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Life can be unpredictable so it's wise to be prepared with the right insurance. Find out what you need and where to get it in this comprehensive guide.

If there’s anything we can take away from the crazy events of 2020 so far, it’s that we have no idea what the future holds. From the wildfires that raged through Australia to the emergence of a worldwide pandemic, we’ve been given stark reminders that our property and health are more vulnerable than we realize. Although we have limited control of how life unfolds, various types of insurance coverage can at least alleviate much of the financial worry that comes with an unexpected accident, illness, or other adversity.

To help you make smart decisions about which sorts of coverage you might need, we’ve put together this comprehensive guide to the insurance products in Canada – including home, auto, life, mortgage, travel and disability insurance – as well as why, when and how to purchase each type of policy.

Auto Insurance

To legally drive a vehicle anywhere in Canada, you must have a valid auto insurance policy. There are three types of auto insurance coverage, and each one protects you financially in slightly different ways:

  • Third-party liability insurance covers you against any damage or injury you cause to another vehicle or individual while driving;
  • Collision insurance covers damage to your own vehicle from an accident, even if it doesn’t involve another vehicle, such as hitting a wall or pole in an indoor garage;
  • Comprehensive insurance covers damage to your vehicle from reasons other than a collision, such as vandalism, flying objects, fire, theft, etc.

Where to Buy Auto Insurance

You can buy a policy directly from a specific auto insurance provider, or you can use an independent broker or online search platform so you can easily compare rates from several different providers at once to save you time and money. For this reason, we like both Kanetix and InsuranceHotline.com, which compare rates for dozens of providers with a few clicks. For instance, with InsuranceHotline.com, you can shop for the best auto insurance rates from more than 30+ insurers online, and drivers reportedly save on average $427 after comparing car insurance quotes using this platform. Read more about The Best Car Insurance Companies in Canada.

Learn more about InsuranceHotline.com

For one, third-party liability coverage is mandatory in Canada. If you’re caught driving without coverage, you could be fined up to $50,000, your car could be impounded, and your driver’s license suspended. Also, if you get into an accident and you don’t have this type of coverage, the other party can sue you for damages (to their vehicle and their health). These damages could ruin you financially. As such, most experts recommend purchasing third-party liability coverage of $1 to $5 million.

While collision and comprehensive insurance are not mandatory, a vehicle is one of the most valuable items you will ever own, so it makes sense to protect yourself against the costs to replace or repair it due to theft or damage.

It’s best to get auto insurance as soon as you have a driver’s license. Even though teens are automatically covered on a parent’s policy (assuming they live under the same roof), it’s beneficial to add children to the policy so they can start building up a good driving record. Your driving record is one of the main factors (in addition to type of vehicle, your age, and where you live) insurers use to determine auto premiums. If you can show you’ve had coverage for many years without any accidents or claims, it will shave thousands of dollars off your insurance bill when you eventually get your own vehicle.

New drivers who live on their own and don’t have a vehicle could consider taking out a membership with car-sharing service, even if they don’t plan to use it much since the insurance will be cheaper. It will also help build up a driving record.

Obviously, once you own a vehicle you’ll need to purchase third-party liability insurance. You should also get collision and comprehensive coverage unless you’re driving a clunker that would make a claim more expensive (due to the subsequent rise in premiums) than the car’s value.

Home Insurance

Home insurance is a type of insurance that protects your belongings and the property where you live against accidental damage, theft or loss. Also called property insurance, the kind of coverage you get depends on whether you rent or own your home.

  • Tenant’s insurance covers the contents of the apartment, condo or house that you rent – in other words, your possessions. It also covers you for personal liability if someone is injured at your place of residence;
  • Comprehensive or “all-perils” home insurance covers your possessions, personal liability, as well as the home or condo unit itself.

Where to Buy Home Insurance

It can be a good idea to bundle your home and auto insurance together since providers will likely give you a discount if they underwrite both policies. Of course, it doesn’t hurt to shop around for better rates, which you can do quickly and conveniently using online search platforms such as InsuranceHotline.com or Kanetix. With Kanetix, you can compare home insurance quotes from 50+ insurance companies and get discounts if you bundle your home and car insurance with them. Read more about the Best Home Insurance in Canada for more tips and info on property insurance providers.

Learn more about Kanetix

Home insurance is not mandatory in Canada. However, if you’re applying for a mortgage, your bank or lender will often require you to hold an active home insurance policy. Plus, as with most types of insurance, you’ll be glad to have it if a disaster strikes. It protects your most valuable possession – your home.

It’s amazing how much destruction can come from a fallen tree branch, which I found out first-hand a couple of years after moving into my Toronto home. It not only took out the power lines but also a good chunk of our porch roof and eaves, not to mention the front yard landscaping we had put in just months before. Fortunately, our insurance covered all the repairs (minus the deductible).

Even if you aren’t a homeowner, a fire could not only destroy all your possessions but also force you to find temporary accommodations while your rental unit is repaired. A tenant’s policy will pay to replace your belongings and provide emergency living expenses as well.

Furthermore, a home or tenant’s policy may also insure you against theft or loss of property from another location – for example, a stolen laptop while travelling. Of course, any claims you make could raise your premiums so, depending on the value of the item, you could be better off just absorbing the replacement cost yourself.

You should get some kind of property insurance as soon as you move out of the family home. Even if you don’t own anything of value, the liability coverage alone is worth it.

Obviously, once you own a home, you’ll want to not only insure its contents but the property itself. Most comprehensive policies will cover all types of accidental damage, other than earthquakes or floods. Experts advise adding extra coverage to the policy, called a rider, for sewer backup – especially if you have a finished basement.

Similarly, check the limits on your policy as you may need to add coverage for specific items of value, such as electronics, jewelry, artwork or collectibles.

Life Insurance

This type of insurance provides financial assistance to your loved ones when you die. You pay monthly premiums on the policy and, if you die during the coverage period you choose, they receive a lump-sum death benefit. There are two main types of life insurance:

  • Term life insurance covers you for a specific term, usually between 5 to 30 years, and your premiums are fixed for the duration of the term. While premiums are cheaper for shorter terms because you are less likely to die during the coverage period, the costs also increase with age so it may be more economical to lock in your premium for a longer-term.
  • Permanent life insurance covers you indefinitely, so long as you continue to pay your premiums. It is much more expensive than term life insurance, as it is guaranteed to pay out a benefit upon your death.

Where to Buy Life Insurance

As with other types of coverage, you can purchase life insurance directly from an insurance company, through a broker who deals with multiple insurance providers, or using an online search platform, such as PolicyMe, to compare rates from the top life insurance companies in Canada. PolicyMe’s non-commissioned sales advisors will also help you determine your coverage needs and submit your application online.

Learn more about PolicyMe

If you have dependents (such as a spouse or children) who rely on your income, a life insurance policy will help pay their expenses and maintain their lifestyle if you die. Without life insurance, your loved ones may need to sell the family home or find a cheaper place to live, relocate to find better-paying work, forgo educational opportunities or take on large amounts of debt.

On the other hand, if you have no dependents, or if you already have enough assets accumulated – including property, savings and investments – to cover your family’s needs even if you aren’t there to help provide for them, you probably don’t need life insurance.

It’s always cheapest – and easiest – to buy life insurance when you are young and healthy. In other words, the sooner the better. If you develop any kind of chronic health condition, it can be more difficult to be approved for coverage. But once you are covered, your policy will remain in place at the same cost for the duration of the term unless you stop paying your premiums on time.

If you’re wondering if providers are still issuing life insurance during the coronavirus pandemic, they are – although they will likely defer coverage if you are currently ill.

Mortgage Insurance

When you take out a mortgage, your lender will offer you mortgage insurance that will cover any outstanding balance on your mortgage should you die before you finish paying it off.

Where to Buy Mortgage Insurance

We like the mortgage protection insurance offered by PolicyAdvisor, which offers a unique combination of term life and mortgage insurance. It’s essentially a term life insurance policy, but with a term that matches the length of your mortgage amortization period, and coverage equal to the full amount of your mortgage. PolicyAdvisor.com has partnered with Canada’s 20 best insurance companies to create the country’s largest marketplace for mortgage protection insurance. You can compare rates using its online tool.

Learn more about PolicyAdvisor.com

Obviously, there’s no need for mortgage insurance unless you have a mortgage. But, even if you do have a mortgage, you may not need this type of coverage if your spouse can afford to carry the mortgage payments on his/her own, or if you already have adequate life insurance.

In fact, there are arguments to be made that term life insurance is the way to go even if you just want enough coverage to pay down the mortgage. First, term life insurance is usually cheaper than mortgage insurance. Second, the benefit payable with mortgage insurance decreases as you pay down your balance since the policy pays off only the remaining mortgage owing to your lender at the time of your death. However, with term life insurance, the death benefit never changes. So, if you bought $500,000 in coverage, that’s what the benefit will remain, regardless of the remaining mortgage amortization. Finally, your designated beneficiaries – not your lender – will receive that money, offering them the flexibility to use it as they choose.

If you can’t get coverage for term life insurance, mortgage insurance can be a good alternative.

Travel Insurance

More accurately described as travel health insurance, this type of coverage will not only pay for any emergency medical care you receive while on a trip outside of Canada, but also for any accommodation or change in travel arrangements due to illness.

Where to Buy Travel Insurance

Your travel agent or operator may offer you insurance, but not necessarily at the best rates. Use an online platform like Kanetix or InsuranceHotline.com to compare quotes from dozens of providers in one place.

Alternatively, you can also look at getting one of The Best Credit Cards in Canada for Travel Insurance. Many credit cards include travel health insurance if paid for your trip with that card. For instance, the BMO® World Elite®* Mastercard®* covers travel emergency medical protection for up to $2,000,000. Also included is car rental insurance, trip cancellation/interruption, lost or damaged luggage.

Learn more about the BMO® World Elite®* Mastercard®*

Canadian public health insurance is not valid outside of Canada, and the Canadian government will not pay for your medical bills if you have an illness or accident suffered abroad.

Even if you’re travelling within Canada’s borders, having emergency medical coverage is essential. You’ll likely be covered for some of the same services insured by your home provincial plan, but depending on where you’re visiting, other services may not be covered (e.g. ambulance, hospital transfer, prescription drugs, transportation back to your home province, and procedures not currently approved by your home plan).

You’ll also likely be charged for any medical bills incurred in Quebec, which requires up-front payment from non-residents. That’s why having at least $1 million in emergency medical coverage is crucial, even if you’re not leaving Canada.

If you're travelling for any reason – especially if it's a U.S. destination – you need some kind of travel insurance. If you end up in the hospital for any reason, even for a simple test, you could end up owing tens or even hundreds of thousands of dollars in medical bills.

If you have coverage through a workplace policy or credit card, find out what the limits are. It may still be wise to purchase separate coverage.

Disability/Critical Illness Insurance

Disability insurance provides coverage against lost income due to an illness or accident. Long-term disability insurance will replace a percentage of your monthly income, up to a cap, if you are unable to work. Some types of coverage will only pay out if you can’t perform any type of work, while better coverage will pay out even if you’re only unable to perform your usual job. There’s also critical illness insurance, which pays a lump-sum benefit to policyholders battling a serious illness or disease, such as cancer.

Where to Buy Disability/Critical Illness Insurance

As we’ve mentioned, we like Kanetix for the convenience and speed of comparing coverage with Canada’s top insurers in one shot. With Kanetix, critical illness insurance can be added to your life insurance policy, or you can purchase it as a stand-alone policy.

For disability insurance, PolicyAdvisor.com can help you find a disability insurance plan that fits your needs, so you can protect yourself and your loved ones.

Learn more about Kanetix

Most working people need some amount of long-term disability insurance so they can support their dependents and/or themselves if their health prevents them from earning an income. Even if you have some coverage through your employer, you might want to purchase supplemental coverage (especially if your income is high), since there could be monthly or lifetime caps that limit your benefits.
Unless you have a spouse or someone else who supports you, or already have enough assets to support yourself without working, you need disability insurance. If you’re young, your future earning potential is one of your most valuable assets, and you need to protect it.

Final Word

It’s impossible to prevent misfortunes from occurring, but you can avoid many of the financial repercussions of those hardships with the right insurance products. Be sure to do your homework comparing rates and policy details, especially since online search platforms make it so easy.

Finally, while you are in the mindset of protecting your assets and loved ones, consider preparing a will, if you haven’t already done so. You can create an economical legal online will using a Canadian provider such as Willful. To help you get started, Young and Thrifty readers currently get $20 off any Willful plan. Having a will in place ensures your heirs receive what’s rightfully theirs in a timely manner. If you die without a will, it could take the court months (or even years!) to decide what happens to your assets.

Get $20 off any Willful plan with YOUNGANDTHRIFTY promo code!

Article comments

28 comments

Hi Young,

I think one of the problems with insurance is the costs! Most people if you asked them “if insurance was free or if insurance cost very little would you want the most coverage or the least” Most people would say give me the most …if cost was a non issue!

The real deal is if most people like better protection, with guarantees. But are told to buy the “cheapest type” and invest the difference. The problem is the market does not always give steady returns.

The other big problem is to be truly “self insured” is one needs a lot of cash on hand.

Who has two or ten years of free tax free money on hand?

In retirement one can have 25% less cash (assuming they were dumb enough to buy insurance) in retirement and yet have more money to spend, pay less taxes, and have better protection. Than someone who bought no insurance or cheaper term insurance.

See my calculator http://www.rightinsurance.ca/tools-person-a-b.html

For an example.

cheers,

Brian

http://www.huffingtonpost.ca/2011/11/01/cancer-death-canada_n_1069232.html#s446102&title=Stroke

Here is the “guts of the story”

OTTAWA – A new report says cancer and heart disease were responsible for just over half of Canada’s 238,617 deaths in 2008.

And Statistics Canada reports cancer was the leading cause of death in every province and territory for the first time.

The agency says heart disease was the second-leading cause of death in every province and territory in 2008

young says:

@Brian- Definitely definitely agree. Cancer or any other chronic disease is crippling- for both the health and the finances. Especially strokes- those are really disabling because the spouse usually has to quit their job to take care of the person with the stroke.

Thanks for sharing the stats, Brian.

Hey Young,

You may want to add some information regarding Critical Illness insurance.
In a nutshell with respect to the “termguy” is he does not compare disability and critical illness insurance. They really are two different products, my sense is he does not own it himself so he doe not think it is important.

For example a cancer victim may be at work in three months…no lump sum payout, with disability insurance.

Person in a car accident disability monthly amount…no lumpsum payout with critical illness insurance.

LTD versus CI insurance

Long Term Disability (LTD) Critical Illness Insurance

Pays a portion of your lost income Lump sum payment
Payments cease once back to work Coverage terminates at first payout
Requires ongoing proof of loss of income to continue benefit payments One time claim adjudication
The policy continues, additional claims may be made Coverage terminates at first payout

I wrote a few times on this topic let me know if you want more information on this and the misunderstood term insurance.

cheers,

Brian

InsureCan says:

Fair enough, but then it should be billed as ‘you’re buying insurance for alternative treatments’. And as I noted, that’s not insurance. That’s a lottery. And it’s no longer a ‘need’, it’s a want – because primary treatment is already available for free.

I’ve no issues with people buying critical illness insurance – the difficulty is trying to justify this as an insurance product. In most cases, it’s not. It’s more along the lines of ‘I want to drive a porche instead of a toyota’. Drive what makes you happy, but driving a porche doesn’t fit in the realm of ‘I’m driving a car based on financial decisions’. they drive it for emotional reasons.

What people who are discussing finances should be concerned about is two points I’ve already raised; one is whether the amount of coverage has any correlation to the amount needed for whatever wish is being fulfilled, and secondly whether critical illness is masking a real need for disability insurance.

In short, be critical. Disability and life insurance can stand up to some serious scrutiny. Critical illness insurance, not so much.

InsureCan says:

That’s the party line you’ll hear from the insurance companies. But seeking alternative treatment isn’t a ‘need’, it’s a want. We’ve got a healthcare system in Canada, I’ve family members that have had cancer, and it doesn’t cost anything for treatment. What you’re describing is an emotional sale.

And if you think it’s not an emotional sale, did anyone that bought into the CI ‘gives you money for treatment in the US’ actually look at any numbers as to costs? Anyone say, if I get cancer, I need this treatment at this clinic, thus costs would be this? If I have a heart attack, I want to go to this American clinic and that costs this much? Not a chance – it’s simply insurance playing on your emotions. If you get sick, wouldn’t it be nice if you had ‘some large amount of money’ to go get ‘preferential medical treatment’? It’d be nice I’m sure. But nobody actually looks at numbers or specific treatments. It’s all very vague. Don’t ask a lot of specific questions. I understand when the insurance industry plays this on consumers, it’s common. It’s a lot less acceptable when products are discussed on financial sites and nobody casts a critical eye at the analysis.

More specifically, insurance should properly be designed to cover a catastrophic financial loss. What you’ve described is not a financial loss – it’s creating something based on an event. That’s a lottery, not insurance. Same mechanics, but the intent is entirely different.

This makes more sense in the US. If you need treatment, costs can be exhorbitant, and having extra cash can mean better treatment. In Canada, we all get the same level of treatment, and at no direct cost.

As for your mortgage, that’s properly covered by disability insurance. Critical illness insurance is not a substitute for disability insurance. You’re being sold a product again, if you get cancer and were off work for 6 months, wouldn’t it be nice to have money for living expenses? I’m sure it would be nice. But if we’re talking about you not being able to pay living expenses for disability, why are you restricting coverage to a couple dozen conditions? What about stress – that’ll disable you. What about illnesses not considered on the list of ‘critical illnesses’? What about a car accident, or breaking a leg? That’s why, if you’re covering living expenses due to disability, that you seek disability insurance not critical illness. Disability insurance covers loss of income due to disability, without regard to the cause of the disability. Critical illness provides a benefit, but only based on a specific list of conditions.

Critical illness does have the occassional use. If you don’t have an income (e.g. stay at home parent) then you basically can’t disability insurance because there’s no income to insure. In that case, getting critical illness is a great choice, it becomes the best available option. But that does not mean that we should then take that specific instance and apply it to the general.

Disability insurance to cover your income for yourself. Life insurance to cover your income for your dependents. Critical illness a distant third, and only after life insurance and disability are properly covered.

If you’re not completely sick of reading, I wrote a post on this a few years ago on my blog: http://www.thetermguy.com/2008/04/08/drawbacks-to-critical-illness-insurance/

young says:

@InsureCan- No, I wasn’t sick of reading 🙂 It was fantastic and a great read- it was actually quite refreshing to read coming from a perspective of a person who sells insurance themselves! I have had some of the opposite experiences with family and friends who were sick with cancer. Perhaps its because there are many who are into alternative therapies here on the west coast, but I know of people who have began fundraising within their families and friends and networks to save money for these treatments, and they have been given a very poor prognosis. Some of my other friends have needed to remortgage their home so they can pay for the treatment they currently have. Just food for thought. Different strokes for different folks, I suppose 🙂

InsureCan says:

Jenn, what costs associated with a critical illness? Most people would be hard pressed to come up with specific needs in the event of a critical illness that totals the amount of their policy.

We live in Canada. Medical expenses are covered. You get cancer, they treat it. No charge.

Be sceptical about critical illness. There are some potential benefits, but the typical scenario boils down to ‘if you got cancer, wouldn’t it be nice to have $100K’, and most people think, why yes, it would be nice if I got $100K if I got cancer.

personally, I think it would be nice to get $100K without the cancer. Point being, be aware that you aren’t getting an emotional sale when it comes to critical illness.

young says:

@InsureCan- Some people seek medical treatment that isn’t covered by the medical services plan though (e.g. complementary or alternative therapies, treatment in the states, beating the line ups for MRIs or PET scans). It could also be for payment of mortgage etc. or perhaps you would need to supplement the compassionate benefits of someone who is taking care of you (since we all know that the government of Canada doesn’t provide much in that realm). I agree that it would be nice to get $100K without the cancer too.

Jen @ SheBloggs says:

I’m actually more concerned about income protection and disability insurance. I don’t have any dependents, but I also know that the older I get, the more expensive the premiums will be on life insurance.

One type of insurance that doesn’t get a whole lot of attention is critical illness insurance. I got it last year and can sleep much easier knowing that if I get some type of critical illness, I will have a lump sum that will get me through the costs associated with it.

young says:

@She Bloggs- How much did your critical illness insurance end up being per month? There’s so many types of insurance to think about- life, disability, critical illness..!

jesse says:

Agree on the disability side too but again one must be realistic. What my family decided on LI was that if one of us died the family would move to smaller accommodations closer to family. It simply didn’t make sense to pay large sums for life insurance to pay off a mortgage on a place that’s too big.

Disability is one that many companies cover. We reviewed the plans at the employer and it seemed fair. It won’t lead to riches, mind, but we could survive.

The “what if” line is a Pandora’s box. You have to draw the line somewhere. Some of the most well-off people I know sell insurance. Just saying.

Money Pincher says:

Young and Thrifty, I didn’t get a luxury car 🙁 I have my 2009 Mazda and my insurance is $2400 ><! I have no idea why my insurance why my insurance is still so expensive.

I had an 98 Acura EL before and at 10% off I was paying $3000 for the insurance… and it was an OLD car too!

The medication that mom was on is not covered unless you go through 1 round of chemotherapy. My mom didn't want chemo so she choose to pay out of pocket for the target therapy drug 🙁 So now it got me thinking that it's better to have $$$ when any illness are involved :/ $$ just provides more choices.

I got the universal life insurance from manulife… I didn't get much… I got enough for now… but I will prob need to get more when I have kids… but that will….great thing about the policy is that there's cash value to it that I can use while I am still alive. 1/2 of the money I put in goes to investment… and at the time of my death… if the investments did well… my death benefit would be $200,000 + whatever money the money I pumped in made. So if I die in 15 years and my police carries $11,000 cash value already, my beneficiary will have $211,000 instead of $200,000. I can also take out that $11,000 whenever I need cash and just repay it over the years. I also have the flexibility to pump in $5000 for the next 3 years into my policy and I don't have to worry paying for this policy after that because there's enough money to generate whatever cost that requires to cover the cost the policy.

young says:

@The Money Pincher- Yowza! ICBC really gets you don’t they? I think maybe its because you probably have less than 10 years of experience? So you don’t get as much of a discount. Wow, $3000 for an old sedans insurance.

Agree that money provides more choices, especially in our health care system where you often feel powerless because of the seeming lack of choices…

World of Finance says:

These what-ifs (unexpected events) are what can flip a family’s personal financial situation upside down into financial ruin with medical bills and the like.

P.S. My car insurance is expensive just like yours 🙁 It’s the area I live in.

World of Finance says:

I don’t like insurance companies but it’s something you have to have. No likes to talk about it, but you ALWAYS have to be prepared for the “what-ifs.” You never know what could happen or when it could happen.

young says:

@World of Finance- Agree. It’s a necessary evil, unfortunately. It’s those “what ifs” that we all have to prepare for… I think it’s just being pragmatic and realistic, and protecting yourself from these “what ifs”.

Sarah H says:

I love that you just wrote about this. My husband and I just got life insurance last week. We have minimal coverage through work, so we decided to take out private insurance as well. Now we are both covered substantially, and if one of us were to pass (how morbid to think), our mortgage would be paid for and we would have some left over funds. We will more than likely take out another policy once we have children.

We were paying mortgage insurance (how stupid of us.. but we didn’t know) and it was 98 dollars a MONTH! we are paying less for private and we get way more!

We also opted to get critical illness insurance. This means that if either myself or my husband were to get sick, we would get 50G automatically. It is a one time payment, but hey, we both have cancer in our family, so we decided to pay a few extra dollars a month for this.

We did term LI for 30 years… we figure when we hit 55, our needs will change drastically and we can go from there. 🙂

As for car insurance, my husband drives in town <5km to work every day.. so pays 1300, and I pay about 2000, but I commute over 150km to work everyday. I am at 40% hubby is at 35% discount.

young says:

@Sarah H- My work insurance coverage is pretty scant too. It’s something like $50,000 for my life LOL! I’m worth less than I make annually? what? 🙂 Wow $98 a month? You know what, I have mortgage insurance too (but my mortgage is massive haha) and it’s about $60 a month. I checked for private insurance, and because BF smokes (or has been smoking within a year) our insurance would be hefty compared to the mortgage insurance. So I guess until he quits….

You commute 150km to work every day? Wow! You’re getting a good deal for insurance compared to your husband I suppose 🙂

It’s nice to know that what I’m paying isn’t completely unreasonable 🙂

Money Pincher says:

I have life insurance. I bought mine last year when I found out that my mom was sick. Since anything can happen anytime, I didn’t want to leave her without money for her medicine. (her drug cost her at least $1300 per month). I pay about $80 a month for 15 years and it will pay for itself until I die. I also bought critical illness insurance because I know how costly it can be, so I spend about $120 a month on life insurance all together

My car insurance cost $2400 with a 35% discount…sigh… you gotta love ICBC @_@

young says:

@Money Pincher- Wow $2400 (I thought my $1600 was bad), but I remember you have a luxury car right? Did you end up getting that Lexus? 🙂

Wow, $1300 a month for medications. Doesn’t pharmacare cover a portion of that? 🙁 It’s crazy how health care can be so expensive, even though we have so much coverage.

That’s good that you made the decision to buy insurance- it sounds like you got term life insurance?

eemusings says:

No life insurance. Should probably think about income protection, disability though.

Full car insurance is $1200 – I don’t drive so it’s jus T. He’s 22, has had a couple of accidents. Car is about 10 years old.

young says:

@eemusings- My aunt lives in Australia and I remember that car insurance over there is fantastic and very reasonable. I am assuming it’s the same for New Zealand because $1200 for being 22 with a couple of accidents sounds amazing!

Etienne says:

IMO, before you have kids, the main insurance you need is disability insurance. You have a lot of bills, and no savings usually, you need to make sure you’ll be able to pay the bills if you are disabled.
Once you have kids, you add life insurance to protect your family, before that, there is not really any need because you have low liabilities.
Car insurance is mandatory, but if the car is not worth a lot, you only need basic coverage.

Read the book Wealthbuilding by Kurt Rosenreter, it explains why you should consider disability insurance and not life insurance before you have kids.

young says:

@Etienne- Thanks! I haven’t heard of that book yet, now I’ve got another book to review and read 🙂 That makes sense. It’s to protect your family, and it’s a very “selfless” thing to do, pay into life insurance, but its important.

jesse says:

Food for thought: many large corporations “self-insure” because they are big enough that it’s worth it to pay out uncorrelated events than it is to give a hefty premium to an insurance company.

You cannot insure risk away completely in aggregate. The insurance company will take a profit. All sorts of schemes are thrust upon consumers about the “worst-case scenario” and ensuring dependents have their entire lives paid for, whatever. You can buy this line but to me it’s fear-mongering. As I get older my insurance requirement decreases as I amass savings and have fewer years left. We had term insurance for a time when we had less savings but haven’t bothered increasing it as our lifestyles improve. We simply carried it over and will likely terminate it once we have enough saved up. The premiums simply don’t make sense after a certain point, unless (as I mentioned) you take into account the worst-case scenario. The best insurance you can get is to save and give your kids enough education so they don’t need to rely on an inheritance.

Farmers got into cooperative insurance years ago: basically they do what corporations do and “self-insure” for property and flood. It is a great model; profits are recycled to members instead of shareholders.

On a final note on my rant, many financial advisors I know have basically told me they make much of their income from commissions selling insurance. It’s a lucrative racket, which lead me to ask how much insurance I really need. Any financial advisor that makes money off insurance I wouldn’t trust to be void of conflict of interest.

young says:

@jesse- I’m very much turned off by life insurance/ mutual fund sales people/ financial advisors too. It’s all about the commissions, I suppose. Thanks for your input!

krantcents says:

I would add homeowners/renter’s insurance too.