Insurance for the Living – Critical Illness

Have you heard of insurance for the living? It’s a recently developed concept that really makes sense. Insurance for the living is just what it sounds like – it’s available to you while you’re alive, and for many people it’s ideal.

Typical life insurance, which might really be called death insurance, pays out when you die. Unfortunately, you’re not the one who gets to spend it. So let’s get real. Sure, you want to leave your heirs a little something; of course, you want your funeral expenses looked after; but isn’t there some way that YOU can see some benefits also? Insurance for the living may be the answer.

Consider the case where you suffer a critical illness. Things like cancer, heart attack and stroke used to be killers, but now with technological advancements and healthier lifestyles, people are living to tell the tale. The down side, however, is that you may incur large unexpected financial costs as a result of your illness and government health plans may not pay for all of your medications; you may need constant care, or find that you need to remodel your home to accommodate a wheelchair. At the same time, you may still be suffering from on-going symptoms and side effects which limit your ability to work. If you are self-employed this is an important area for you to consider since it is very likely that no-one else can take your place.

Critical Illness coverage is insurance designed for just this situation.
In addition, with this coverage you can purchase a “return of premium” rider. Purchasing a plan with this option has three advantages:

  1. If you pay the premiums and are unfortunate enough to be diagnosed with one of the twenty four covered illnesses, you will receive a lump sum payout. This money can be used for anything you see fit, for example, experimental medical treatment or mortgage payments.
  2. If you live past the age of 75, which is when the policy expires, you will get your premiums back, tax free.  You can then invest this money to supplement your retirement income.
  3. If you pass away while the policy is in force, your beneficiaries get all of your premiums back, tax free.

In other words, your money does not go to waste. While the policy is in effect, you have peace of mind. If the policy terminates, your premiums will be refunded.

I advise my clients to take care of themselves, not just their heirs. Critical illness in a family is a serious and stressful situation for everybody concerned. Insurance certainly won’t remove all of that stress and worry, but it can lessen the financial impact of unexpected illness.

It is worth considering.

Deborah L. McCulloch is a Certified Financial Planner and the owner of MC Wealth Management.
She can be reached at 905-430-4651