Insurance Advice

Car Insurance:

Car insurance isn't just a nice option, it's the law. But how much coverage do you need? And what types of coverage make sense for your situation? 

 Credit Insurance: This is group insurance that provides the customer with protection for a loan if they become disabled from an accident or illness and cannot work to repay the loan, or if they die before the borrowed funds are repaid. The insurer will either continue to make the payments for the customer in the case of disability, or will pay the outstanding balance of the loan to the financial institution if the customer dies.

Critical Illness: This insurance is intended to provide financial assistance to people diagnosed with certain medical conditions, such as cancer. It must be purchased before the customer is diagnosed with an illness.

Disability Insurance: In the event youcan't work due to a short or long-term illness or injury or a permanent disability, this insurance provides you with a source of income and/or medical home care.

General Insurance: General insurance covers a wide range of risks that do not deal with life, disability or extended health coverage. This type of insurance includes unpredictable losses, natural disasters, negligence and legal liability. Individuals and companies concerned about these potential hazards pay premiums to an insurance company, which reimburses them in case they suffer a loss, are sued or must pay damages. General insurance products include home and property, vehicle and travel (see separate definitions).

Health Insurance: In Canada a certain level of medical treatment is covered by provincial health insurance plans. Individuals can obtain supplemental health insurance for services and expenses for medical treatment, such as prescription drugs and dental care, that are not covered by their province. Supplemental health is often provided through your employer.

Home Insurance: Protects policyholders from direct losses or damage (through theft, fire, etc.) that occur to their home and its contents. For tenants and condominium owners, these is insurance that covers the contents of your residence and any improvements you have made. Home insurance coverage comes in a variety of packages, ranging from ("no-frills") to comprehensive.

Life Insurance: The purpose of life insurance is to provide income or lump sum benefits to your survivors - children, spouse, other family members - in the event of your death. It's a way of securing your family's financial future by providing them with some replacement income, as well as covering your final expenses and debts. There are many life insurance products geared for different needs but basically, there are two types:

• Term Insurance: A term policy offers protection for a specified length of time (e.g., 1, 5, 10, 20 years). Once the terms expires, the insurance ends. If renewed, premiums are adjusted over time (usually increased) to reflect the increased probability of death. This is a popular type of insurance coverage because it is fairly inexpensive.
• Permanent Insurance: This type of insurance covers you for as long as you live. There are several types: whole life, universal life and variable life.

   

  • Whole Life: It offers insurance protection plus a cash value savings fund (like a savings account), allowing you to save over a longer term. Part of the premium you pay goes toward insurance coverage and the rest is deposited in an account within the policy that earns interest and grows tax-deferred. There is a fixed premium for as long as the policy is in place. Accumulated savings are returned to the policyholder when the policy matures. If the policy matures only at death, the savings are passed on to the beneficiaries.
  • Universal Life: Similar to whole life insurance as it provides coverage for life and combines a savings component with insurance. However, universal life offers the flexibility of a number of payment and premium options. As well, policyholders have a say in how the savings are invested. Universal insurance does not guarantee a fixed return on the savings portion, as is the case with most whole life policies. Policyholders bear more of the investment risk because they have the opportunity to earn market returns on the excess premiums. Income generally varies depending on prevailing interest rates or the stock market.
  • Variable Life: A combination of whole life and universal life, this type of policy provides insurance coverage and a cash value account, in which the money is invested in a money market fund or a common stock fund. The policyholder cannot change the coverage amount or the amount of the premiums. The death benefit, while guaranteed in part, varies depending on the investment performance of the cash value account.

Mortgage Life Insurance: You can obtain this coverage when you take out a mortgage. If you die before the mortgage is paid off, the insurance will cover the balance, usually up to a set maximum.

Mortgage Payment Insurance: It insures that your regular mortgage payments are covered in the event of a negative change in your financial situation.

Straight Life Annuity: Purchased through an insurance company, you receive fixed regular payments for as long as you live. No funds will be transferred to your spouse, dependents or your estate after you die.

Travel Insurance: It basically provides protection for medical expenses incurred while travelling outside of Canada that exceed the amount covered by provincial health care plans. Travel insurance can also cover travel expenses that result from cancellations, lost tickets, etc.

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