7 disability insurance myths to stop believing + MORE Sep 25th

Ask MoneySense
I am a single, 70-year-old with a reasonable mortgage of $115,000. I have no family and no dependants. I find that the life insurance on my mortgage is too expensive. Do I need mortgage life insurance anyway? What for?

—Katerina

What is mortgage life insurance?

I’m glad that you noticed the life insurance you’re paying on your mortgage, Katerina. Many people don’t even know if their mortgage is insured or not in the first place. Click on your mortgage when online banking or check your most recent mortgage statement and you will most likely notice a reference to your mortgage being protected or insured or potentially not protected or not insured.

This insurance coverage is typically a combination of life insurance and disability insurance. In the event of death, the life insurance component of the policy pays off the outstanding mortgage. In the event of disability, the disability insurance component of the policy makes your regular payments.

Banks are prohibited from selling most types of insurance in their branches other than life and disability insurance on credit products…

Disability insurance can be a tricky topic, and misinformation is common. Luckily, insurEye, a Canadian insurance education site, has compiled a list of more than 100 disability myths that need busting. We’ve picked seven that we think are most prevalent.

Get personalized quotes from Canada’s top life insurance providers.All for free with ratehub.ca. Let’s get started.*Life Insurance QuotesTerm LifeWhole LifeThis will open a new tab. Just close the tab to return to MoneySense.

1. MYTH: I do not need disability insurance; the chances of something happening to me are very low.

FACT: The chances of becoming disabled are much higher than the chances of getting into a car accident or having your house burn down. There is a 25% chance that a 20-year-old person will be disabled during their career. If you own a home, you likely have home insurance. What’s the justification for not having disability insurance?

2. MYTH: My insurance at work covers me, should something happen to me…

Critical illness insurance issues a single lump-sum benefit should you be diagnosed with a critical illness that falls under the policy’s coverage, such as cancer, multiple sclerosis or paralysis. Unlike disability insurance, critical illness coverage is not designed to be ongoing, but to handle immediate expenses. That said, you’re entirely free to use this money however you wish, from paying for in-home care to taking a once-in-a-lifetime trip. If you’re curious about critical illness insurance, read on to learn all about why it’s a popular form of coverage for many Canadians.

What is critical illness insurance?

Critical illness insurance grants you a one-time, predetermined lump-sum payment in the event of one of several diagnoses. Unlike a disability plan, this is not designed to replace employment as an income stream, but to provide a sum of money to handle expenses associated with living with a critical illness. For example, you might use the funds to modify your living space, or to pay for treatments or in-home care…

While many of us understand the importance of life insurance, the truth is that insurance against an accident or disease that prevents you from working is arguably even more important. According to the 2017 Canadian Survey on Disability, one in five working-age adults (ages 25 to 64) had a disability.

There are two main options: long-term disability (LTD) and critical illness (CI) policies. Both pay you money in case of an illness or disability, but they do it in different ways. Disability insurance provides a monthly income if you’re unable to work due to a serious injury or illness, while critical illness insurance pays out a tax-free lump sum payment following the diagnosis of one of several illnesses covered by your policy. So which one is right for you?

Get personalized quotes from Canada’s top life insurance providers.All for free with ratehub.ca. Let’s get started.*Life Insurance QuotesTerm LifeWhole LifeThis will open a new tab. Just close the tab to return to MoneySense…

Critical illness insurance is hugely misunderstood. And if you’re not reading the fine print on your policy, you could be relying on inaccurate myths when deciding how much you’ll need. InsurEye, a Canadian insurance education site, has compiled a list of several critical insurance myths. We’ve picked eight that we think need busting.

Get personalized quotes from Canada’s top life insurance providers.All for free with ratehub.ca. Let’s get started.*Life Insurance QuotesTerm LifeWhole LifeThis will open a new tab. Just close the tab to return to MoneySense.

1. MYTH: Critical illness insurance and disability insurance are the same thing.

FACT: No, they’re not. The aim of disability insurance is to substitute your lost income due to your disability. Critical illness insurance provides a lump sum payment if you are diagnosed with a critical illness, such as cancer or an immunological disease. The benefit is that you can decided how to use these funds, so you can either pay for your treatment with the money or, if you’re self-employed, use the money to pay for family expenses…