With the price of real estate in the lower mainland coupled with many other economical and lifestyle factors, more and more of us will be entering retirement with debt. Many of us will be working well past the age of 65 because we will need to, many of us want to but often it is due to need.
Are you aware that in most cases the disability plan you have will end at age 65? There are a few exceptions but currently industry standard has these plans stopping at age 65. We all know our odds of illness increase past the age of 65 increase, this can affect our ability to generate the income required to keep up with our bills.
There is a solution, here is a short case study:
Client is 52, just renewed mortgage for $400,000 he makes a good living but odds are he will not have his mortgage paid off by age 65.
He is healthy and eligible for loan disability but the plan will cease when he turns 65 leaving him exposed financially. What else could he do?
Long term care insurance is a great alternative to have a look at here. LTC pays a tax free monthly benefit once you can’t do 2 of 6 activities of daily living:
- Bathing
- Dressing
- Transferring (from a bed to chair etc.)
- Feeding yourself
- Toiletting
- Maintaining continence
- Or if you suffer a cognitive impairment you are on claim
This is a more narrow definition than most disability plans but stay with me here. LTC plans stay in effect and will pay for the rest of your life, LTC does not stop at age 65.
Let’s compare costs:
Loan disability:
- Benefit amount: $2,000
- Waiting period: 90 days
- Benefit received for: 5 years
- Plan ends at age 65
- Monthly premium $93.40 a month
Long term care insurance:
- Benefit amount: $2,000
- Waiting period: 90 days
- Benefit received for: for life (you can go off and on claim)
- Plan ends at death
- Monthly premium $91.89 a month
What looks better to you?
Both plans based on 52 year old male non-smoker in reasonable health.
Loan disability from IA Excellence (3A occupation class). Long term care from Desjardins
underwriting requirements would have to be met for both plans to go into effect.
If you are over 50 and looking at income protection, have a look at both plans and decide what is best for you. I’m here to help “Reynolds Wrap” your risks and give you peace of mind.
Margaret Reynolds: 778-986-9186
margaret.reynolds@BCinsurancegal.com
