So many times, I’ve encountered people who have placed their faith on the coverage they have with their employer without considering what would happen if they suddenly had to find new employment. Making sure your Personal Insurance Plan compliments your Company Insurance plan is often more important than just having one or the other.

Your group benefit plan is a fantastic part of the compensation package your employer provides to you and you should take full advantage of it. However, it should be noted that it cannot be taken for granted. Assuming that you are completely covered by the Company Insurance Plan your employer provides can be risky. Bear in mind that you have no control over this policy, and it may not include everything. Also, it is only available while your employer offers it to you. If for any reason you suddenly do not have this coverage, what do you have in place to protect yourself?

Now you ask, “Why wouldn’t I have this coverage?”

“If I have job security as a result of good stable employment, I shouldn’t have to worry, right?”

Anything can happen. Trust me, I’ve been there myself. Having a Personal Insurance Plan can save you hardship.

What if…

  • …your employer decides to cut back on expenses? Often times, the company health spending is the first thing to be reviewed. Employers often reduce coverage, remove parts of the plan, or remove the plan altogether.
  • …your current position with your employer becomes a contract position? You would then be required to cover all or most of your own health spending expenses. As well, if you have any health concerns which arise between now and then, it would be more difficult to qualify for coverage. Qualifying now saves you from having to worry about it later.
  • …your employer suddenly switches ownership? Often when this happens redundant roles are removed, and people are left unemployed. As well, new health spending policies often replace old ones in this case. There’s nothing saying it will be better or worse.
  • …your employer goes out of business? During hard economic times, even the most successful businesses experience hardship or even fail to survive.
  • …you become a higher income-earner? Not that it’s a bad thing, but in this case, is your current coverage enough to protect you?
  • …you take out a mortgage on a house with a larger amount owing than what your company life insurance covers? Are you sure your family is protected from the burden of paying that mortgage in case of a loss of life?

Company Insurance Plan

Through your Company Insurance Plan and Health Policy, you will typically be covered for things like prescriptions, dental work, massages and chiropractor. These are expenses you can easily incur or even put off until you have the coverage you need. There are other things which are not so simple though. If you have a fully comprehensive company benefit plan, you likely enjoy the following coverage:

  • Health & Dental – Covers you for dental work, prescriptions, vision care, therapy, ambulance and much more. Often these expenses will be covered at only a percentage of the cost and to a maximum annual amount. If the plan is very good, they may be covered at 100%. Things like vision care are typically covered every two calendar years for adults and each calendar year for dependents under 18 years of age.
  • Disability – Short-Term and/or Long-Term, but not always both! Be sure you know what your company plan covers. Many plans do not include short term which can be problematic if you’re recovering from surgery or unable to work for more than a week or less than a few months due to illness or injury. A Long-Term Disability plan will only cover you after you’ve been disabled for several months. Whereas a Short-Term plan will cover you for the first few months before you need any Long-Term coverage.
  • Life Insurance – Some plans will include a Life Insurance Policy and others will not. Review your company package and be sure. Often times, the Life Insurance covered is only $10,000 to $50,000, depending on what the employer is willing to pay for. Other plans will cover up to $200,000 because they are large enough and have enough employees to offset the cost. They may even base the coverage on your annual salary with a 2x multiplier.
  • Critical Illness – Again, some packages may include it, but many do not. Make sure you know what your employer has chosen to include in the company plan. In some cases, the Critical Illness coverage will be linked to the Life Insurance as a rider. In this case it may only be for $10,000.

If your employer covers all of this for you, count yourself lucky, as many do not. If you do not have this coverage, it may be wise to look into it. Consider the cost of your annual health expenses. Add up what it costs you each year to visit the dentist, pay for prescriptions, get your eyes checked and go for treatments from registered therapists. Also, be sure to consider the cost of your own Life Insurance and Disability Policies.

For example, here is a table that shows the expenses for a 35 year old male with a spouse and two children. Keep in mind these are bare expenses and could potentially be higher for some people.

*For example purposes only. Not to be taken for quote.

Health & Dental Insurance Plan

When you consider that the coverage from a Company Insurance Plan with group benefits would likely cost about $3000 per year for this family, it’s easy to see how they would benefit from a good plan through their employer. On the other hand, if the employer doesn’t provide one, it may or may not make sense to get a Personal Insurance Plan for themselves. A mid-level plan might cost them about $300/month, so they would really need to be sure they utilize the plan to get the most out of it.

Disability Insurance Plan

Disability policies are not always included in Company Insurance Plans. In some cases where the company has a small employee base, you might expect to see that while they may have a plan in place for health and dental expenses, there is no plan for disability.

So, what happens if you get hurt or fall ill? Can you afford to pay your bills while you are off work? If you’re hurt on the job, there will likely be coverage through Worker’s Compensation (WCB) which all employers are required to carry. Bear in mind, they are not always easy to deal with depending on the circumstances. You might receive some compensation to cover your expenses while recovering, but there are situations where it may not be enough.

If your employer has a disability plan included on the company health plan, be sure to understand what you’re covered for. Some plans only include Long-Term Disability. If this is the case, you would only be able to get coverage for an injury or illness after the waiting period. This could be up to 6 months! If you can afford to go without income for any period longer than a few weeks, then you should be applauded, because most cannot. Though even if you can, you should consider if it’s financially wise to risk having to use your savings to finance your expenses for up to six months. It would be advisable in this case to have a Personal Insurance Plan in place that covers you for the period on which you are waiting for income on a Long-Term plan with your employer.

On the other hand, if your Company Insurance Plan covers you for both Long-Term and Short-Term, you should have all you need. Be sure though, and check what it covers. If it covers you for 60% of your gross earning, you should be okay. However, if it is anything less than that, consider taking out a Personal Insurance Plan to cover the difference.

Talk to your Insurance Advisor to be sure. Remember, it never hurts to ask. We don’t change anything for inquiries.

Life Insurance Plan

The coverage for Life Insurance through your Company Insurance Plan may not be enough. In this case, a person would likely have a Mortgage on which they owe $200,000 or more. Having at least that much in life insurance on a joint policy would be advisable. A company plan which includes a life Insurance policy would likely be at most $100,000 – $200,000 for their key employees. For executive and management staff, the company may even offer a 2x multiplier of salary for life insurance. Therefore, if you’re earning a significantly large salary, you’d have a good policy through work. For example, if you earn $250,000 in annual salary, your Life Insurance policy would cover you for up to $500,000.

Again, check your policy and make sure. In some cases, even where the life Insurance is covered with this salary multiplier, it may have a cap. So, if the company decides to cap the coverage at $200,000, it doesn’t matter how much you make a year beyond $100,000 in salary, your Life Insurance policy would still only cover you for $200,000.

With all that said, it may be wise to have your own Personal Insurance Plan for Life Insurance in place anyway. As we considered earlier, you may not be with the same employer forever, so how can you be sure you’ll always have that policy to protect you? In the event that you become sick with an illness that prevents you from qualifying for life insurance, you would only be able to rely on what the company offers. Therefore, if you no longer have that policy with the company, you may be hard pressed to find the coverage that you need if you cannot qualify due to medical reasons.

Again, talk to an Insurance Advisor if you’re not sure about whether your current coverage is enough. Asking for advice on what coverage you need is free!

Critical Illness Insurance Plan

Finally, do you need Critical Illness coverage? If your employer includes it, that’s great. If they don’t you should consider these concepts:

  • If you become ill with a critical illness that prevents you from being able to work, what will you have in place to cover your expenses?
  • If you have disability insurance that’s a great start. Make sure you can get paid by that disability insurance without having to wait for months. Remember what we discussed about Long-Term & Short-Term Disability coverage.
  • Remember that Critical Illness is basically a “One-off” in most cases. Once you are paid the full benefit, the policy terminates. However, it does pay out a lump sum, so having that big sum of money suddenly can be very helpful.
  • Consider that if you become so ill that you are unable to work, you may be unable to do other things as well. If you’re not going to be well enough to make sure your expenses are taken care of while you’re recovering, who will? Make sure you’re able to easily cover off your responsibilities so you don’t have to worry about them. This way you can focus on a quick recovery, stress-free.
  • Would it be helpful to have $50,000 or $100,000 or more in the event of a critical illness? Would it help to take off some financial stress while you recover? Would it buy you the time you need to get your affairs in order while you deal with this illness?

These are all great questions to consider when looking at Critical Illness Insurance, but let’s not forget the most important. Can you afford it? In many cases stand-alone Critical Illness Insurance policies can be very expensive. $200 a month might not be an easy bill to chew on. In this case, you could consider having the policy as a 10-year rider on your Life Insurance policy. This can bring the cost down substantially. Consider paying $20 or $30 a month in this case. Would that make sense? The only question now, is how long do you need it? Is 10 years enough?

Explore Your Options

Once again, I can’t stress enough. Talk to an Insurance Advisor to find out what you need. A good advisor will give you unbiased information for free. In many cases you may want to get a few opinions. Shop around. You won’t have to pay for a consultation from an Insurance Advisor, so it’s in your best interest to get as much information from us as you can.