Your Guide To Insurance Essentials In Canada
Insurance isn’t exactly the most exciting topic, but you should know about it! Having the right insurance is vital to financial planning and can help protect you from various risks and uncertainties.
Trying to figure out where to start? I’ll explain five of the most common types of insurance and why they’re essential for you to have.
Health insurance: In Canada, we automatically have health insurance coverage based on our province or territory. For example, in Ontario, we have the Ontario Health Insurance Plan (OHIP) that covers expenses like a visit to the emergency room or a routine doctor’s visit. Huge expenses such as surgery (as long as it’s related to health and not purely cosmetic) are also covered! But many other costs — such as visits to the dentist or glasses are not covered. So if you don’t have benefits via employment, private health insurance is a must. Shop around to see if any association you belong to (such as CAA) offers you insurance at a discount.
Life insurance: Life insurance provides financial protection for your loved ones in the event of your death. It can help pay for your funeral expenses and outstanding debts, and your dependent’s living expenses. Life insurance is critical to buy if you have young children to ensure they are taken care of.
With term life insurance, you get coverage for a specific period of time (usually five or ten years), while whole life insurance provides coverage for the entirety of your life. Term life is cheaper when you’re younger but will get more expensive as you age, or your health worsens.
Auto insurance: Auto insurance is required by law in Canada and helps cover the cost of damages and injuries in case of an accident. It provides financial protection for you and others in a collision, theft, or natural disaster.
Some coverage is mandatory, and you can add on optional coverage such as having a rental car covered while your car is being repaired. The key is ensuring you have enough coverage to protect yourself and your assets in case of an accident!
Homeowners insurance: Homeowners insurance protects your home and belongings in case of damage or theft. It also provides liability coverage in case someone is injured on your property.
Your mortgage lender may require this type of insurance before agreeing to give you a mortgage. If you own your home completely (no mortgage), you can choose not to have homeowners insurance, but the cost of it is well worth it — as you’ll lose everything if your house burns down or is badly damaged.
Disability insurance: Disability insurance provides financial protection if you cannot work due to an injury or illness. This type of insurance can replace a portion of your income and cover living expenses while you are unable to work.
Disability insurance is a must-have if your income is the primary source of support for yourself and your family! You may have some coverage through work, but additional private coverage may also be worth buying.
The Bottom Line
This may seem overwhelming, but tackle one type of insurance at a time, and you'll be set in no time! You can use an insurance broker to shop around for you and get a discount by bundling different types of insurance (such as home and auto) together.
