Your Money Matters

August 2012 Issue


Do You Value Your Employee Benefits?


Your employee benefits

If you are one of those folks planning on “Freedom 55”, before you ditch your office for the golf course, remember to carefully consider how you will replace an often neglected perk of working for the corporate world - your benefit package.

What happens to your life insurance, long-term disability insurance and health and dental benefits when you retire?

In the past, many companies continued to offer employees benefits through their retirement years. But, due to climbing costs and changes to how companies account for these liabilities on their financial books, retirement benefits will be few and far between in the future.

Here are some options for those retirees who don't have group plans that extend into retirement, who want coverage during a gap before they turn 65 or who simply want to supplement their provincial government plan once it comes into effect at age 65:

Life Insurance

The Canadian Life and Health Insurance Association (CLHIA) mandates that all companies offering group life insurance to their employees must allow them to convert to an individual plan once they leave the group. They don't have to show evidence of good health or undergo a medical exam. This is extremely beneficial to those employees who may not be in the best of health and wouldn't qualify for individual insurance, or would pay exorbitant fees for coverage. You will still have to pay the going rate for the amount of insurance you choose, but at least you will be insured.

Health and Dental

While some extended government health benefits kick in for all Canadians at age 65, there are limits. For example, when you turn 65 in Ontario, the Ontario Drug Benefit Program covers drug costs with some deductibles and fees involved. Eye exams every 12 months are covered for those over 64 but eyeglasses, syringes and other diabetic supplies, dentures, hearing aids are not covered. And of course, there is no dental care provided.

Many Canadian insurance companies have programs that will allow you to convert from your group medical and dental plan to an individual plan within 60 days of leaving your group plan. Again, no medical evidence is required so this is great for those who may not be in the best of health. Costs will vary depending on your age and the amount of coverage you choose.

Disability

Disability insurance is crucial for working Canadians. However, once you retire disability coverage is the one type of insurance that you likely don't need to replace.

Be sure to consult with your financial advisor well before you leave the workforce. Your advisor should be able to help you put all these coverages in place so you have a well-protected retirement.

Article written by Terri Williams, CFP®, is Vice President, Editorial Services and Production for Dundee Wealth Inc.
 

Theresa Wever and the Money Concepts Team

Commissions, trailing commissions, management fee and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Insurance products provided through multiple insurance carriers. Mutual fund products provided through Investia Financial Services Inc.