DAILY FINANCIAL TIP – DAY 27 – INSURANCE

These daily financial tips are designed to be short ideas covering different aspects of family and business finances. They are short pieces intended to provide information to enable individuals, families and businesses to make informed financial decisions. Not all tips will apply to every situation, but over the course of a year, most financial topics will be covered. Check in regularly and share with friends and associates.
There is much confusion regarding the purpose of insurance and it’s intended purpose. As a result, Canadians are some of the most under-insured in the world. Part of the confusion arises that there are many different kinds of insurance with different purposes: such as home insurance, car insurance, liability insurance, life insurance, disability insurance, critical illness insurance, travel insurance. In general (regardless of the kind of insurance), insurance provides financial support/reimbursement during time of loss.
My focus here will be discussing life and health insurance coverage. In many cases, there are legal requirements to purchase minimal amounts of home and auto insurance coverage. Home and Auto insurance will protect against loss of replaceable/material items. Life and Health insurance is all about protecting your most valuable assets – yourself and your family. Life and Health insurance includes Life Insurance, Disability Insurance, and Critical Illness insurance.
Our most valuable asset is our health and our families. Our health enables us to work and generate income which pays the bills and provides for our families, retirement, etc. The different life and health coverages provide protection against different life events. I will go into more detail of each of the coverages over the next few days. Life Insurance, Disability Insurance, Critical Illness insurance should form the foundation for any financial plan.
Life Insurance is one of the most common forms of coverage. It protects against the worst case scenario – death. It pays out a lump sum of cash to your beneficiaries tax free. Disability Insurance pays an income stream monthly in the event that you cannot work (ie sickness, accident, injury). Critical Illness will pay a lump sum of cash tax free in the event of a major health event (such at cancer, heart attack, stroke, etc). There are many different forms of life insurance, disability insurance, critical illness insurance, so it is best to discuss with a licensed advisor who can structure plans that best suit your objectives, lifestyle and budget.
Proper financial planning will incorporate elements of Life insurance, Disability Insurance and Critical Illness insurance. If these aren’t currently part of your financial plan or you haven’t reviewed your coverages recently, best to discuss with a licensed insurance advisor to put the foundations of your plan together.
Share these ideas with friends and family and come back to check out daily financial tips and ideas. If there are subjects you wish covered or questions, please email me and I’ll include them in future posts.