How do I protect my Financial Plan?

Sarah Chisholm, Financial Advisor

O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd.

Grab your favourite cup of tea or coffee and let us protect your Wealth Plan. In addition to building assets and reducing debts, a comprehensive Wealth Plan should provide risk mitigation.

Your wealth is growing – you are building your retirement equity in RRSP, TFSA, rental properties, business ventures and perhaps workplace pensions. You have an income that supports your lifestyle expenses including mortgages, car payments, vacations, and retirement savings. Have you considered what happens if you become sick or injured? How do you continue to fund your lifestyle and grow your wealth?

If you are currently 35 years old and are making $50,000 per year, you will be generating $1,500,000 of income over the next 30 years! Is your ability to earn an income protected?

The good news is that you may already have some level of protection against illness or injury. In Ontario, the Workplace Safety Insurance Board provides coverage for work-related illness and injuries, providing income replacement until you can return to work. Not all industries, however, are covered through WSIB.

Employment Insurance may also be an option. If you meet the required number of hours in the 52-week timeframe you could be eligible for 15 weeks of taxable benefits after a 2-week waiting period. EI comes in as a taxable benefit and is based on a percentage of your income. You would receive 55% of your weekly paycheque, up to a maximum of $595 per week. For the self-employed there are very specific requirements to meet to be eligible for EI.

Canada Pension Plan Disability Benefit is a monthly payment available to those who have a severe and prolonged disability. A doctor must sign off on a portion of the application. The candidate must also meet CPP contribution requirements based on a six-year timeframe. The maximum monthly payment in 2021 is $1,413; however, the amount received is based on past CPP contributions and the average received is only $1,031.

You may also have coverage through other plans including creditor insurance, auto-insurance, critical illness policies.

Finally, you may also have coverage through a group disability insurance policy or an individually owned disability policy. Depending on the specific policy, multiple factors could change; your start date for coverage, is your coverage taxable or non-taxable, how long does the coverage last, does the coverage exclude any conditions, and is there a refund of premium option.

The possibilities may seem overwhelming, but your Financial Advisor can help you explore all the options, identify any gaps in your plan, and provide recommendations on how to strengthen the risk mitigation portion of your Wealth Plan.