Disability and The Main Breadwinner

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Image source: http://www.unrwa.org/

BY FAZAAD BACCHUS 

Every family knows that the main bread winner is the key person in the home. He or she goes to work every day and brings a pay check which keeps the family afloat. Without this income the family would be deprived of either basic necessities or certainly find themselves suffering a lower standard of living. This doesn’t mean that those who are not main bread winners are less valuable.  

It’s quite likely you may remember growing up and knowing of families who had domestic problems and even though the relationship was unhealthy, stayed together, all because without that income the family would be in dire straits. Still all the same, that type of situation exists until today and perhaps you are in one now. The fact of the matter is that nothing happens in this country unless money is coming in, so herein lies the value or so called value of the bread winner. Protecting the ability to earn that income therefore is something that should be considered. If you are a main breadwinner, let us consider what the odds of a disability are and how it can affect you.

According to Canada Statistics latest report (2012) approximately 3.8 million Canadians aged fifteen and older were on permanent disability; a whopping 13.7 percent of the population. Another 2.7 million were on disability due to pain related conditions. These statistics are frightening when you think that a disability can affect one in every three people and lasts for approximately two and a half years. Consider the impact on your family, if you were unable to work for such a period and did not have a replacement income. Before we do that, let’s look at what permanent disability does to a person’s income. As an example, a forty-year old who makes approximately $48,000 per year will earn $1,750,045 by the time he is sixty-five.  When you think about it, it’s actually much more than his currents assets.  What will become of him if he loses the opportunity to earn that income and what will also become of his family’s livelihood.

Consider the more common disability where you are laid up for 2.6 years. If you were earning $48,000 per year, you would have lost income of $124,800. How can you replace it without using up your savings? And if you have savings, they are probably meant for your retirement, so now can you imagine what that will look like with most of your savings gone. At this time, hope is lost and charity steps in, it’s all lost. Life and its circumstances are all very fragile so we need to plan for the unexpected.

What sort of planning can you do? First let’s consider your group plan at work. If you have been offered the option to participate in a group work plan, please go ahead and accept. If that option is not available, then you can purchase a disability income plan on your own. This is particularly important if you are self-employed and you don’t have a company plan available to you. There are many plans you can buy that include features like short and long term disability as well as a major benefit called “own occupation”. This benefit covers you if you cannot work at your occupation and can even cover you up to age sixty-five. Further to that there are disability plans that can even provide you a retirement benefit at age sixty-five. Don’t put off this critical area of financial planning. Talk to your financial advisor today.

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