If you google, “The goose that laid the golden eggs,” you’ll find several versions of this classic fable, each with its own moral to impart.
In one version, the owners of the prized poultry decide to cut the goose open and get all the eggs at once instead of waiting for their one-a-day reward. Clearly patience was not a virtue for this farming couple. They quickly learn that greed does not pay since it turns out a dead goose is just, well, a dead goose.
In another version, the couple try to double dip by cutting back on portions (and costs) for the bird’s feed while still expecting their own daily bread, so to speak. Turns out, if you don’t take proper care of your money maker, your money maker won’t take care of you.
In the financial services industry, we have yet another take on this tale. Our modern day “golden eggs” are our homes, our vehicles, our assets. We work hard to accumulate our things and we want to protect them. In fact, we insure everything these days; from our kid’s toys to our own “toys.” But what if something happened to the goose?
All versions of the fable really teach us the same thing: No goose. No eggs. The goose is what really needs protecting. And, more importantly, the goose’s ability to lay the golden eggs needs protecting.
You are the goose. (Just in case you weren’t following where I was going with this analogy!)
Your ability to earn an income - the income that allows you to acquire the things that bring security, comfort and joy to you and your family - is your greatest asset.
In 2012, Stats Canada reported an average Canadian has a 1 in 3 chance of becoming disabled due to an injury or illness in his or her lifetime. If disabled, the average time you can expect to be off work is 2.6 years. For women, the stats are even more frightening.
If your income stopped tomorrow, how would you replace it?
While some government funds may be available, whether or not you would qualify is uncertain. For example, CPP only pays a benefit if the disability is considered severe and prolonged and Worker’s Compensation mainly covers injuries that occur at work. Group benefits can help, but the amount of benefit may not be sufficient and the potential benefit period not long enough. Would you want to borrow money from family to pay your utility bill? Would a bank be willing to give you a loan if you weren’t working? How many months could your current savings maintain your current lifestyle? These are all important questions.
To determine how much individual disability coverage you need, a competent advisor would walk you through a series of questions like these, including a review of your current expenses, assets and other potential sources of cash flow. How much you qualify for would then be determined by looking at your current income, occupation and any existing coverage in place.
Convinced, but think you can’t afford it? There’s good news. Insurance companies have integrated many moving parts into their disability plans that allow individuals - with the help of an advisor - to build plans that are suitable to both their need and their budget. Optional features also allow you to increase your benefits as your income increases with only minimal financial underwriting and no additional medical criteria. Some plans even refund a portion of your premiums if you do not have a claim.
The real moral of the story: When it comes to protecting your income, it’s worth asking some questions and taking some time to consider your options.