Whether you’re young and single or married with five kids, income replacement insurance is for you. In the video below, Criss Crombie explains income replacement insurance and why everyone needs it. Check it out!
Scenario 1: Single with No Dependents
For those without dependents, income replacement insurance primarily includes disability income insurance. You dependent on your income – your ability to work. If you couldn’t work due to an accident or severe illness, who’s going to take care of you? Disability income insurance replaces your income on a tax-free basis should something serious happen to you. This type of insurance substitutes no more than 80% of your income. Typically, disability income insurance covers 45-65% of your gross income should your disability keep you from working. Here are a few things to know when choosing disability income insurance:
- Is there a waiting period before the income kicks in?
- Does the policy cover short and long term disabilities?
- Does the policy cover disabilities resulting from accidents or illnesses?
Scenario 2: Married with Dependents
A working professional with a family should consider disability income insurance a necessity. Furthermore, they should combine their disability income insurance with a life insurance policy. This combination prepares individuals and their families for every eventuality of lost income.
For example, in the event that you were in a car accident, thus causing you to miss work because of serious injuries, then the disability income insurance would provide for you and your family. If the accident resulted in your death, then the life insurance would take care of your family. The life policy provides your family with a lump-sum, tax-free death benefit for an indefinite period of time.
Because this type of insurance is not required like home owner’s insurance, individuals tend to forego this protection. Moreover, they may believe they have disability coverage through their workplace. However, this is not always the case. If it is provided through an employer, the quality may not provide enough income replacement should the time ever come to use it. Don’t find yourself without the protection you need. Contact an agent to better assess your needs.