had no individual critical illness coverage.
What both of these studies conclude is that most Canadians rely heavily on their group benefits for their family’s insurance protection.
What’s the problem with that?
- Group insurance protection is tied to employment and if the company for any reason changes or cancels the coverage, the employee stands to lose valuable and necessary protection.
- If you are currently employed in an industry or with a company that you feel is at risk due to economic conditions, it may be time to reevaluate your insurance mix. You lose your job, you may lose your life insurance protection.
- For many group plans, the maximum life coverage provided is only two times annual earnings.
- For those plans that provide critical illness coverage, the amount provided is very minimal.
What happens when you retire?
Almost all group insurance plans cease upon retirement which for most Canadians is still age 65. To protect spouses and dependent children, some life coverage should be maintained after age 65. Converting group life coverage to an individual plan can be expensive as you get older. Individual coverage purchased earlier in life is the most cost effective way to protect your family in the long term.
If you feel you may be at risk of being underinsured or in danger of losing your group insurance coverage it may be time to integrate some individual insurance protection into your portfolio.
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