Protecting Your Retirement | The Value of Critical Illness Insurance

Losing a significant portion of your retirement income due to an illness that strikes can be avoided with insurance planning. In this post, we take a look at four scenarios to consider.


RRSP season is upon us, and hopefully we’re patting ourselves on the back for putting aside some money for our retirement.

While many of us have put in place retirement savings plans, it’s possible we haven’t done a great job of protecting those investments.


No one I know has a crystal ball, so planning for scenarios that you don’t necessarily want to see in your future is important.


Critical illness insurance is one way of making sure that you can leave retirement or other savings intact in the event that you are diagnosed with one of the dreaded diseases covered by the policy (think heart attack, life threatening cancer, or stroke).


Here, we break down four possible scenarios:

1. You’re diagnosed with a critical condition and have coverage

2. You’re diagnosed with a critical condition and don’t have coverage

3. You’re not diagnosed with a critical condition and have coverage

4. You’re not diagnosed with a critical condition and don’t have coverage


You might be surprised at the results!


A 40-year-old female has $200,000 in her RRSPs and saves $10,000 / year towards retirement. Imagine now that she is diagnosed at age 50 with cancer and the combination of lost income and additional expenses costs her $100,000.


Having to take that money out of her RRSP has a significant effect on the outcomes of the retirement income she can expect.*


We hope we all land in the scenario where you don’t suffer an illness and didn’t spend money on insurance premiums, but statistics in Canada suggest that won’t be the case for approximately half of the population.


The minimal impact between this “best case scenario” and having coverage (regardless of whether the coverage is actually needed) is worth some attention.


In 2022, consider carving of a small amount of the money you’re setting aside for retirement to help ensure that those funds are there when you need them.


Call us today to chat – we would love an opportunity to explore options that fit your budget.


*Retirement income scenarios assume 6% average rate of return on investments.