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Online Benefits Information
UTILIZING PERSONAL ASSETS
CONVERTING YOUR ASSETS INTO INCOME
Whether newly diagnosed with HIV, or whether it's begun to affect your health for the first time, you may choose this time to take stock and assess your resources to help you cope through some tough times. Most people who live successfully with HIV access all the support they can, through family and friends, community resources, medical resources, and financial resources.
Many people have acquired financial resources through their lifetime that can be used in either the short or long-term to help reduce the financial burden of living with the effects of HIV. People may forget about these assets and resources, or do not know how and when to use them.
Resource people to help you with your decisions may include a financial planner, an investment planner, bank manager, credit counselor, or the staff who work directly with that particular asset. It can also be very helpful to talk to others who may have gone through a similar experience; not only people with HIV, but people with any disability or serious illness, such as cancer or auto injury. The most important thing to keep in mind when considering your own assets is to review all the terms, conditions and documents that describe each of your assets. This will give you the tools and knowledge you need to best decide if and how to use this asset.
INVESTMENTS, SAVINGS, AND RSPs
If you have assets such as stocks, bonds, GICs, mutual funds and/or RSPs, these may be cashed in to provide you with money to meet your financial needs. Consider speaking to your bank manager, or an investment specialist or professional financial planner, to fully understand the pros and cons and intricacies of cashing in your assets.
Before considering cashing any of these in, you should consider the following:
- What are your budgetary needs? In case of prolonged illness, can you reduce your budgetary needs? How much money will you need now, and in the future? If you do cash an asset in, how long will the money last?
- Are these assets which can be cashed in at any time you like, or only at certain times?
- Are there regulations that could prevent you cashing this asset?
- If you have a "locked in" asset, can it be "unlocked" because of your medical need? (see document for more information about how to do this)
- Are there fees or penalties for cashing the asset? How much will they be?
- Will you owe tax on this asset if you cash it in? How will cashing it in affect you at tax time? How much should you set aside to pay the taxes on it?
LIFE INSURANCE POLICES
You probably bought life insurance in order to provide financial security to your loved ones. This benefits them after you die. However, there are at present a few potential options that allow life insurance policy owners to turn their policy into a living asset in order to be able to have access to the funds now.
- CASH SURRENDER VALUE: Some policies have a cash surrender value, or a basic amount paid to the owner should they cash in the policy. It is usually a small percentage of the total value of the policy, and is paid out only when the policy is surrendered. Once you accept the cash surrender amount, the policy is cancelled
- LIVING BENEFIT: One way to have a larger financial gain from a life insurance policy while you're still alive is through "living benefit". Some insurance companies offer a "living benefit", or an advance on the partial value of the life insurance policy. You don't cash-in the policy; you are lent a portion of its final value.
- VIATICAL SETTLEMENTS: A viatical settlement is when the policy owner sells their life insurance policy to a viatical company for a certain percentage of the value of the policy. In return, the viatical company is named as the beneficiary and will receive the benefit when you die.
For more information, see our chapter on Life Insurance.
LONG-TERM DISABILITY WAIVER CLAUSE
You may have purchased insurance to cover yourself when you made a major purchase such as a home, an automobile, etc. You might pay for this through long-term disability premiums, or a wage-loss protection premium. Not everyone gets this, or remembers that they did. When you got this coverage, you probably had to complete an application and also a qualifying medical.
If you can no longer work due to the health effects of HIV (or any other health reason) and can't afford to pay your mortgage or car payments, this insurance may cover payments, which allows you to keep the asset (house, car, etc.). It would be a good idea to do the following:
- Review your policy and find out if you have long-term disability insurance.
- Check the conditions of the contract and coverage - what application will you need to fill out, what documentation of illness is required, what degree of illness/impairment is required to qualify? How quickly must you apply for the benefit? Are there any deadlines for applying?
- Speak directly with your insurance company or policy provider to find out about the specifics of the policy. Be well informed.
- Find out whether your credit cards might also have disability insurance coverage. This would cover outstanding balances if you were unable to pay your balance due to medical reasons.
REVERSE MORTGAGE
Owning a home that's worth a fair amount of money doesn't usually benefit you unless you sell it. However, there may be a way to keep your home but also receive part of its value in cash. There may be the opportunity to get a cash advance for part of the value of the property, in return for a pre-arranged agreement for the sale of the property.
You convert your asset into a liquid asset to have the funds now, then leave the asset to the purchaser when you pass away. Basically, you get the money you'd get for selling your home now, and still get to live in your home. However, you do get less than 100% of the home's market value as the cost of this arrangement.
Before proceeding, you should think about the following:
- Research the various options that different companies might offer.
- Learn the current value of your home, and find out how the trends in real estate values might affect your property's future value.
- Get the advice of a professional financial planner, real estate agent, and lawyer on the intricacies of making such an arrangement and on any contracts you might be signing.
- Consider the difference between a reverse mortgage vs. taking out a second mortgage. Which one offers you the best option for your needs?
- Consider the pros and cons of a reverse mortgage vs. selling your property outright. Which one would give you the best financial resources to meet your needs?
- Find out what application and documentation is required, and what degree of illness or impairment is needed (if any) to qualify for the service.
ACQUIRED ASSETS
You may have acquired assets that could be sold to meet your financial needs. This could include jewelry, art, hi-tech equipment, and prized collectibles. Though this can be a very emotional decision, it may be the best way for you to meet your financial needs during difficult times.
Get sound, professional advice about the current value of the asset. (We've all seen the "Antiques Roadshow"; don't put you faith in the value of an object with anyone other than a professional appraiser.) Speak to a financial planner or lawyer who may be able to give you the best advice about cashing in valuable assets and whether this is your best option. Find our whether the money from the sale will affect your tax situation. It might also affect your government benefits. Find out what you could expect to sell the asset for, and how that amount might affect any financial assistance from Ontario Works, ODSP, etc.
FREQUENTLY ASKED QUESTIONS
Q: How can I know how much money I'll be needing?
You need to look at your monthly expenses, and deduct them from your monthly income. Look at ways to reduce your monthly expenses. Find out what financial assistance you may be entitled to. Find out what government benefits you may be entitled to if the health effects of HIV prevent you from working.
Q: I don't know how long I'll live. Should this affect my financial decisions?
HIV and AIDS are still relatively unpredictable. You may live many years with HIV, or have one catastrophic illness that takes you away suddenly. Many people with HIV/AIDS develop a serious illness, believe they aren't going to live long, and spend their money accordingly. Then they recover, and have no money left. You need to know your health situation, and also keep up to date with HIV/AIDS treatments. The old saying goes "Plan for a rainy day; it won't hurt you if it stays sunny".
Q: If I sell my art/collectibles/jewelry, will it affect my welfare benefit?
Any cash income could affect your Ontario Works or Ontario Disability Support Program monthly financial assistance, depending on the amount. Find out how it will affect you, before you sell. Check our pages on Ontario Works and Ontario Disability Support Program.
Q: I don't know whether I can keep up the payments on my house. What should I do?
Read our section on the long-term disability waiver clause, above. You might be insured for just such a situation. If not, you might consider a reverse mortgage. Or selling. It's not a decision you will make lightly, so get professional advice before you take any action.
Q: I wanted to leave my stuff to my family when I die. If I cash in everything, there won't be anything to leave.
Most of us would like to be able to leave something to our families and friends. It's not always possible. Unless you have dependants, you probably shouldn't be thinking this way. Your loved ones would want you to be as comfortable as possible, while you are alive. If you are worried about the cost of burying/cremation, there is a death benefit from Canada Pension Plan that is usually enough to cover the basics. It's not a nice thought, but many people take comfort in knowing their loved ones won't go in debt to bury them.
If you do have dependants, such as minor children, disabled sibling, or infirm parents, then the decision to sell assets is a much more difficult one. You need to balance your financial needs, with what you feel you could provide for your loved one. The decision is very difficult. It would be a good idea to get professional advice from a lawyer, accountant, financial planner, or benefits advisor.
LINKS
If you live in Toronto, you can visit the Toronto People With AIDS Foundation. They have several full-time benefits advisors. They can meet with you in person to discuss your situation. Their phone # is 416-506-1400. Ask to speak to one of the Case Managers. Or visit them at 399 Church Street, 2nd floor.
For up-to-date information about life insurance, viatical settlements, and the law in Ontario, try contacting the HIV and AIDS Legal Clinic (Ontario), HALCO. HALCO is a not-for-profit, community-based legal clinic serving low-income people with HIV and AIDS (PHAs) in Ontario.
In Toronto call (416) 340-7790 or toll-free in Ontario at 1-888-705-8889.
Or, e-mail to: talklaw@halco.org
Or, visit their web site at http://www.halco.org/
Their postal address is:
HALCO
65 Wellesley Street, East
Suite 400
Toronto, ON M4Y 1G7
Also, you should visit our sections on:
We hope this information provided by the Ontario AIDS Network answers all your questions. If the section does not answer all your questions, and you have HIV/AIDS or are an individual or organization supporting someone living with HIV/AIDS, let our Benefits Expert answer your question. All responses are confidential. Click HERE to send your question.
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