5 Financial Tips for Times of Disruption – PART 2 of 2

May 21, 2020

This second installment in our “Tips for Times of Disruption” series focuses on taking control and ownership of your risk management strategy. For the complete list, please revisit Part 1 that was posted previously.

Tip # 4 – Group Benefits – Resist the urge to be complacent.

Clients of mine have heard me say many times, “You don’t control what you don’t own.” Group benefits are the prime reason why I have adapted that mantra. While I won’t deny that Group benefits offer an affordable way for people to access healthcare, life insurance and income protection benefits, I also feel that they can create a false sense of security in those folks fortunate enough to have them.

I have had the unfortunate task of sitting with many a person who has been laid off, losing access to a health plan and facing the dilemma of having to pay out of pocket for expensive prescriptions because they don’t qualify for a personal health pan. Since Group plans can spread risk among several people, they will cover pre-existing medical conditions. On your own, these will rarely be covered. For that reason, it’s important to know your options in the event of a layoff. Some ideas to keep your healthcare options open include:

  • Assured Access from Medavie Blue Cross takes a snapshot of your health while you have group benefits and holds that snapshot steady regardless of changes to health in the future. When you lose group coverage for any reason, a simple phone call and your own health plan can be activated with no medical questions asked. It is a product I feel everyone should have as part of their financial pan.
  • Group plans will allow ex-employees access to personal plans on a conversion basis. While these are better than nothing for people with health issues, they must be applied for within 60 days of job loss and they normally put a restrictive cap on annual prescription costs. Since they are plans that have never required medical underwriting, the insurer normally charges a higher premium to offset any potential for high claims and losses.
  • Private Health Spending Accounts (PHSA) are a great way for employers to continue to offer benefits on a tax-free basis to employees if they can no longer afford the high cost of group plans. The employer sets an annual allowance for each employee that they can chose to spend on any needed healthcare cost with no on-going monthly commitment. Plus, the employer gets to write off the entire cost of the plan.
  • If the layoff is temporary, many group insurers will allow you to stay on your Group plan for up to 60 days. You and your employer can decide how the cost of coverage will be shared. This is especially valuable for employers looking to keep employees engaged during this time of lost revenues.

Tip #5 – Own Your Own Insurance

Having life insurance only through your employer or mortgage lender is NEVER a good idea (this is an important point so I would like you to read that sentence again). As mentioned in Tip #3, you don’t control what you don’t own, and you rarely keep your coverage when you are laid off. Furthermore, tying your insurance to a lender ties you to that lender and limits your options each time your loan/mortgage comes up for renewal. Also, the lender is always the beneficiary and that may not be best for you and your family. I am a big fan of choice, especially in these times when it appears so many choices are being taken from us.

Owning your own insurance allows you to flow through the various stages of your life without concern for the “what if.” The good news is that most insurers are still allowing people to apply for coverage and – thanks to advancement in e-applications, video conferencing and smart algorithms – are able to offer coverage without having to send a nurse to your home or collecting any fluid samples from you. While staying safe and secure, you can access up to $1million in life insurance, up to $250,000 in critical illness coverage and up to $8000/month in income protection benefits. Again, test your assumptions. Ask questions. Get the facts.

When you take the time to know better, you will always do better.