After a Diagnosis: How Life Insurance Can Help
Nobody expects a serious illness or injury – especially one that makes it impossible to work for a prolonged period. And we certainly don’t like to think about a new diagnosis that may mean saying good-bye to our loved ones too soon.
Even so, it doesn’t hurt to be prepared just in case the unthinkable were to happen. And the recent pandemic taught us that being a little more risk averse and a lot more prepared is certainly not a bad thing. The good news is, you can do both in one fell swoop with life insurance.
Planning for Your Future
We don’t need to tell you how important life insurance is because you’re one of the almost 50% of Canadians who purchased life insurance when you were young and healthy… right? (source)
(If not, we encourage you to read this article: You’re Never Too Young to Have Life Insurance.)
If you are insured – under a permanent life insurance policy, that is – and have been for the majority of your life, then stay right here because this article is for you.
What many people may not be aware of is this: The longer you’ve paid into your policy, the larger your cash value (i.e., cash that is accumulated within the policy) will grow. And if you find yourself living with an unexpected diagnosis later in life, you could consider using that cash value towards the total cost of the following scenarios:
- temporary income replacement while you’re on an extended leave
- payment for medical treatments or procedures that aren’t covered by the government
- access to mental health support
- a final vacation with loved ones
- a party to celebrate good news
Growing your cash value
Let’s back up a minute. What’s a cash value, and how does it grow? Well, imagine this: Your parents bought you a 20-pay whole life insurance policy for $50,000 at only $57.15 per month when you were a baby*. It grew to about $14,000 over the next 20 years, and by your 40th birthday, the cash value is worth $45,000.
Keep in mind that your policy’s cash value needs to accumulate for a long enough period of time in order for you to have access to a sum that can sufficiently cover one of the scenarios above.
But if you choose to make use of your policy’s Additional Deposit Option (i.e., overpaying your life insurance premiums) at an extra $5 to $27 a month for juvenile policies, you’ll be able to grow your cash value more quickly.
In the Additional Deposit Option scenario above, you could withdraw $25,000 at age 20 and $75,000 at age 40** – and this is just the cash value; the death benefit would be much, much higher. Pretty impressive when you consider the low monthly cost and the fact that payments stop after 20 years!
Not sure where to start? Contact a Serenia Life advisor for guidance.
Life after a diagnosis
If you are living with a chronic illness, like diabetes or arthritis, things start to get a little more complicated. Why? Because the severity of your condition, the medications you take, your lifestyle – each of these can affect your coverage – and they’re all unique to you. Your best bet in this situation is to get on the phone with a Serenia Life advisor. They can take as much time as needed to ask you the necessary questions – and customize your life insurance policy to suit your specific needs. Fill out this form to get started.
When the end is near
If your health has taken a turn for the worse, it may be time to request a Financial Needs Analysis for you and your loved ones. At this point, it would also be wise to update your will or power of attorney. Did you know that it’s recommended to review these important documents at least every five years?
Here’s a little-known tip: In situations where a patient has been given less than a year to live, many are unaware that they may be able dip into their existing life insurance before they pass. Some life insurance policies may provide individuals that have received a terminal diagnosis with 25% of the death benefit – so that they can live life to the fullest in the months leading up to their death.
Whether that be crossing items off their bucket list, visiting faraway family members, treating their loved ones to the vacation of a lifetime, or making sure that their last days are spent in comfort and dignity, a partial payout during this difficult time can mean spending your final days doing the things you enjoy with the people you love the most.
Never too young
Remember, buying life insurance before a major health event interrupts your current lifestyle is most certainly the way to go. You’re never too young to buy something as important as life insurance. In fact, it’s best to purchase a policy in your younger years to take advantage of what are typically lower costs. And the reality is, none of us know when we’ll need it. So why not be prepared?
*In this example, the baby is less than 6 months of age, and was born in 2022.
**These numbers are for informational purposes only. Because each person’s situation is unique, it is always best to speak with a qualified professional to better understand your needs.
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