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Mental health: a social issue that can also be a financial issue - DFSIN - SFL

Mental health: a social issue that can also be a financial issue

As we marked World Mental Health Day this October, here is some useful information about the potential financial consequences of mental health problems – and a few tools that can offer some protection.

October 25, 2022

The numbers are striking: an estimated one in five Canadians will suffer from a mental illness in their lifetime, and 8% of Canadians will experience severe depression.

This health issue could also lead to financial problems, since someone with a mental illness may find their judgment impaired and, as a result, end up making decisions that are not in their best interests. This person can also become more vulnerable to various forms of financial exploitation.

Table of pictograms illustrating the six major forms of financial exploitation of vulnerable individuals: emotional blackmail, romance scams, misuse of power of attorney, inappropriate use of payment cards, pressure to sign, and theft of property or money.v

One way of protecting vulnerable individuals: the “trusted contact person”

That’s why it’s important to highlight the entry into force this year of a new Canadian Securities Authorities regulation. Under this regulation, every advisor is now required to ask each client for the name and contact information of a trusted contact person (TCP), and for written consent to contact the TCP under specific circumstances.

For example, if your advisor started to have doubts about your ability to make financial decisions or, even worse, suspected that you might be a victim of financial exploitation, he or she could contact this trusted person. Another circumstance might be if your advisor was having unusual difficulty contacting you or needed to confirm the names of people you authorized to act on your behalf.

Your trusted contact person is not empowered to do anything other than help your advisor clarify a situation, obtain specific information and get help for you. The TCP cannot under any circumstances make decisions for you or make transactions on your behalf.

This new TCP rule should also be considered within the context of an aging population. Some older people have cognitive impairment that can leave them vulnerable to fraudulent, manipulative or deceptive practices. In fact, an estimated 12% of elder abuse cases involve financial exploitation.

If you have not yet designated one or more TCPs, your advisor will talk to you about doing so when next updating your file. If you would like to make this designation sooner, feel free to contact your advisor.

Protecting yourself: disability insurance

In addition to their effect on judgment and decision-making, mental illnesses can also result in an inability to work and create a situation where the standard of living of both the individual and his or her family are seriously compromised. In fact, mental health issues are considered to be the leading cause of disability in Canada.

Although a mental health disorder can be more difficult to diagnose than a physical disability, some disability insurance solutions could provide a source of income during this period. Such solutions may also offer preventive services and personalized counselling. Health conditions that could qualify for benefits include post-traumatic stress disorder, generalized anxiety disorder or other serious conditions that affect an individual’s ability to work or maintain social interactions.

Disability insurance may be offered by some employer plans, but is often purchased directly by the individual, especially if the person would like greater flexibility and more options. For example, disability insurance generally involves a waiting period of 30 to 120 days before benefit payments begin. An individual could choose to tailor this coverage in order to start receiving benefits sooner or later, depending on anticipated needs, and have the premiums adjusted accordingly.

So don’t hesitate to ask your advisor about all the options available to you.

The following sources were used to prepare this article. 
Get Smarter About Money, “Your Trusted Contact Person and Why They Matter”; “Disability insurance basics”; “Choosing disability insurance.” 
McMillan, “The CSA Comes Full Circle to Protect the Vulnerable.” 
Cover me, “It’s a new day for mental illness.” 
Warnett Hallen, “Does Long-Term Disability Cover Mental Health Claims?.”