Insurance: Everything you need to know (but were too bored to ask)
Is insurance actually worth it?
In short, yes. If something unlucky happens, whether it’s a house fire, a car accident, or the death of someone close to you, the cost of insurance will be tiny compared to the benefit your family receives. Even if nothing goes wrong, you still get the confidence of knowing that you and your family have a layer of financial protection around you.
How does insurance work?
Imagine a community where, if one family has a problem, all the other families rally around to help. Insurance works in much the same way.
For example, if you have a homeowners insurance policy, you pay a relatively small “premium” every month. The insurance company pools your premiums together with those of the other homeowners. If there’s ever a flood at your house, the insurance company will take money from that pool to pay you a lump sum “benefit” to help you pay for home repairs.
What types of insurance are there?
Broadly speaking, there are three types of insurance that most people should consider owning:
- Property insurance is designed to protect physical property such as your home and vehicle. This type of insurance is usually not optional, as your landlord or mortgage lender will require you to have home insurance, and provincial laws require you to have auto insurance.
- Life insurance is designed to cushion the financial impact on your loved ones if you were to pass away. This could mean covering funeral expenses, paying off mortgages and other debts, and creating long-term stability by setting up an ongoing stream of income for your family.
A SISIP advisor is your go-to guide for simplifying and optimizing your life insurance choices. We are experts on CAF survivor benefits,and we will kickstart the process by understanding the coverage you already have. Then, depending on factors like your age, the age of your children, your mortgage, and your savings, we can determine if you need anything else. Our goal is to ensure you have the protection you need while keeping your insurance costs as affordable as possible.
- Health insurance is designed to offset the financial impact of a health crisis. For example, if you are diagnosed with a serious illness, critical illness insurance can pay you a lump sum benefit. The odds of surviving something like a heart attack or cancer have never been better, and the money from a critical illness policy can help make sure you have options in terms of your treatment and lifestyle as you recover.
As a CAF member, you are automatically enrolled in long-term disability insurance. This can provide you with ongoing monthly income if an accident or illness makes it impossible for you to work. That way, the bills are covered while you focus on getting better.
How much insurance is enough?
The whole idea of insurance is to replace something that has been lost, whether that is a physical asset, your ability to work, or your ability to provide for your family over time. With a home or car, the calculation is pretty straightforward, and the insurance company dictates most of the terms.
With life insurance, there’s a lot more room for judgment. You need to look at your whole financial picture and balance what’s right for your family with what works for your budget. You also need to keep in mind that your needs will change. Many people find they they need more insurance when they have the financial responsibilities of a young family, then less insurance as they build savings, pay down debt, and the kids grow up.
With a SISIP advisor by your side, uncerntainty about the right amount of insurance becomes a thing of the past. Our Insurance Needs Assessment was created specifically for the CAF community and includes all CAF benefits. Our recommendations are finely tuned to provide the right amount of coverage for you – no more, no less.
Where should I buy insurance?
An insurance broker is someone who represents you and can shop around for the best deals from multiple insurance companies. This can make a broker a good choice, especially for car or home insurance.
An insurance agent is someone who works for one specific insurance company and only sells policies from that company. Sometimes this requires caution, as an agent won’t have the same product choices or pricing flexibility as a broker. However, other times, an agent is exactly what you need.
For example, a SISIP advisor is an agent with products that are customized for you - such as life insurance that doesn’t exclude war or dangerous occupations. In addition, we are salaried professionals (not commissioned salespeople) who deliver advice that is honest, unbiased, and tailored for the CAF community.
Another place that you might be offered insurance is the bank. When you take out a mortgage, they will likely offer you life, disability or critical illness insurance to cover your balance if you can’t make your payments. Be careful here. These policies tend to be expensive, and often the beneficiary is the bank rather than your family.
Whatever you do, beware of fraudsters. Criminals have been known to pose as insurance representatives offering too-good-to-be-true prices. A legitimate insurance provider will never ask you to pay upfront fees or make a payment directly to your agent or broker.
When do I need to review my insurance?
It’s a good practice to review your financial plan - including your insurance - every year or so. And if there have been any recent changes in your life, it’s extra important to take a look at the implications for your insurance coverage.
Some of the changes that can have an impact on your insurance needs include welcoming a new child, buying or selling a property, marriage or divorce, a promotion or new job, making a major purchase, or retiring. Essentially, if there’s a shift in your financial life or your family dynamics, it’s time to take another look at your insurance.
You might find that you have a need for more or less insurance, or just an update to your existing coverage - from something as simple as changing an address to something as critical as making sure that an ex-spouse is no longer the beneficiary of your life insurance policy.
What’s the hard truth about insurance?
If you wait until there’s bad news from a doctor or a river of lava flowing towards your house, it may already be too late to get the insurance you need. In general, the sooner you buy insurance, the better. Working with a SISIP advisor, you can lock-in life insurance coverage until age 100 at the lowest possible price right now. After all, you'll never be younger or healthier than you are today.
What’s the bottom line?
Owning insurance puts you in charge of your financial security. Your spouse and children won't need to rely on a GoFundMe page or the kindness of strangers if something goes wrong. Sure, it can be boring and even a little scary to think about, but a SISIP advisor will make insurance easy so you can sleep well, knowing that you’ve done the right thing for you and your family.
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by SISIP Financial, for the benefit of SISIP Financial a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.
