The moment you are disabled, so may be your ability to earn an income.
Where would this money come from if you became disabled and couldn’t work for six months or longer?
RRSP and personal savings
Are you willing to liquidate any portion of your retirement savings for the purpose of meeting basic lifestyle needs? Did you know that if you saved five per cent of your income each year, it’s possible that you could wipe out 10 years of savings in just six months? Would a withdrawal from savings affect your financial independence in your retirement years?
Loans and credit
If you can borrow from family or friends, you’re lucky. But would you really want to? What if you had to rely on a financial institution? Many banks are reluctant to lend money to someone without an income and if they did, may impose harsh loan terms and conditions.
Could your family maintain its standard of living based on one income alone, in the face of potentially higher costs such as childcare, medical or home modifications? Would that financial stress put unnecessary strain in your relationships at a time when you need those relationships the most?
Sale of assets
What would be the consequences of having to sell your home or other assets? Would you receive fair market value?