Make sure you’re covered, with complementary insurance solutions
Your house, your car, your health… You want to make sure it’s all taken care of. That’s why it’s important to have a plan B lined up in case something goes wrong. That’s where insurance comes into play.
Mortgage insurance, disability, group, individual, health, credit, etc. There are seemingly endless types of insurance available. And with all these options, there comes a time when you start to question whether you actually need them all, and whether you’re needlessly doubling up on payments. Because no one likes to be caught in the dark, why not start by examining your needs?
The weight of your financial commitments
According to an inquiry by the Financial Consumer Agency of Canada, about 60% of car loans given out for new vehicles in Canada had a duration of between six and eight years. The same year, statistics indicated that personal lines of credit represented 11% of household debt in Quebec. Outside of mortgages, this constitutes the second highest reason for indebtedness among Canadians.
While paying back one or more of these financial commitments may fit painlessly into your budget when you have a stable job and salary, that may not be the case if something major happened that turned your life upside down. That’s why loan insurance can be an excellent idea to help prepare for future surprises, as Éric Lebel, partner and financial turnaround advisor at Raymond Chabot Grant Thornton, illustrates. “When we’re locked into a car loan at $300 or $400 over five years, it can add up to a large amount by the end of the year. If we’re not able to pay for one reason or another, we can easily find ourselves in trouble, which is why it’s a good idea to get loan insurance for this type of long-term commitment.”
Keep a cool head, and a roof above it!
If bad luck or tragedy hits, it probably won’t just affect one part of your life. In addition to your car, your mortgage payments are probably the biggest monthly expense you have to cover. That’s why mortgage insurance is another great choice to include in a balanced insurance portfolio. “Taking out insurance on your mortgage is well worthwhile in my opinion, because it’s a significant amount of money spread over a long period of time. On a 25-year mortgage, insurance could make a difference to your financial situation if you needed to stop working for a year or two to recover from cancer, for example,” explains Lebel.
In addition, if you’re affected by a disability, knowing that your mortgage payments would be covered can be very reassuring. In case of death, whether you’re a co-owner of your home or head of the family, being insured can make all the difference to your already grieving loved ones.
A boost when life hits you with a surprise
All your life, you made plans and saved up to bring them to life: a house, kids, trips… Then suddenly, you hit a snag. Illness hits, or you lose your job unexpectedly. In short, you find yourself with a situation to handle and a credit card bill to pay, though that’s likely the last thing on your mind. That’s where payment protection or credit card balance protection can be useful.
Though this type of insurance doesn’t give long term coverage – because credit isn’t a type of loan designed for the long term – insurance can at least help you avoid needing to dip into your emergency fund or chequing account right away. In case of diagnosis with a serious illness like cancer, accidental dismemberment or death, the money you’d planned to use to pay your credit card could be used on something else, because your credit card insurance would take care of your balance.
Insurance through your employer
For some people, their company offers a range of group insurance plans ranging from critical illness and life insurance, to drug insurance and salary insurance. The premium is therefore partially paid by the employer. Though this is undoubtedly a highly useful benefit, it’s connected to your work. If you lose your job, you lose your coverage too. In that case you’d have to rely on a severance package or employment insurance. However, if the company closed its doors, your insurance coverage would likely fall through the cracks, and you’d face potential losses when it comes to drug insurance, health insurance, etc.
And for the rest…
Despite the large number of commonly offered insurance solutions – mortgage, personal loan, life insurance, etc. – it’s possible that some specific needs still won’t be covered. To compensate for this grey area, speak to a financial security advisor. They can do research to find specific insurance products that will meet your remaining needs, taking your existing coverage into account.
In summary, there are insurance solutions that exist to cover just about any type of financial commitment or situation that might arise if something major happened. The advice to keep in mind: make sure you’re adequately covered, while making sure you’ve chosen solutions that complement each other well!
Edited on 19 December 2017