Insurance: who needs it – and when?
By Sally Praskey, Editor, Insurance Canada ConsumerInfo
When it comes to your list of interesting subjects, insurance probably ranks right up there with "101 creative uses for polyester." But the truth is, we all rely on insurance--just as we do polyester!--throughout our lives. Whether you've just passed your driver's test, moved into your own apartment, left home to attend college, bought a house, started a family, launched your own business from home, or made plans to travel outside Canada, you need insurance. Insurance protects you and your family, as well as your home and belongings. Without insurance, the economy would practically come to a standstill, because starting and operating any kind of business would be too risky--one fire and your livelihood would go up in smoke. In fact, you couldn't even drive a car, because a serious accident would wipe out all your savings. Nor could you borrow money to buy a house, as no lending institution would allow you to mortgage a property that wasn't insured.
Canadians spend almost $50 billion on insurance annually, according to combined statistics from the Insurance Bureau of Canada and the Canadian Life and Health Insurance Association. Many of us fork out thousands of dollars each year on insurance--it's the fifth-largest expenditure a family makes, according to Statistics Canada figures--but the strange thing is, few of us know what we've bought until we need it. Then we sometimes get a nasty surprise when we find out our insurance doesn't cover a particular loss. Perhaps our agent or broker didn't explain what our policy did and didn't cover when we bought it; likely we didn't read the policy ourselves--who does? But now it's too late--it's all water under the bridge--or in your basement!--and you simply have to grit your teeth and foot the repair bill.
Imagine spending the same amount on a new high-tech sound system as you do on insurance. You'd certainly want to make sure you were getting good value for your hard-earned cash, and you'd probably spend a lot more time shopping around for the sound equipment than for your insurance. Let's face it--it's pretty hard to get excited about buying a new insurance policy!
You'd also want to replace your sound system when it became old or outdated (which doesn't take long these days). Similarly, your insurance needs will change through various stages of life, as well as with changes in job status. For example, a single person starting a career probably will not need life insurance just yet, since he or she doesn't have a family to protect; empty nesters moving into a condominium will need different insurance than a homeowner; self-employed people may need health coverage that others usually get through their workplace, and so on.
Many factors affect an individual's insurance--age, marital and familial status, employment status, the purchase of a new car or new home, and the acquisition of valuables, like jewellery, a state-of-the-art computer, or even a rare comic book.
Insurance Canada ConsumerInfo wants to help prevent that nasty surprise at claims time, by telling you what isn't covered in most policies, and how to get the right coverage at the best price.
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