Advisors missing critical opportunity

The idea of having to financially support an adult child who’s unable to work due to a critical illness is daunting indeed but at least one carrier has come up with a solution that could make the task a little bit easier

The idea of having to financially support an adult child who’s unable to work due to a critical illness is daunting indeed but at least one carrier has come up with a solution that could make the task a little bit easier.
 
Thought by many advisors to be a condition falling outside critical illness coverage, it turns out that autism is covered by at least one company in Canada prompting the question whether advisors are missing out on a segment of their client base.
 
Why autism?
 
If you have a child born with autism and then you have a second child, that child is also very likely to have autism. It can get expensive very quickly for parents especially if those children are unable to work in adulthood. While many advisors believe clients should focus on ensuring they themselves are sufficiently insured, this is one of those situations where it does make sense to focus on the child.
 
Advisors unfamiliar with the possible solutions available to clients facing this very difficult situation might want to explore them further.

The first solution is courtesy The Co-Operators. It offers what’s called the Critical Assist Head Start for Children, a program that provides funds to support the care and recovery from one of 36 conditions, including autism.

The benefits are paid in a tax-free lump sum, ranging from $25,000 to $250,000 depending on the coverage needed. Children are eligible for the plan at 30 days old until aged 17 and the policy expires at the anniversary nearest age 75.

Another solution suggests B.C. advisor Ken MacCoy, which doesn’t involve insurance, is for your client to establish a Registered Disability Savings Plan for their child. Estimates suggest at least 500,000 Canadians are eligible for this tax-deferred savings plan. In order to open an RDSP the child must be eligible for the Disability Tax Credit.

Parents are able to make unlimited annual contributions up to a lifetime maximum of $200,000. Once inside the RDSP those funds earn income and capital gains on a tax-deferred basis until the funds are withdrawn from the plan. That’s the first good thing about RDSPs.

The second positive is the Canada Disability Savings Grant, which provides that anyone with family net income less than $89,401 receives $3,500 in grants from the federal government for $1,500 in contributions. With a lifetime maximum of $70,000, parents can make the same contribution for 35 consecutive years.

The final benefit is for parents with family net income of less than $26,021 is the Canada Disability Savings Bond, which sees the federal government contribute $1,000 annually up to a maximum of $20,000 lifetime with no matching contribution requirements.

Here at LHP we’d like to hear from advisors on this subject. What do you do for clients in this situation?

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