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Insuring Your Paycheque

By Cole Seabrook, Financial Advisor

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

Insuring your paycheck

When speaking with individuals regarding their financial plans, many like to focus on the wealth management portion. Although savings and investments are key components of financial planning, many individuals neglect an incredibly crucial factor - Disability and Critical Illness Insurance. As individuals, we do not like to think about the worst-case scenario, but it is a consideration that should be addressed and planned for.


Should anyone become disabled or critically ill at some point during their working years, this could have a major impact on many aspects of their financial situation. It could become difficult to cover their living expenses, mortgage payments, taxes, and other bills. On top of adding pressure to their financial situation, job loss can also cause stress on family dynamics. Let us look at how the two different types of insurance can protect individuals against potential job loss due to disability or illness.



Disability insurance: In the event an individual becomes disabled, a private disability plan provides a monthly tax-free income – potentially for the entire duration of time that they are unable to work, or possibly until the age of sixty-five. There are many ways to structure this type of insurance to meet an individual’s needs. Although many employers have this type of coverage in their Group Benefits plan, the coverage amount is not always adequate to maintain the employee’s standard of living. This is where a personally owned Disability Insurance policy can help to top up the coverage offered through an employer.



Critical Illness insurance: Like Disability Insurance, Critical Illness insurance pays out a tax-free benefit. The difference between the two policies is that, with Critical Illness, the individual receives a lump-sum amount. The definition of each policy can vary, most covering up to twenty-five illnesses such as life-threatening cancer, heart attack, and stroke. If one becomes ill, receiving the benefit would allow an individual to stay on track with their financial plan while covering their living expenses and allowing them to focus on the road to recovery.


Although no one wants to consider the “what ifs?”; imagine the comfort in knowing that in the event of a tragedy you and your family would be able to manage the financial stress with the help of an insurance policy. Insurance can play a key role in an individual’s financial plan. Your ability to earn an income is one of the most significant assets and placing insurance on that asset is of utmost importance.



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