Seven Considerations When Buying Personal Insurance Coverage

Posted by on Oct 25, 2017

What is personal insurance, and do you need it? If you’re wondering if you have enough life insurance coverage over and above your group insurance, you’ve come to the right place. Below we’ll look at what you need to consider when buying personal insurance in Alberta.

Although group insurance is wonderful to have, it’s not always sufficient. Sometimes top-ups are necessary. It’s possible to purchase extra insurance at an affordable cost.

First, think about what personal insurance is for. Some insurance products are for you, the insured, while others provide protection for your spouse, significant other, children, parents, business partners, charities – anyone you love.

Seven Considerations When Buying Personal Insurance Coverage in Alberta

Below are types of personal insurance and seven considerations to take into account.

1. Life Insurance

The amount and type of life insurance you need depends on your personal situation and who your beneficiaries are.

Even if you’re single with no children, life insurance can cover the cost of your final expenses, debts and funeral costs. Without coverage, your family or executor will have to deal with these issues while they’re mourning.  The cheapest funeral in Canada is around $5,000 and the cost of cremation can run up to $4,500.

If you’re married, you’ll likely need more life insurance than a single individual. This is true whether you’re the main income earner or a homemaker.  If you’re the breadwinner, your beneficiaries will need your life insurance in Taxes benefit to replace your income.

If you’re a homemaker you might think your loved ones don’t rely on you financially because you’re not the breadwinner, so having your life insured isn’t necessary. This isn’t correct. Your loved ones will have to pay for the services you provide – childcare, chores, cooking and cleaning.

Housekeeping costs around $20.00/hour at the low end, and that doesn’t include childcare – daycare costs are through the roof. This doesn’t even consider how much it costs to drive around the kids and put them in sports and other activities.

2. Health Insurance

Supplemental health and dental insurance can fill in the gaps left by group medical insurance and provincial health insurance in Alberta.  It can also help with out-of-pocket expenses not covered in a spouse’s plan. If you have a pre-existing condition, a personal insurance policy can help to offset ongoing costs.

3. Disability Insurance

One in three Canadians will suffer a disability lasting more than 90 days before the age of 65. Can your family survive with this amount of income loss? A personal insurance policy can help alleviate financial stress while the family waits for government or group insurance to kick in.

This area of insurance can be tricky, however. It’s not a good idea to get multiple disability insurance policies because the amount is capped by the government. Care is required when assessing how much top-up disability insurance is required.

4. Travel Insurance

Travel out-of-province is expensive when an unexpected illness or accident happens. It can be astronomical (www.cbc.ca/news/canada/windsor/medical-emergencies-in-u-s-can-cost-canadians-thousands-1.1856433) when traveling out-of-country or overseas.  Any time you travel, you should invest in this type of personal insurance.

5. Health Spending Account (HSA) for Entrepreneurs

An HSA is a cost-effective way to provide supplemental health and dental benefits for entrepreneurs. An HSA offers an attractive option for small businesses to pay for their employees’ and family’s medical expenses on a tax-free basis.

Eligible entrepreneurs who provide HSA’s can deduct all eligible dental and medical expenses from their gross business income rather than making them personal expenses.  This type of personal insurance is ideal for start-ups and small businesses.

6.  Critical Illness Insurance

This personal insurance offers financial security and support services to help you cope during a challenging time if you’re diagnosed with a critical illness.  It includes coverage such as a daily living assistance benefit or a lump sum payment.

7. How Can you Afford Personal Insurance Coverage?

If you’re wondering if you need to top up your personal insurance portfolio, you’re probably also thinking you can’t afford it because you don’t have extra money. The good news is that it’s possible to work it into the budget with a few tweaks.

If you’re between 25 and 50, don’t smoke and are health, insurance costs about the same as getting a Starbucks every work day.

If you eat out a lot or go to the movies regularly, you could consider getting Netflix for a flat monthly fee, and miss a few restaurant meals. If you grab a daily coffee, why not skip a few days and make your own?

For a free assessment of your personal insurance needs, you should contact an insurance broker. Brokers are insurance professionals who work with a number of insurance companies. They can help you compare plans and rates so you can rest assured that your personal insurance needs are covered.

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