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Insurance basics: What types of protection are right for you?

February 8, 2021 by Darcie Doell and Laurianne Osmak

Over the years, insurance products have evolved to become more specialized with added features and riders. That makes it possible for individuals to build increasingly customized plans – but it also means it takes a little more work to understand the various solutions available to protect Canadians from different risks. 

Insurance falls into two major categories: 

  • Life insurance, which pays a benefit when the insured person dies, includes term life insurance, whole life insurance and universal life insurance 
  • Living benefits, which pay a benefit under specific circumstances during the insured’s lifetime, include critical illness insurance and disability insurance

These different types of insurance can be combined to help individuals and families meet many high-priority goals, such as covering immediate expenses after death, building a legacy for the next generation, or protecting income in case of illness or injury. 

What is a rider?  A rider is a clause in an insurance contract that provides additional protection at an additional cost. Here are just a few examples: 

  • a child protection rider that adds coverage for a child to an adult’s policy
  • a total disability waiver rider that allows the insured person to skip premium payments while disabled and unable to work
  • a return of premium rider that pays back all premiums if the insured person doesn’t experience a covered situation, such as a critical illness 

What can term life insurance add to your plan?

Term life insurance is the simplest type of life insurance, and it’s often available quickly through an easy application process. It provides protection for a set period of time – the “term.” The term may last for a fixed number of years (e.g., 10 years) or until the insured person reaches a certain age (e.g., age 65). At the end of the term, it may be possible to renew the policy or convert it to a different type of life insurance. Should an individual convert their term policy to a permanent policy, underwriting won’t be required unless they increase their coverage. 

One way to use term life insurance:


Taran and Pari have 20 years left on their mortgage and want to make sure that, if one of them were to die, their house would be paid off in full.


They can insure both their lives with a 20-year term life insurance policy, setting the death benefit at the full value of the remaining balance on their mortgage. They will also have the added flexibility of being able to reduce their amount of insurance in the future, as they pay down their mortgage.

What can whole life insurance add to your plan?

Whole life insurance is permanent insurance that provides guaranteed protection for life, as long as premium payments stay up to date. In addition, some whole life insurance build a tax-advantaged “cash value” within the policy that the insured person can access while alive. On death, beneficiaries receive the death benefit, which is an amount equal to the original face amount, plus any paid-up insurance that was purchased.

One way to use whole life insurance:

Min doesn’t want her three children to have to pay for her funeral and cover the taxes on her estate after she dies.


She considers term life insurance, but she also likes the idea of a policy that will protect her for her lifetime with guaranteed premiums and accumulate a cash value she can withdraw if needed. She chooses a whole life insurance policy that allows her to pay all her premiums in 20 years, with a death benefit sufficient to cover funeral and tax costs on death.

What is paid-up insurance?

Available as a dividend option on a whole life policy, paid-up insurance is additional coverage that a policyholder can purchase using the policy’s dividends. It allows policyholders to increase their death benefit, and in some policies, the living benefit cash value.

What can universal life insurance add to your plan?

Like whole life insurance, universal life insurance is permanent insurance that blends life insurance with tax-advantaged investing. It generally offers even more flexibility and features than whole life insurance, including a wider range of investment choices for the “account value” – such as investments linked to equity market growth. It is possible to access the account value during life. Alternatively, the insured person can choose to include the investment portion of the policy in the death benefit to leave an even larger tax-free legacy to beneficiaries.

One way to use universal life insurance:


Elian wants to make sure his two adult children receive equal shares of his estate.


He plans to leave his cottage to his son, who spends a lot of time there with his young family, so he needs an equal-value asset to leave to his daughter. A universal life insurance policy will allow him to increase the death benefit over time by investing in a wide range of tax-preferred investments. He can also adjust the death benefit as needed if property values rise (note that increasing the death benefit may require medical evidence).

What can critical illness insurance add to your plan?

When people are younger, they are more likely to experience critical illnesses such as cancer, a heart attack or a stroke than they are to die. Critical illness insurance, ideally purchased while someone is relatively young and healthy, pays a tax-free lump-sum benefit that can be used for any purpose – for example, to fund health care or treatment, cover household and family expenses, protect retirement savings or manage business expenses. 

One way to use critical illness insurance:


Kendra is 40 years old and married with two young children.


Her best friend was recently diagnosed with breast cancer, and Kendra is concerned about the impact a diagnosis like that would have on her family’s ability to pay the bills. With critical illness insurance, she can ensure her family receives a fixed amount of money if she is diagnosed with a range of covered illnesses, including cancer, and satisfies certain other conditions.

What can disability insurance add to your plan?

When people with disability insurance develop a physical or mental health disability that prevents them from working, they can receive regular payments of a percentage of their income. Like a critical illness insurance benefit, this money can be used for any purpose – for example, to replace income, reimburse business expenses or fund a buyout agreement that allows someone else to take over the insured person’s business.

One way to use disability insurance:


Paul is 32 years old, runs his own consulting business and recently had a baby with his wife, Kioni.


He knows both his business’s continued success and his family’s standard of living depend on his remaining healthy and able to work. Because he is self-employed, he doesn’t have access to disability benefits through an employer, but an individual disability insurance policy can provide the protection he needs.

Putting it all together

A wide variety of life insurance and living benefits products are available to Canadians. Some solutions even combine life insurance, critical illness insurance and disability insurance within a single all-in-one policy. Speak with an advisor who help assess your unique needs and then recommend the right insurance portfolio to achieve cost-effective protection in your specific situation.

Filed Under: Critical illness insurance, Disability insurance, Insurance, Life insurance

Living benefits insurance: Taking the worry out of what-if

November 16, 2020 by Darcie Doell and Laurianne Osmak

The sudden emergence of the COVID-19 pandemic has affected people’s lives in unexpected, if not unimaginable, ways. When Canadians suddenly needed to assess their ability to protect themselves and their loved ones against a serious health threat, many realized how unprepared they were for the effect it would have on their finances, lifestyle, relationships and employment, not to mention their general health and well-being. At times like this, people think, “What happens if I’m not prepared?”

Global emergencies aside, unexpected circumstances, such as an illness or injury, can impact your income and the lifestyle you’re accustomed to. If that illness or injury makes it impossible for you to work or forces you to rely on others to take care of you, it will affect your financial health as well. 

Protect what’s important 

Canada has a universal health care system, but that doesn’t mean everything is free. All sorts of treatments, therapies, tests and prescription drugs aren’t covered by the system. That’s why taking action to ensure you’re better prepared to cover potential out-of-pocket health care costs with living benefits insurance can be a vital investment in your future. You can also extend that protection to your family and the life you’ve worked hard to build.            

Experts recommend purchasing living benefits insurance earlier in life, even though thoughts of illness and disability may seem like more remote possibilities. The advantages include lower monthly premiums and the comfort of knowing you’re protected over the course of your life, not just at an advanced age.  

Match solutions with your needs

Regardless of how prepared you are to handle an unexpected event, facing the reality of it can be a very different experience, especially when it comes to your health. If you became disabled or were diagnosed with a critical illness, could you afford the added expenses? In many cases, these expenses go beyond what government-sponsored health coverage provides. 

Living benefits insurance offers the flexibility to suit your specific needs. These plans can be tailored to work in tandem with employee benefit plans or recognize the fact that you own and operate a business or work independently. There are two kinds of living benefits insurance:

  • Critical illness insurance pays a lump sum if you’re diagnosed with an illness or condition that’s covered by your policy. The benefit can help finance health care treatments, cover household and family-related costs, manage business expenses and protect what you have set aside for your retirement, so that you can focus on recovery.
  • Disability insurance protects your income if you are unable to work as a result of either physical or mental health disabilities. Regular payments provide you with a percentage of your income. The benefit is designed to help replace lost income and, for business owners, reimburse business expenses and fund a buy-out agreement if necessary. 

Having a combination of critical illness and disability insurance may be a good solution for you. This way, additional coverage can be matched with your circumstances. Consider someone with a $60,000 annual salary who is diagnosed with a critical illness and unable to work.  

The importance of having a plan

The COVID-19 pandemic has been a unique and challenging experience for everyone, but valuable too, in that it exposed our vulnerabilities and reminded us that it’s important to be financially prepared for what can occur. Most people don’t expect to be faced with the reality of becoming disabled or being diagnosed with a critical illness, but we all know it can happen. The protection of living benefits insurance can be one of the most valuable assets you have. Speaking with your advisor is the first step towards understanding the best options available to help take the worry out of the what-if. 

What’s your risk? 

Your risk of becoming disabled or developing a critical illness changes based on your age, lifestyle choices and other factors. The tables below provide examples of the risks for both a man and a woman, age 35. You can find out more about your personal risk at www.insureright.ca/what-is-your-risk. 

35-year-old male, non-smoker*
Risk of disability before age 6519%
Risk of critical illness before age 6526%
Risk of dying before age 656%
35-year-old female, non-smoker*
Risk of disability before age 6526%
Risk of critical illness before age 6519%
Risk of dying before age 654%

Filed Under: COVID-19, Critical illness insurance, Disability insurance, Insurance

Hot yoga, superfoods and insurance

March 6, 2020 by Darcie Doell and Laurianne Osmak

Protect the healthy lifestyle you’ve worked hard to build.

Your health and well-being matter to you. Perhaps you play ultimate frisbee or sweat it out in high-intensity interval training. Maybe you follow fitness influencers on Instagram, meditate or meal prep on the weekends. Whatever your preference, chances are you make a commitment to feeling your best. But what if your world suddenly turns upside down?

Ironically, millennials, widely considered the most health-conscious generation,[1] often feel immune to the kinds of health problems that can derail the best-laid plans. Even if you know someone your age who has experienced a serious illness or disability, it can be hard to believe something similar could happen to you. In fact, there’s something called the “optimism bias” that makes people underestimate the risk that negative events, including injury and sickness, will affect them.[2]

The healthy lifestyle you’ve worked hard to achieve also includes your finances. Safeguarding your income can help prevent you from being caught off guard by lessening the financial impact of an unexpected illness or injury.

Ensure you have the right protection

The first insurance policy many people buy is life insurance, but if you’re in your 20s or 30s, you’re more likely to make a disability and critical illness insurance claim than you are to die prematurely. Think of it this way: If you could no longer earn a paycheque due to illness or injury, how long could you keep up your rent or mortgage payments? What other expenses would start piling up?

The fact is, when you’re younger, your risk of dying is much lower than the likelihood of illness or injury (see sidebar). Disability insurance and critical illness insurance offer protection to help replace your income if you can’t work, so you can maintain your lifestyle and focus on recovery.

A 25-year-old male non-smoker has:

37%risk of disability before age 65
27%risk of critical illness before age 65
07%risk of dying before age 65

A 25-year-old female non-smoker has:

43%risk of disability before age 65
20%risk of critical illness before age 65
05%risk of dying before age 65

Source: www.insureright.ca/what-is-your-risk

How does disability insurance work?

Disability insurance pays a percentage of your income if an illness or injury prevents you from working. It covers physical health as well as mental health, which is important because it is estimated that half of Canadians will experience a mental illness by the time they reach age 40.[3]

If you’re a business owner, you can get disability insurance to cover your income and your business expenses as well as to fund a buy-sell agreement. Some policies even provide discounted disability insurance protection for people who work in specific professions, such as accountants, engineers or veterinarians. 

How does critical illness insurance work?

Critical illness insurance pays a lump sum if you are diagnosed with an illness or condition covered by your policy. To save money, consider term critical illness coverage, which protects you for a specific number of years. It can be renewed for the same term or upgraded to a longer or permanent duration later without further medical underwriting. That way, in case your health changes down the road, you will be able to keep your protection for a longer term in a cost-effective manner.

You can choose a policy that covers more or fewer illnesses and conditions. Some also provide additional benefits that are available without making a claim, such as reliable online health information, one-on-one telephone support and medical second opinions from top specialists.

How much protection do you need?

When deciding how much disability and critical illness insurance you need, consider how long you could be away from work before you would be in financial difficulty. Recovery from a serious injury or illness may take many months. It can also be stressful – so the fewer financial worries you have, the better.

Beyond covering your own lost income, consider other costs you might encounter, such as:

  • your partner or other loved ones needing to take time off to help you get better
  • extra help with child care for a period of time
  • out-of-pocket costs for things like medications, hospital parking, home care or accessibility renovations

Be health-conscious about your finances

Healthy finances are an important part of a healthy life. Both disability and critical illness insurance can help strengthen your finances and make them more resilient – and, if you have a serious injury or illness, they can provide a financial cushion that lets you concentrate on getting well again. 

We want to hear “Your Story” – Let’s talk about the right balance of coverage, features and cost for your needs.

Source:  manulifesolutions.ca 

[1] https://campuspress.yale.edu/perspective/are-millennials-healthier-than-the-baby-boomers

[2] www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/optimism-bias

[3] www.camh.ca/en/driving-change/the-crisis-is-real/mental-health-statistics

Filed Under: Critical illness insurance, Disability insurance, Insurance

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  • Fax: 306-922-0535
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