One of the most common questions I get asked by my clients is “what types of insurance products do I need?” Most people don’t understand the differences between the products, once you do you will see that there are solutions for financial protection in the event that you or your loved ones pass away prematurely, become disabled and can’t go to work or you become critically ill. Here is an overview of how they all differ from one another:
- Life insurance pays your beneficiaries a tax-free lump sum benefit on death.
- Disability insurance is income protection for you during your employment years. This coverage will pay you a tax-free monthly benefit in the event that you become sick or injured and are not able to work. Depending on your policy, they are different definitions of total disability. This insurance depends on your income, occupation and health.
- Critical illness insurance will pay you a tax-free lump sum benefit in the event that you are diagnosed with a covered illness. Most critical illness polices cover around 25 different illnesses, with the major ones being, life-threatening cancer, heart attack, stroke and coronary artery by-pass surgery. This benefit usually pays 31 days after you’ve been diagnosed.
Disability and critical illness insurance are called living benefits, since you receive the benefits of these policies while you’re living. It’s important to remember that bills and expenses don’t stop if you’re injured or ill, they usually tend to increase and incomes drop significantly.
Check out the link to calculate what your risk is.