Insure “You” For Value

No one solves a problem before they believe they have the problem.

You will notice that it is not  a question of whether or not they have the problem, it is a question of whether they believe that they do.  Ask any insurance advisor.  Believing is buying.  As a result of disbelief, the number of unresolved real problems is huge.

The antidote to disbelief is better information.

Consider insurance to provide income in the event of an illness or injury that prevents you from working.  People own far too little, often of the wrong kind and they do so because the underestimate the need and fail to understand the solutions available.

A recent survey by RBC Insurance found some interesting things.

  • 45% of people believe disabilities are rare.
    Fact: one of every three working people will be disabled for at least 90 days.
  • 72% of people believe that disability arises from an accident.  (64% for a workplace accident.)
    Fact: fewer than 10% of disabilities begin with an accident.
  • Fewer than 50% of people believe that depression, diabetes or anxiety could cause a disability.
  • Many think their group insurance covers them.
    Fact: Disability insurance is a contract of definitions.  There are big differences in meaning.  For example, does your plan cover you to age 65?  If it does., does the definition of disability change after 24 Months. It usually becomes the inability to carry out the duties of “Any Occupation” for which you are qualified by education or training. Group insurance carriers will nearly always challenge you after 24 months.
  • Individual insurance offers better definitions.  These protect you if you cannot do your job, not just any job.  “Regular occupation” or ideally “own occupation”  Your adviser can explain the differences.

There are dozens of important variables in a disability contract, but most people treat it like buying a golf shirt.  They are all the same and if it is cheap, I will get it.

Bad mistake.

Three reasons:

  1. Your ability to earn income is likely your most valuable asset.  For most young people well over $2,000,000.
  2. You are not bulletproof; it can happen to you.  The coverage does not keep you from being disabled, it keeps you from having to change lifestyle or use other assets to live.
  3. A large share of people who are disabled for more than 90 days never return to work.  Forever is a long time to go without income.

Look at the policy differently.  Talk to an advisor who can show you the capital value of the policy instead of just the monthly benefit.  Capital value is very high.

If you already have the money in the bank, then you do not need the coverage, and probably the insurer would not let you have it. But most young people are not rich yet. 

An advisor can show you a quality product (good definitions, options) for a price that is likely less than one quarter of one percent of the capital value.  Could we agree that is fair?

Living without your income is harder than living within your income, and that is hard enough.

Make the choice that protects your most valuable asset.  You.


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Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact:  

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