Good question, right? Spontaneously, you may have thought about your primary residence, which, more than ever, requires a considerable financial investment for the majority of us. But I’m referring here rather to your ability to generate income. Indeed, as long as financial independence is not achieved, long-term financial planning remains difficult to envisage without income.
It is no longer uncommon to see fundraising campaigns on social media aimed at supporting individuals struggling with health problems. Generous by nature, I of course participate, not without thinking, through professional distortion, that it is everyone’s personal responsibility to protect themselves by resorting to the protections offered by insurance for serious illnesses and disability insurance.
According to Assumption Life and Statistics Canada, nearly half of property foreclosures are caused by disabilities, just as half of workers lose their homes after the onset of a disabling situation.
The first question to ask yourself is therefore the following: for how long could you respect your financial commitments following an accident or illness which would leave you unable to work? By doing this exercise honestly, many will find that they are financially at risk. In a context of high costs of living and difficult access to property, this increased risk should not be ignored.
Even when you are young and healthy
In fact, especially when you are young and healthy! The younger you are, the more you should feel concerned about this subject. The problem is that at the start of their career, most people feel invincible. Their degree of sensitivity to this element of financial security is therefore reduced, or even zero. Furthermore, for many, the very term “disability insurance” suggests that it is a protection product for those who have health problems when, on the contrary, it is necessary to subscribe to it when we are in good health.
It should be understood that the pricing of this type of insurance is more complex than life insurance. First, the premium payable is based on the risk associated with the professional class to which one belongs. But age and medical records will be taken into account when establishing this. Considering that individual disability insurance can be maintained as long as necessary, even after a change of job, it is undeniable that it is advantageous to subscribe to it before health problems lead to exclusions, refusals or additional premiums.
False objections in insurance
“I already have group insurance,” you may object. This is probably one of the automatic objections we hear the most when it comes to considering disability insurance. If you benefit from this benefit at work, there is no doubt that you have basic protection. Be happy about it. However, the definition of disability under this type of plan means that you will not be protected for long-term inabilities to work, even though this is your greatest financial risk. In addition, it is entirely possible to take out individual insurance that you can keep if your career leads you to a change of employer.
“I don’t have the budget for that,” some will add. A budget is of course a matter of personal choice. It is true that the premiums required to replace a salary up to age 65 are generally significant, but the financial impacts of such a situation are even greater. Would you really be ready to reduce your lifestyle, postpone your retirement, liquidate investments or remortgage your house to cover your basic expenses following an illness or accident?
In any case, the financial strategies you have put in place would be greatly affected. From my perspective, unless, of course, you are already financially independent, disability insurance is part of your basic expenses. And it is always safer to insure part of your income; this is always better than nothing.
“My loved ones will support me,” others will argue. New, younger owners are often also the most vulnerable in the event of inability to work since they sometimes have student debt in addition to their new mortgage. At a time when the increasing cost of living affects the entire population, do you really believe that the option of becoming a financial burden on another person around you is healthy, realistic and wise?
In short, people generally do not hesitate to buy life insurance to protect their loved ones. Disability insurance allows you to do this even more effectively; being alive, but sick or disabled, is expensive.
Do you have questions about insurance or other financial topics? Write to me at [email protected].