June 16, 2021Education Financial literacy
Insuring health, today and tomorrow
We’ve all witnessed just how unpredictable the world can be over the past 18 months. We always do our best to plan for the future, but there are things in life we often cannot foresee. And as wealth advisors, one of the most important roles we have is to protect not only what you have earned, but also make recommendations to look after the people who matter most. This is where insurance comes in.
Our primary philosophy incorporates the Chicken and Egg relationship, which is based on getting consistent returns, regardless of market cycle. However, in the case of risk mitigation, we are looking less for a consistent inflow and more towards offsetting a sudden outflow. The kind of outflow we are talking about is typically brought about by some type of unexpected loss which could be temporary or permanent in nature.
Insurance strategies can serve as a cost-effective means to offset potential losses that can arise from something unforeseen. And as much as insurance can bring about negativity for some folks, it is important to understand its benefits. Because the truth is, if you’re insurable, then incorporating insurance strategies into your financial plan makes good sense.
This area of coverage falls into two timeframes, short and long. Short-term health insurance would cover things like travel insurance and in our experience, people who go on trips will either be aware of the need for insurance coverage or they choose not to worry about it. Getting travel or trip insurance can be done in a few different ways and many airlines will offer insurance as part of the booking procedure. If you have a well-appointed credit card and pay for the trip using that card, you will be covered under the plan that comes with it. Separate coverage is also available from several providers as standalone policies for periods of time or specific occasions. OHIP does cover you for some costs, but falling ill or getting injured while away from home can be extremely costly depending on what happened and where it occurred. The relatively low expense of temporary insurance would be covered many fold if you have a health concern away from home.
Longer-term coverage for health will often fall under a group or private benefit plan. Let’s say you are working for a company that is more than a few employees in size and offers group benefits. These programs typically cover disability, dental, health care, death and various other expenses that aren’t covered by OHIP or any other plan. Now, if you are self employed and not part of a group benefit plan through your employment, the onus is on you to take out a policy or live without this additional coverage. Should something happen to you and you are unable to work, the negative impact on your family and potentially on your business could be significant. Private benefit plans can be used to supplement group coverage that isn’t sufficient or provide the entirety of the coverage you are looking for.
Anyone who has a motor vehicle will take out an insurance policy on it because it is illegal not to in Ontario. If you own other assets like a home or property, you will very likely have some level of insurance coverage on them as well. When buying this coverage, is your strategy based solely on paying the lowest premium possible, or have you spent some time to weigh the options of various levels of deductible or third party liability coverage to protect you from a law suit should you injure someone with your vehicle or someone is injured on your property? In many cases, adding a bit of additional protection isn’t very expensive, but could pay massive dividends if an unfortunate accident occurs. Historically Canada hasn’t been a very litigious environment and getting sued hasn’t been a major concern, but according to Canadian Underwriter, this trend seems to be shifting and the payouts are increasing in size. The fact is you simply don’t want to rely on other people’s good nature not to launch a lawsuit if something occurs.
And just like home and auto insurance, coming up with ways to protect you and your family through short- and long-term disability, critical care as well as many other areas of coverage is a prudent way to go when it comes to looking after what matters most.
As always, we are more than pleased to discuss small business insurance strategies with you and are happy to tap into our network of professionals as your needs change and evolve through life.