Insurance planning is an important task to undertake as entrepreneurs and professionals, especially as we age and health risks begin to creep up. Kathleen Gebotys from 33seven walks us through why it's important to plan financially for a critical illness.
1. Different stages of life = different financial needs
Our financial needs change depending on where we are on life's trajectory. For example, when we're young and our careers are still starting, our "saving needs" are significantly smaller than when we're saving for retirement. On the other hand, when we're in retirement, our "lifestyle and growth needs," and typically, our "health needs" increase significantly.
2. Different stages of life = different critical illness insurance needs
As with our financial needs, our insurance needs change as we age. And, as many of us know, getting older often means dealing with unforeseen illness. So, Kathleen says, it's important to recognize that we need the correct insurance at certain stages in our lives to ensure that we're protected properly.
3. So, which critical illness insurance do I need right now?
Kathleen says that when you're "building for the future," you should consider critical illness insurance for income and debt protection. When you're getting ready for retirement, you should consider debt and asset protection. And when you're in retirement, considering asset and estate protection is ideal.
4. Why does critical illness insurance matter?
No one ever plans on getting sick or being injured. It's important to consider then how suffering from a health event today or in retirement would affect your lifestyle, family and financial future. Recovery costs money, especially if you're unable to work or need to take time off, travel is expensive, and so are things like childcare and other unforeseen costs that can pile up.
5. Let's say you suffer a health event... where does the money come from to help pay for it?
There are a few options on the table when you're looking to cover the costs that accompany a serious health event. You can: withdraw from savings or sell your assets, secure a line of credit secured by home equity, go into debt, make sacrifices at home, or in regards to your treatment and recovery.
6. Or, you can self-fund, share or transfer the risk of a health event.
- Self-fund: this means that you would maintain a portion of your savings for unexpected and significant health care expenses.
- Share: this means that you would purchase a critical illness insurance plan to cover the risk as you get ready to retire, and then self-fund the cost of recovery if your illness occurs after you retire.
- Transfer: this means that you would purchase a lifetime critical illness insurance plan, and you would be protected now throughout retirement.
Kathleen Gebotys entered the insurance industry after graduating from Wilfrid Laurier University in 2009. In 2016, Kathleen earned her Chartered Life Underwriter designation. Now, with almost a decade of experience, she ranks as one of the top insurance advisors in the GTA. Gebotys specializes in comprehensive estate and insurance planning for entrepreneurs and professionals. She is an active member of Advocis (the financial advisors association of Canada), and is on the Young Leaders Board for the charity, Big Brothers Big Sisters Toronto. Kathleen enjoys time with friends, family, colleagues and is involved in numerous mentoring/coaching opportunities.
Kathleen Gebotys, CLU