It’s critical to prepare financially for the unexpected

We all crave good health for ourselves and our loved ones. But, quite frankly, what if you were involved in an accident? Think about it. Would your family have enough money to pay the bills?

Apparently not. A recent study* reveals that Canadians would feel secure having about $266,000 in life insurance coverage to cover funeral expenses and debt and to ensure that their dependents are supported financially when they’re gone.

However, less than one-fifth (16%) have actually purchased life, critical illness and disability insurance. They’ve shied away either because they think it’s too expensive, they’re in good health so they haven’t given it much thought, or they already have enough coverage through work.

That’s problematic, since two-thirds (65%) of Canadians believe that developing a critical illness or becoming disabled as a result of an accident would have a significant financial impact on themselves or their family’s standard of living, according to the study. Further, more than half (55%) think it would take just six months for them to start feeling financially strained if they fell seriously ill or were disabled, and a whopping one-third (38%) would feel the heat in less than three months.

A comfy insurance buffer often varies depending on a person’s age and stage – whether they’re married, have kids, are single, have coverage through work and so on. Yet the study makes it clear that Canadians need to think seriously about securing their finances for the long haul. Loss of income, drawing down on savings, and medical costs over and above what is covered by a family’s group plan or by government-funded health programs can quickly add up and become a financial burden on a spouse or family.

In short, it’s clearly not enough to focus on making sure that your family is supported financially if you were to die. Unexpected events such as illnesses and accidents can happen as well, putting a tremendous amount of financial stress on both yourself and those you love.

One of the best ways to prepare for the unexpected is to ensure you have the right balance between life, critical illness and disability insurances as part of your financial plan – before an event happens that makes it difficult and more expensive to take on coverage later in life. Just like it’s never too early to start saving for retirement, get a jump on just-in-case insurance when you’re young and healthy so you can ease the financial stress associated with unpleasant surprises that could happen later in life.

A serious illness – or, heaven forbid, death – can strike anyone at any time. You may not want to think about it, but it’s a possibility that you can’t afford to ignore. By planning early for whatever might be, you can rest easy and grow old with confidence.

*Survey conducted by Pollara and commissioned by BMO Life Assurance Company. Compiled from a random sample of 1,002 Canadians 18 years of age and over between October 22nd and October 24th, 2014. A probability sample of this size would yield results accurate to ± 3.1 per cent, 19 times out of 20. Results have been weighted using the latest Canadian Stats Can data to be representative of the general population.

This blog post is for informational purposes only and is not and should not be construed as, professional advice to any individual. Individuals should contact their BMO representative for professional advice regarding their personal circumstances and/or financial position. The information contained in this report is based on material believed to be reliable, but BMO Financial Group cannot guarantee the information is accurate or complete. BMO Financial Group does not undertake to advise individuals as to a change in the information provided. All rights are reserved. No part of this report may be reproduced in any form, or referred to in any other publication, without the express written permission of BMO Financial Group. ®/™ Registered trade-marks/trade-marks of Bank of Montreal, used under license