You’ve worked hard and spent time planning for an enjoyable retirement. But what will happen to your great plans if you have a heart attack or stroke, or are diagnosed with cancer today or in a few years from now? How will your lifestyle be affected? What will happen to your savings? What will happen to your family and your future?
We all like to think it won’t happen to us, but cancer, heart attack and stroke are more common that we think.
While our chances for recovery are quite good, the costs associated with recovering can be quite high. Things like out of pocket medical and other expenses, or alternative treatments, can cost tens or even hundreds of thousands of dollars.
If you have to prematurely sell investments or stop investing in order to manage the cost of recovery, your portfolio and future plans may never recover.
So is there an alternative?
What if you redirected a small portion of what you invest each year towards critical illness protection? This will keep your investment portfolio intact, and if you have a critical illness, you will receive cash to use any way you feel necessary, including paying off your mortgage or debts, renovating or changing your home to accommodate a physical disability, covering travel expenses or lost income, or seeking alternative care.
Government health care programs may cover the cost of some services, but they rarely pay 100% of the cost, and many new treatments are not covered yet. With an aging population, and higher expectations for our health care, is it realistic to think this will improve (or get worse?)
You may be thinking it doesn’t make sense to take money away from your portfolio, but as you’ll see in this Investment Portfolio Scenarios chart, the impact on your portfolio is relatively insignificant compared to the impact of the cost of a critical illness. Plus you can also choose to have the premiums you pay returned to you, if you decide to cancel, or after a certain period of time goes by.
SCENARIO A
John has $150,000 RSP and $100,000 non-RSP Savings, and adds $5,000 to each every year. By John’s age 65, his portfolio value will be $875,581.
SCENARIO B
If a critical illness happens at age 56, and John needs $50,000 for medical care and $75,000 for income replacement, with 3% inflation his need will be $247,371. At retirement (age 65) John will only have $378,619 in his portfolio, a difference of $496,962.
SCENARIO C
If John instead directs $3,690 of his $10,000 savings to a $250,000 Critical Illness policy (Term 75, with a Return of Premium option) and there is no critical illness, at age 65 John’s portfolio, plus the return of his premiums, will be $820,762. The impact of being insured all those years will be $54,819.
Talk to your ZLC Associate to see how critical illness insurance can help protect your investment portfolio and future plans.
