09 août 2013 ~ 0 Commentaire

The difference between critical illness insurance and a registered disability savings plan- which one is right for me?

When you or a family member become critically ill it can put you out of work and without pay for months on end. Those who are permanently disabled or were born with a debilitating disease are equally as burdened with ongoing financial costs. In each case, there are plans that can help create financial security. So, which one is the right plan for you?

Suffers of permanent disabilities or people born with a debilitating disease may be eligible for a registered disability savings plan, while anyone who has fallen critically ill unexpectedly may consider critical illness insurance. The latter covers individuals with life-threatening conditions such as stroke, cancer or a heart attack. The difference between the two plans is significant and a registered mutual find advisor can assist you with making your decision of which option is best for you.

A registered disability savings plan (RDSP) is for Canadians living with a long-term disability and is in place to help them save for future endeavors. A registered disability savings plan is a fund that is managed by the Canada Revenue Agency and the beneficiary of the funds is the person who will receive the funds in the future. Eligibility for a registered disability savings plan is granted if the individual is a Canadian resident, has a social insurance number, is eligible for the Disability Tax credit and is under sixty years of age.

It can be hard to save for the future and provide care for someone when they’re disabled or seriously ill. Medical expenses and other costs can escalate rapidly, making it hard to save for the future. The registered disability savings plan is not included in income when you make a payment out of it but contributions are not tax deductible. The limit or amount that the registered disability savings plan caps at is a total lifetime limit of $200,000 and no annual limit. This is a savings fund that is not subject to taxes and also has an attractive interest rate to help funds grow over time. For someone that has to live life with debility, it is important to have funds available to them when they need it to be able to put a down payment on a home or pursue the dreams that they have always had.

Critical illness insurance is a product that provides a lump-sum payment following the diagnosis of any specified critical illness. It is designed for individuals who have suddenly fallen critically ill from conditions such as cancer, stroke or heart attack. These events can be life changing and critical illness insurance can help pay costs and alleviate financial burden in the event of serious illness.

The ongoing costs and impact on financial savings from having a critical illness can be overwhelming without critical illness insurance. The financial cost is also met with ongoing opportunity cost and many forego their personal goals and aspirations in favor of ongoing treatment to improve their quality of life. For those afflicted with a serious medical condition, it is helpful to have a back-up plan put in place. Critical illness insurance can help with the ongoing financial costs that these conditions bring and help to create a stronger financial future.

Though both options are different in nature, they’re designed to improve the financial freedom of anyone suffering from an eligible illness or disability. Speaking with a life insurance representative who can offer Critical Illness Insurance representative can help you find the right option for your circumstances.

Alexandra Blair is the author of this article on The difference between critical illness insurance and a registered disability savings plan- which one is right for me?. Find more information about critical illness insurance here.

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