
Group Insurance and Its Pitfalls
No matter how accurate your expenses are or how much you are able to save each month, without sufficient insurance coverage your financial health has a substantial element of risk. One of the main purposes of insurance is to provide financial security and risk mitigation to ensure that retirement funds are not utilized to cover medical expenses and loss of income during recovery or potential death.
Group insurance is a common form of insurance that many people feel is adequate, but often is not. Below we will go over general group insurance and its common pitfalls.
Group Term Insurance
- Your work term insurance is generally less than what is required due to maximums placed by insurance companies. The ideal amount of term life insurance should cover your family’s expenses as if you were still working until your significant other is able to retire unencumbered and your children are no longer dependent on your income.
Disability Insurance
- Similar to term insurance, group disability generally has a few shortcomings.
- Benefit Maximum, this means that there will generally be a monthly maximum amount regardless of your income that you may qualify for group insurance.
- Benefit duration, most group insurance plans provide coverage until age 65 which is perfectly reasonable.
- Definition of disability, this is the main reason why a group disability policy may not be adequate. After two years, if you are able to work ANY occupation, your policy will cease disability payments, while an individual policy may ensure that you will continue to be paid if you are unable to work in your current position.
Critical Illness
- Critical illness is a unique insurance policy because the coverage can be heavily dependent on the individuals needs therefore there is not one universal answer.
- As a guideline, you would want this lump sum amount to cover any time away from work and for medical costs such as surgeries and rehabilitation.
We understand that this is a lot to keep track of. If you are curious about your group insurance and if it is sufficient, please feel free to reach out and we will have it reviewed.
Matthew Gomes, CFP, CIM
Financial Planner
* This article link will open in a new internet browser tab.
The Advisor and Manulife Wealth Inc. and/or Manulife Wealth Insurance Services Inc. (“Manulife Wealth”) do not make any representation that the information in any linked site is accurate and will not accept any responsibility or liability for any inaccuracies in the information not maintained by them, such as linked sites. Any opinion or advice expressed in a linked site should not be construed as the opinion or advice of the advisor or Manulife Wealth. The information in this communication is subject to change without notice.
This publication contains opinions of the writer and may not reflect opinions of the Advisor and Manulife Wealth Inc. and/or Manulife Wealth Insurance Services Inc. (collectively, “Manulife Wealth"). The information contained herein was obtained from sources believed to be reliable. No representation, or warranty, express or implied, is made by the writer, Manulife Wealth or any other person as to its accuracy, completeness or correctness. This publication is not an offer to sell or a solicitation of an offer to buy any of the securities. The securities discussed in this publication may not be eligible for sale in some jurisdictions. If you are not a Canadian resident, this report should not have been delivered to you. This publication is not meant to provide legal, financial, tax or investment advice. As each situation is different, you should consult your own professional advisors for advice based on your specific circumstances.