Living Benefits: Options for protecting yourself and your family

December 15, 2022 / Insight from Chris Schoonderwoerd, CFP, Wealth Advisor

Five people standing in a line holding circular signs with the followings images, a heart, a car, an umbrella, a piggy bank, a house.

Most people have life insurance as a part of their overall financial plan, which pays out a benefit on your death. However, there are other life events that can significantly affect your financial plan while working or in retirement. The impacts of these unexpected events can be mitigated through other forms of insurance, often called living benefits.

Living benefit health insurance products can help meet the financial challenges you and your family may encounter because of critical illness, disability, or to provide for your long-term care. Living benefits programs protect your ability to earn an income or maintain an income in the event of a serious health event. They protect your retirement plan by providing either a lump sum benefit or monthly income to help you achieve your long-term dreams and goals.


Critical Illness Insurance

A critical illness is defined as a life-altering illness – such as cancer or heart disease. With increasing Canadian life expectancy, Critical Illness insurance can provide an extra measure of protection to ensure you can afford the expenses that can arise from treatment, care, and life alterations, which are not covered by your provincial health care, including prescriptions, medical accessories, and even alternative or out of country treatment. Critical Illness insurance is paid out in a one-time lump-sum payment of the value of the policy.

Some workplaces may offer Critical Illness as part of their employee benefits plan. However, the amounts offered through the group are often lower than the amount that may be  needed to offer sufficient protection. As a result, having supplemental Critical Illness insurance will help you to replace your salary, afford modifications to your home, and provide for your treatment and care.

For business owners, Critical Illness insurance can be a valuable tool to support ongoing business activities as well as provide support for the owner and their family, or for key employees and their family.


Disability Insurance

Some level of disability insurance is offered in employer group benefits plans, which provides income replacement of between 50% and 70% of your regular income, to a maximum amount for a specified time if you temporarily cannot work or are permanently disabled due to an injury or illness.

As an employee, you can purchase additional individual disability insurance to complement your group benefits. If you are self-employed, or a business owner, disability insurance benefits can be purchased as part of your overall insurance coverage, and provides payments to support you, your business, and those reliant on you.

A non-cancellable disability insurance policy can only be changed by the insured person. The insurance company cannot lower the benefit, raise premiums, or cancel the insurance as long as you are paying premiums for the coverage. If you currently hold a non-cancellable disability insurance policy, it is recommended you continue to pay the premiums and hold on to it, as some insurance companies are discontinuing these types of policies.


Long-term Care

Long-term Care policies provide a monthly income benefit to help pay for facility care or home care to a maximum of the value of benefits selected. It is a valuable living benefit to have when you consider that 70% of people turning 65 today will need some form of long-term care in their lives. This type of coverage can be purchased as a standalone policy, or as an add-on to Critical Illness contracts.

These types of living benefits insurance, like life insurance, are part of your larger, overall financial plan. It is recommended that you discuss these coverage types with your financial advisor and, if you have group insurance, with your group plan administrator, to ensure you have the coverage you and your family may need.

Chris Schoonderwoerd, CFP®

Wealth Advisor


The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.

Insurance products and services are provided by NBF Financial Services (NBFFS). NBFFS is not a Member of the Canadian Investor Protection Fund (CIPF). Insurance products are not protected by the CIPF.

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