The five types of insurance everyone needs

Oftentimes, choosing insurance can feel like ordering off a menu at a restaurant – the more options there are, the harder it can be to make a decision. While it’s human nature to gravitate toward the things that bring immediate gratification, choosing the right insurance protection is about striking a balance between reimbursement for day-to-day out-of-pocket expenses and investing in a reliable safety net for the future.

From the ‘obvious’ home and auto coverage to an extensive list of risk-specific personal insurance products, reviewing the types of insurance you may need can be overwhelming at best. A licensed advisor can assess your financial situation to recommend the best coverages and appropriate amount of protection based on your employment status and lifestyle; however, the general principles remain the same for everyone. Read on to learn about the types of insurance all working Canadians should have to garner financial stability through life’s ups and downs.

What types of insurance do you need?

According to The Commonwealth Fund, about two-thirds of Canadians have private benefits to help offset out-of-pocket expenses not covered by their provincial or territorial plan. For most, that consists of basic health and dental benefits from an employer-sponsored group policy, with a limited amount of disability income protection and/or a small amount of life insurance. For the most part, compensation from a group policy is minimal and short-lived, helping keep day-to-day expenses manageable, but doing little to protect Canadians and their families from the significant financial risks of a serious medical event.

That’s where private insurance comes in. Regardless whether you have access to group benefits or are self-employed, the fact remains that most working Canadians do not have the means to maintain financial equilibrium if faced with a significant shift in household income or sudden medical bills.

Choosing which insurance coverage to purchase should be prioritized by the magnitude of the potential financial impact. With most households relying on two steady incomes, a sudden loss of income – whether that be due to a disability or premature death – could be catastrophic. Second to income protection, Canadians should be prepared for the increasing odds of experiencing a Critical Illness, and the ripple effect that may have. Here are five types of insurance everyone needs to cover their financial bases

Life

Life insurance is typically the first type of coverage people think of when investing in their family’s financial security. The Canadian Government encourages citizens to obtain comprehensive coverage to help keep their dependents financially sound if they were to pass away unexpectedly. As a tax-free, lump-sum payment, your family can use these funds to pay off debt, maintain their standard of living, cover funeral expenses, put toward education or anything they see fit.

While no one likes to consider these scenarios, having life insurance can ease the financial burden for your loved ones.

Disability

Although life insurance is widely understood, many people don’t realize that the odds of experiencing a disability are actually substantially greater during your working years than the odds of passing away prematurely. If you were suddenly unable to work, could you afford to self-finance the costs of treatment, medical devices or home modification? How would you make ends meet?

Disability insurance is an affordable way to ensure you maintain a steady income stream during your recovery. By budgeting the predictable monthly premiums into your costs of living, it allows you to amass a sizeable safety net in a fraction of the time it would take to accumulate the same amount in savings.

While most insurance companies offer one-size-fits-all income protection which combines benefits for injuries and illnesses, this makes it more difficult to qualify for coverage, and has a sizeable impact on premiums. The Edge Benefits, on the other hand, provides Canadians the flexibility to tailor disability benefits according to their needs and budget. EDGE offers guaranteed injury-only coverage which can be customized by selecting from a variety of benefit amounts and coverage options, as well as comprehensive injury and illness coverage with the same degree of flexibility.

Critical Illness

Strokes, heart attacks, and cancer are all considered critical illnesses and account for 85% of critical illness insurance claims. Not only are these events and diagnoses life-changing, but they are also costly to treat and may require significant modifications to your home or lifestyle. Though some of the acute medical costs of critical illnesses are covered by government benefits, expenses can still add up quickly for the items not covered by your provincial plan.

Private Critical Illness insurance is one of the most important personal benefits you can invest in after life and disability insurance; it’s essential in helping alleviate the financial costs associated with certain long-term illnesses. By providing you with a tax-free, lump-sum cash payment, you can use these funds for anything you may need regarding a diagnosed illness. From treatment costs to hiring in-home care and participating in rehabilitation, this money can be used to cover all of your needs to help ease the financial burden of an illness.

This coverage reinforces the protection of income beyond what disability insurance will cover to help compensate for sudden, expensive bills related to an illness. While disability coverage helps you maintain your standard of living if you were to become injured or sick, it doesn’t provide a buffer for unplanned expenses a critical illness would incur.

Travel Medical

If you travel regularly for business or pleasure, Emergency Medical Travel Insurance is a smart investment. If you were to have a medical emergency or need medical attention while outside of your province or Canada, your provincial health plan would not cover many of the costs. Private travel medical insurance supplements provincial coverage in these situations so no matter where an emergency strikes, you can have the peace of mind that you can receive the care you need.

No one wants to think about becoming ill or injured on what was supposed to be a work trip or family holiday, but with this insurance you can focus on getting better and returning home, not the financial hardship.

Health & Dental

Did you know that 32% of Canadians have no dental insurance? According to a report by the Canadian Dental Association, nearly a third of the population foregoes dental care, mostly due to costs. Unfortunately, the Canadian Health Act does not cover oral health care, so Canadians are left to find their own coverage through private or employer insurance options.

There’s no denying that preventive health and dental care are important for your quality of life, but if you are self-employed, between jobs or not receiving the coverage you need from your current benefit plan, you may be sacrificing your wellness to save money. This short-term saving can lead to longer-term health and financial consequences.

Health & Dental benefits provide you and your family coverage to manage day-to-day health maintenance expenses for preventative care (like dental cleanings and prescriptions) to medical services and aid devices.

Having these types of insurance is essential for protecting your finances. By putting aside a predictable, steady amount of money each month in the form of premiums, you have a reliable safety net if faced with immediate, significant medical costs or unexpected and prolonged income losses.

If you’re wondering when it’s a good time to invest in these types of insurance, the rule of thumb is to reevaluate your financial security at each important life milestone. From purchasing or renting a home and moving in with your partner to starting a family or business, you should consider how much coverage you need to protect those who you love, and everything you work hard to achieve.

The Edge Benefits offers all of these important types of insurance and more. It’s never too late to protect your financial security. Browse our customizable benefits today to craft your ideal plan.

Sources

https://www.canada.ca/en/financial-consumer-agency/services/insurance/determining-insurance-needs.html
https://www.commonwealthfund.org/international-health-policy-center/countries/canada
https://www.cda-adc.ca/stateoforalhealth/snap
https://www.canada.ca/en/financial-consumer-agency/services/insurance/life.html#toc0