Moneywise: Plan to replace those valuable workplace benefits

The old saying, “you don’t know what you’ve got till it’s gone,” is a truism in many areas of life including losing the benefits you had when you were working.

Canadians generally recognize the importance of insurance but misconceptions they have about it may be preventing them from getting the coverage and protection they need for themselves and their loved ones.

One of those misconceptions is that the insurance people have at work is enough.

For people relying on employer group insurance for life and disability insurance, for example, coverage is lost if their employment with the company is terminated or if they decide to leave.

“If you get laid off or leave your benefits end, and if your spouse doesn’t have them your family could end up living without any protection,” says Darren Ulmer, an adviser with Sun Life Financial in Saskatoon. “That’s why it’s really important to review your situation with an adviser who can help you understand the coverage you have and how to protect yourself and your family in the event of something happening. “

A recent survey by RBC Insurance found that fewer than half (48 per cent) of Canadians say they have disability coverage through their workplace benefits compared to 57 per cent in 2015, and of those without disability coverage at work 84 per cent have not bought coverage themselves, leaving them at financial risk if they are unable to work due to a disability.

Sixty eight per cent of Canadians acknowledged the possibility of serious financial implications for them and their family if they were unable to work for three months. When faced with a disability, 45 per cent of working Canadians would have liked to take time off due to disability but couldn’t because of finances and 51 per cent said they were forced to go back to work earlier than they wanted because of their financial situation.

Survey participants said the major barriers to getting disability coverage were that their workplace didn’t offer group benefits or disability insurance, they work part-time or contract and aren’t eligible for them, they are self-employed or freelance, and cost.

“There’s a misconception that disability insurance is expensive yet it’s much less than you might think – generally costing between one and three per cent of your income,” Maria Winslow, senior director, life and health, with RBC Insurance, said in a news release.

Insurance through work can lull people into a false sense of security, so getting additional private insurance to back up and fill any gaps in coverage is an important part of an overall financial plan, Ulmer believes.

“When you retire, group plans generally don’t continue except for government workers and teachers,” Ulmer says. “People always seem concerned about dental insurance, but there’s a whole lot more they should look at including health, critical, disability, long-term care and even travel insurance.”

The best time to buy insurance is before you need it. You shouldn’t choose a policy based solely on price. Many people believe insurance is too expensive, but in fact, more competitive rates and longer lifespans actually have been reducing the pure cost of insurance each year. When people are young they don’t think they need insurance but that is exactly the best and least expensive time in your life to set themselves up for the future.

Always review your and your partner’s employer sponsored plans to find out what is and what isn’t covered and then get the right individual insurance to fill any gaps that might exist.

As you progress through life, your insurance needs change. As you age, you may want to look at forms of insurance that protect you from accidents and illnesses that you’re more likely to suffer as you get older and that pay out benefits while you are still alive.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

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