The types of insurance everybody needs—and when they need it
We get it, insurance covers a lot of different things: health, car, home, life, disability… the list goes on.
It can be overwhelming to figure out what you need and when to get it. There are so many types of insurance and more providers to give you coverage.
But what do you actually need, and when? In this article, we’ll go over the four types of insurance that you actually do need and when to get them.
Let’s dive in.
Why some insurance is a necessity
At this point, you know there’s a ton of different types of insurance available—and for full transparency: you don’t need every type of insurance out there.
If you’re feeling overwhelmed figuring out your needs, you can sit down and figure it out pretty easily. To make things easy for you, put insurance products into two categories to figure out what you actually do need.
Here are the two ‘categories’ into which you can group insurance products.
Mandatory by law
There are some insurance products you have to have in order to do certain things. These are, naturally, insurance products you’ll have to purchase.
An example of this is car insurance. Across Canada, you have to have some form of car insurance in order to operate a motor vehicle legally. If you don’t have car insurance and get pulled over (or into an accident), you can face some major legal charges.
Make sure to shop around for different rates when you know you’re going to have to make the purchase – it helps you ensure that you’ll get the best rate out there. You don’t want to settle for the first number you see.
Not mandatory, but needed
Next, you’ll want to look at the insurance products that aren’t mandatory by law, the way car insurance is, but you need. This is where it becomes important to evaluate your personal situation so you can make the most informed insurance decisions possible.
Take life insurance, for example. Life insurance isn’t a mandatory purchase, but it’s hugely important. The death benefit (the payout your loved ones would receive from a life insurance payout) can help pay for your funeral, any expenses you left behind, and cushion your family while they take the time they need to heal from their loss.
While it’s not legally required, it’s a small price to pay to ensure the people you love aren’t saddled with debts from your passing.
There are other insurance products that may not be legally required, but needed for your lifestyle. Think pet insurance—it just depends where your priorities lie!
Once you’ve gone through this exercise with the different types of insurance, you’ll quickly know what you really need to be purchasing it.
But which ones are the most important? And when should you get them?
The 5 types of insurance you should buy
Once you’ve gone through these categories, you’ll have a much clearer idea of your insurance needs. If you’re still struggling, however, we’ve outlined the five types of insurance you’ll want to slip into the need section, even if they don’t fall into the “Mandatory by Law” section.
Here’s our top five insurance products you’ll want to look into, no matter what.
We cannot stress this enough—car insurance is mandatory to drive a car in Canada.
While you are budgeting your monthly insurance expenses, you absolutely have to include this in your considerations if you’re going to get behind the wheel of a car.
Your car insurance will cover certain expenses tied to damages, your car, and your own legal liability up to an amount outlined in your policy. It will cover you (the policyholder), any passengers, any pedestrians, or any property that is damaged in a vehicle accident.
The risks of driving without insurance goes far beyond the costs of car or damage repairs in the case of an accident. Depending on your location, as regulations vary from province to province, you can lose your license for 30 days. You could face even longer license suspensions, or even have your car impounded.
Doesn’t seem worth the risk.
When do you buy it?
You should get car insurance before you put any car on the road under your name. Don’t get behind the wheel without a policy in place.
As we touched on above, life insurance is a great way to protect your loved ones, making it an important insurance product to consider. And if you were to look into it, you wouldn’t be alone – more Canadians have been considering life insurance now more than ever due to the coronavirus.
Your life insurance plan will provide a “death benefit” to your decided beneficiary. This means if something were to happen to you, your loved one would receive a sum of money to help them stay afloat.
With a little bit of research, finding the best life insurance in Canada for your needs can give you peace of mind at a small price!
When do you buy it?
You should look at life insurance the second you have somebody else who is dependent on your income, like children, a partner, or dependent parents. If something were to happen to you, this would ensure they are taken care of and they aren’t saddled with your debts—it’s a great way to be financially responsible and take care of your loved ones tomorrow.
Plus, if you buy while you’re young and healthy, you’ll also be able to lock in a better rate. Win-win!
It’s an unfortunate reality that, even in Canada where we are fortunate to have healthcare, it can still be costly to get sick.
While treatments are covered, there are other parts of being sick that may not be fully covered or covered at all—things like certain prescriptions you may need regularly, crutches, or other walking devices, or different therapies to deal with health issues.
You don’t want to be burdened with these costs. You may want to look at health insurance even more closely if there are any genetic illnesses in your family. Protect yourself early.
When do you buy it?
Most insurance providers won’t give you health insurance the day you get a serious diagnosis, as they know it’s going to cost them. Similarly to life insurance, get health insurance while you’re young and healthy, if you can, to lock in a better rate.
Congratulations on the new home! But home ownership is costly enough already—what would happen if something were to happen to that amazing new investment? Think about if a fire were to ruin your home or you were robbed.
Homeowners insurance can cover you in those scenarios! You’ve already put a lot of money into this purchase, so what’s a monthly fee to ensure that this new home (and everything in it) is taken care of?
When do you buy it?
As you’re looking to make one of the biggest purchases of your life, you’ll want to look at homeowners insurance in tandem. You don’t want to pour thousands into your home for something to happen that you can’t afford to deal with. Mortgage lenders need to see that you have home insurance, too, so it’s smart to look at insurance at the same time.
Bonus: pet insurance
Pet ownership in Canada has skyrocketed since more people started working from home. As a positive headline amidst the daunting headlines, stories of shelters being emptied out coast to coast brought a smile to some faces.
This means that more Canadians have a furry friend that they are also taking care of now—and while the puppy kisses and catnip, pets are expensive. The annual cost of owning a dog in Canada sits at over $3,000, and over $2,000 for a cat annually.
And this isn’t even considering emergency costs or certain health conditions. If you’re worried about the costs adding up for your new pet, you might want to consider pet insurance. This can cover medical or dental issues (which are super costly for animals!), and the average cost of this coverage is around $30/month.
But when you consider that a single operation can set you back thousands… it’s not a bad deal.
When do you buy it?
You can put this into place any time you have a pet! If you’re considering adding a four-legged friend to the family, you can start looking and add it to the costs of pet ownership. But you really can buy this any time of your pet’s life, within reason. Each insurance provider has their list of exclusions, so it pays to look sooner than later.
While there are a lot of different insurance products out there, you shouldn’t get caught up in purchasing all of them. You need to really take the time to evaluate your personal needs and shop around for the best rate.
But when you do, you know you and your loved ones are protected without throwing away any money you don’t have to.
PolicyMe is a rapidly growing insurtech startup making life insurance simpler and more affordable for everyone who needs it. PolicyMe's online platform provides a digital experience for customers to navigate the entire insurance buying process, helping Canadians get personalized advice, compare quotes and apply for life insurance in just a few clicks.
The company was founded by Andrew Ostro, Laura McKay and Jeff McKay in 2018, and is based in Toronto, Canada.
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