A 40-year-old self-employed consultant, single, with no dependents, has an annual income of $150,000. She contributes the maximum to her RRSP and TFSA. She has no employer benefits. Her biggest concern is the financial impact of a sudden severe illness or disability that prevents her from working. Which of the following is the most suitable insurance planning advice?

Question: A 40-year-old self-employed consultant, single, with no dependents, has an annual income of $150,000. She contributes the maximum to her RRSP and TFSA. She has no employer benefits. Her biggest concern is the financial impact of a sudden severe illness or disability that prevents her from working. Which of the following is the most suitable insurance planning advice?

Answer options:

• Purchase a critical illness insurance policy with a large lump-sum benefit to cover living expenses during recovery. ✅ Obtain a comprehensive individual disability insurance policy with a long benefit period and a reasonable waiting period.
• Invest in a non-registered diversified portfolio to build an emergency fund, as self-insuring is often more cost-effective.
• Increase her TFSA contributions further, as these funds can be accessed tax-free in case of an emergency.

Correct answer: Obtain a comprehensive individual disability insurance policy with a long benefit period and a reasonable waiting period.

Explanation: For a self-employed individual with no employer benefits, an individual disability insurance policy is crucial. It replaces a portion of lost income due to inability to work, which is the primary risk identified, providing long-term financial stability during a critical period.