Protect Your RRSP with Critical Illness Insurance

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Protect Your RRSP with Critical Illness Insurance

Now that RRSP season is here, Canadians across the country are making their contribution plans before the March 1st deadline.

But how protected are their RRSP savings from unforeseen circumstances, such as critical illness?

In the unfortunate event that you develop an illness that requires long-term treatment and recovery, and don’t have sufficient insurance coverage, you might be tempted to dip into your RRSP to access funds to cover basic household expenses. Withdrawing from your RRSP could potentially cost you hundreds of thousands of dollars in the long term.

This is also true if you’re a self-employed business owner. Should you be struck with sudden illness, you’ll need coverage to not only keep your business operating, but also to cover your personal and family expenses.

This is why our advisors recommend critical illness insurance as a safety net to protect you and your family’s financial future. Consider this scenario:

  • If you withdrew $150,000 from your RRSP, you’d be put into a higher tax bracket when added to other earnings
  • At a nominal 46% tax rate, you would only net $81,000 of the $150,000 that was in your RRSP
  • With critical illness insurance, you could leave that $150,000 in your RRSP, which compounded at 6% over 20 years would have grown to $481,070

Critical illness insurance plans are completely customizable to your personal needs and current situation, and cover illnesses such as some types of cancer, heart attacks, and stroke. Some policies also cover major organ transplant, Parkinson’s disease, deafness, traumatic head injury, and loss of independence. Optional add-on illnesses are also available.

You would receive a lump sum, tax-free payment upon diagnosis of a covered condition or illness. You can use this payment how you choose and have the flexibility to cover expenses from:

  • Medical treatment or equipment that are not covered elsewhere
  • Alternative medical care offered locally or out-of-country
  • Caregivers to take you to therapy sessions
  • In-home care providers
  • Personal and corporate debt, including taxes
  • Hire a replacement for your role at work (for business owners)
  • Meet your corporate payroll (for business owners)

You’ve worked hard to build up your savings. With critical illness insurance, knowing that your expenses are covered and savings are protected means that you can concentrate fully on your recovery.

After all, your health is your wealth!

To learn more about what critical illness insurance can do to protect your family, business, and investments, call your financial advisor today, or schedule a free,15-minute consultation with one of our advisors!

We’d love to hear from you!

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