Comparing the Four Types of Living Benefits Insurance
Living benefit insurance is very different from life insurance because it pays out if the insured develops a type of injury or illness.
Living benefit insurance policies generally come in four distinct types: Disability Insurance, Critical Illness Insurance, Long-term Care Insurance, and Health and Dental Insurance. For your benefit, we’ve provided a summary of each coverage category.
1. Disability Insurance: This living benefit insurance policy covers the insured in the event that they develop an injury or illness. Generally, disability benefits have a waiting period, which is the period before the benefit takes effect. This waiting period can total 30 days, 60 days, 90 days, 180 days, or even longer. Benefit periods are generally two years, five years, or until age 65, and the monthly indemnity is the amount that the plan pays out while the insured is on claim.
Disability Insurance rates are influenced by the insured’s age, gender, smoking status, and occupation. Most disability policies have multiple occupation classes, and this can have a significant impact on the type of plan available — as well as the premium. The financial underwriting for disability insurance is the most stringent of the different living benefit policies.
2. Critical Illness Insurance: This living benefit insurance policy pays out a lump sum in the event that the insured is diagnosed with a covered critical illness. The number of illnesses covered by this type of policy range from three to 25. Most policies require that the insured survive a 30-day period for the benefit to pay out. Most policies that cover cancer require that the plan be in-force at least 90 days before the cancer benefit kicks in. Therefore the insured would not receive the benefit until after the 120th day of their illness.
A critical illness can affect anyone, no matter their age or gender. It usually strikes when you least expect, and unfortunately, many are diagnosed with critical illnesses each year. Canadians are more likely to experience critical illness than they are to die before the age of 75. Critical Illness policies can either come with no return-of-premium or a full return-of-premium.
Critical Illness policies are also available as term or permanent policies. Permanent policies offer guaranteed, level rates for the insured’s lifetime. Canada is one of the few countries in the world to offer guaranteed Critical Illness rates for the insured’s lifetime, and there is some question as to whether these types of policies will be available in the years to come. So take advantage of this country’s unique Critical Illness policy option while you can.
3. Long-Term Care: In most instances, this insurance type provides individuals with a weekly tax-free benefit in the event that they would require assistance with two of six activities of daily living. Such activities include bathing, dressing, eating, maintaining continence, going to the bathroom, and transferring. (Consult the appropriate policies for more details.) The proceeds received from a long-term care policy can help prevent insureds from having to deplete their savings and forcing their families into debt due to unforeseen or unplanned medical expenses. One key question to consider for policyholders is, “Does the policy have limitations on when and how you receive your benefits?” Many long-term care policies will payout only if you require facility care assistance.
4. Health and Dental Insurance: Finally, this type of policy helps cover medical, dental, chiropractic, massage, and other related expenses not covered by provincial or employer-based health and dental plans. The plan pays out the benefit when the insured incurs an eligible expense. Maximums among the different coverages available vary significantly from carrier to carrier.
For more details on Living Benefits Insurance, please contact us at 1-866-899-4849, or visit any of our Living Benefits Quote Pages, such as our Disability Quote Page, Critical Illness Quote Page, Long-term Care Quote Page, and Health and Dental Insurance Quote Page.