Life insurance, as many know and understand, is a must-have product. Not only does it give financial support if a family member passes away, but it also gives peace of mind while everyone is still alive as you know you are covered financially in a tragedy. A lot of people do not realize that the financial problems can start long before a person passes away. If the main income earner of a family is diagnosed with a critical illness or disease such as cancer, stroke, heart attack, coma, Alzheimer, and many other, this would impact the financial situation of a family as well since they could no longer work. They would need to be hospitalized or receive treatment which can drag on for many years, forcing the other partner to either find a full-time job, sell the house, or downgrade the overall lifestyle when they should be there for the sick to help motivate and support them.
This situation can be avoided by investing in critical illness insurance. It pays a tax-free amount if the insured is diagnosed with over 20 different illness and diseases while the person is still alive. This could help cover financial obligations without having to downgrade or worry about the future while the sick is getting treated. The argument could be that “I know I will die, so I see the use of life insurance, however, I do not know if I will get sick. So am I throwing my money out for nothing?” The simple answer: NO!
Critical illness insurance offers an option that if nothing happens and the client does not get sick, they receive 100% of what they paid back. The insurance covers you until age 75 or 100, however, you can cancel the insurance after 15 years already and receive everything back that you paid! This would mean that in the case you are diagnosed with a critical illness, you will be paid the full insurance amount but if you are fortunate enough to not be diagnosed with any illness or disease, you will receive everything back. Let me illustrate with an example below:
40 year old Male, Non-smoker applies for $50,000 of critical illness insurance until age 75. Monthly cost is $104.36. If anything happens until he reaches 75 years of age, he will get $50,000, tax-free. Starting in year 15, if he cancels before getting any illness, he will receive $18,784.80 which is exactly what he paid for 15 years. If he cancelled after 20 years, he would receive $25,046.40. Even in the case that he cancels when he reaches age 75, he would receive $43,831.20 back. You will never pay as much as you would get for the insurance. Regardless of if you are diagnosed with 45 or 75, you will not have paid in more than you would receive in case of an illness.
For incorporated business owners, there is even an option that the corporation pays for the insurance with you being able to get the return of premiums instead of the corporation. In this option, partial return of premiums already start in year 4 rising to 100% by year 15.
This product is currently under review as the life insurance companies are not profitable with this setup. This means that in the near future this option will either disappear entirely, or the prices will increase drastically. My recommendation would be to apply as quickly as possible to secure your family and yourself before this product disappears.
For more information or to obtain a quote, give us a call at 1-204-326-4479 or send us an email at Insured@vssolutions.ca.