When I probe them on topics that could be covered in this column, my colleagues regularly suggest that I address the false sense of security provided by the protections offered under a group insurance plan provided by the employer. .
“I am well protected, I already have insurance at work” is a statement we often hear, it is true.
Let’s start by saying that, if you benefit from such a plan, you are privileged! Indeed, it certainly includes more generous coverage than government drug insurance and certainly reimburses the care of several health professionals. Plus, travel insurance is likely included, so you don’t have to buy one when traveling. On the other hand, the protections you benefit from under life insurance and disability insurance may be limited or even not appropriate for your needs.
A theoretical “long duration”
By carrying out an analysis of your needs, a financial security advisor will certainly make recommendations for salary insurance. The ability to generate income is the most important thing to ensure until financial independence is achieved. In fact, the achievement of your long-term financial objectives is based on income projections maintained over the long term. In addition, if you have so-called “dependents”, you will also compromise their quality of life in addition to potentially becoming a “financial burden” for those around you if you fall seriously ill without adequate insurance.
“I’m already well protected, I have long-term disability insurance in my employer’s plan,” you might say. True and false ! Although virtually all group insurance plans include short-term and long-term salary insurance protection, this is actually an important myth, maintained because few are interested in the choice of words that go beyond the title. of this guarantee.
The very word “disability”, but especially the fact that you have probably never read its definition in detail in your insurance, explains this false feeling that you have of being well protected. But if you dwell on it a little, you will find that, although the insurance provides that you receive a disability pension until the age of 65, it is in reality unlikely that you will benefit from it until this age.
While disability is generally defined as the inability to perform the usual duties of your job, unfortunately, after the first 12 or 24 months, its definition becomes much more restrictive. In most cases, you will have to prove that you can no longer perform “any task of your usual employment or perform any other gainful employment according to your age, training and experience”. Good luck…
In short, it’s rarely true long-term protection, and that’s the only reason the premiums are lower than the product you may have already been shown by an advisor. The replacement job that you will be able to exercise in the eyes of the insurer will probably not allow you to achieve your financial goals.
Individual salary insurance allows you to have a product that meets your needs, with a definition of disability and more advantageous guarantees. Moreover, it belongs to you and you will be protected even if you change employers.
Optional life insurance
Life insurance in this type of plan is usually a lump sum based on a multiple of your salary, providing the option to purchase additional insurance, with or without an underwriting process.
A second, fairly widespread myth is that covering your life insurance needs this way is cheaper and easier. However, a rating process is still a rating process. Most importantly, having your life insurance needs covered through your workplace plan will force you to start over if you change jobs. When that time comes, you may find it more difficult to insure and you will pay new premiums according to your age.
Finally, I want to be well understood. As an employer, you are giving your team a wonderful gift by offering them such a group insurance plan. And as employees, you are one of the privileged ones if you have such a plan! Just remember from this column that this diet is not a panacea that automatically and completely covers your risks.