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How to figure out what health coverage you need?

on Wed, 05/21/2014 - 10:25
I have been chatting with some prospects on their needs on health coverages lately and found that a lot of them actually have no clue what "health insurance" consist of.
 
In the insurance world, "health insurance" normally referred as "living benefits". That includes: health & dental coverage; critical illness coverage; long term care coverage & disability coverage.
 
Let's drill down what is what.
 
Health & dental coverage is what we usually need day in and day out: when we get sick, the doctor gives you a prescription, you go to the pharmacist, you have to pay for the medication; when you go to the dentist, you pay for the service the dentist does on your teeth; when you go to a psychologist to discuss why you get upset, that time has to be paid. All those are normally included in a health & dental plan.
 
There are in general 3 coverages in a health & dental plan:
Extended health care: chiropractor, physiotherapist, psychologist, etc. are common areas that this covers;
Dental coverage: covers major dental related expenses;
Drug coverage: covers the prescription I described earlier.
 
In Ontario, extended health care is the core component that all plans built around, then you add on your desire level of coverage of dental & drug. Typically a health & dental plan design look like this. Generally, a healthy person can expect to pay around $120 a month on premium for a half decent coverage, there are more basic plans which costs less, but of course, percentage of expenses covered is then relatively lowered.
 
**Self-employs and business owners might be better off setting up a health spending account for this purpose.
 
Critical illness coverage is a policy that will pay out should the policy gets hit by some diseases that get them critically ill. "Critical" means life threatening. Each insurer has their own list of covered illnesses but all insurers commonly cover 22 to 24 illnesses. The condition of illnesses is what determines the payout at the end and that definition is always stated on the insurers' web site, so that policyholders know what to expect.
 
Long term care coverage kicks in when a policyholder needs someone to take care of them 24/7. This kind of policy does not take into account why you need the care (unlike critical illness policy which claims based on the reason). Long term care policy claims based on result. As long as the policyholder cannot perform 2 out of the 6 "daily living activities", they are eligible to apply for payout.
 
Disability coverage reimburses the lost income when the policy holder cannot work due to accident (mainly, some coverage will pay out when it results from an illness too), this is classified as "income replacement" benefit. Normally, disability insurance covers 2/3 to 75% of your working income. The intent is to help pay your bills while you are away but still encourage you to get back to work. Budget about 5% of your working income to protect the 2/3 of it. High income earners usually experience a "cap" in their group plan at work, so the best way to make sure you are well covered is to top it up with your own plan. Self-employs have a tricky calculation on their income, so the insurable income might not be as much as the "desire" coverage.
 
Accidental coverage reimburses the policy holder when they get into accident and suffer from breaking bones and similar conditions. Depending on policy, some policies offer hospital cash (pay you while you are an in-patient in the hospital for over 18 hours) coverage as well.
 
Travel medical coverage reimburses the medical costs when you are away from home on a trip. Normally, travel insurance, emergency medical coverage is built on provincial plan, so if you DO NOT have provincial coverage, you have to make sure you get global travel coverage instead.
 
Are you at risk? Do a quick calculation!
 
Health coverage can be complex, please consult an advisor to obtain the best suitable for yourself and make sure you and your family is not at risk.

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