Life insurance coverage isn’t required by law like auto insurance. But it is arguably just as important. The coverage protects your family and loved ones in the event you pass away. It helps to ensure your death doesn’t place them in financial dire straits. The payout upon your death provides them with the resources they’ll need to live with financial security.

Even though choosing a life insurance product and purchasing the necessary coverage seem simple, doing so is more complex than many people realize. With that in mind, we’ll provide some clarity to five common areas of confusion. The following will help you to make an informed decision toward meeting the future financial needs of your family and loved ones.

#1 – “What Is The Difference Between Term Life Insurance And Permanent Life Insurance?”

These two types of life insurance are different in a couple ways. First, term insurance covers a specific duration (10 years, 20 years, etc.). It expires at the end of the term, and can be renewed at that time. A permanent policy does not expire.

Second, with term life, your monthly premium goes entirely toward paying for the death benefit, the amount paid to your beneficiary (or beneficiaries) upon your death. Permanent life policies add a savings component. Your monthly premium is usually higher because a part of it is allocated toward this component.

The bottom line? Term life insurance allows you to tailor your policy’s duration and coverage amount to your loved ones’ needs, and do so with a lower premium.

#2 – “When Should I Buy Life Insurance Coverage?”

A lot of people believe they don’t need to buy life insurance until they have a family or those who depend on them. But in reality, nearly anyone can benefit from the coverage, even those without dependents. A person’s death usually leaves behind a number of final expenses, including funeral arrangements and outstanding debts. A small insurance policy will cover these expenses, removing that responsibility from those the deceased leaves behind.

It’s also important to realize that younger people tend to pay less for coverage than their older counterparts. They are usually healthier, which means there is less risk for the insurance company.

The bottom line? The earlier you purchase coverage, the less you’ll pay for it.

#3 – “How Much Coverage Should I Purchase?”

You want to avoid buying too much coverage since doing so will needlessly add to its cost. At the same time, you want to ensure you purchase enough to financially protect your family. A lot of people use a simple formula – for example, they buy 5 times their annual salary – to calculate a suitable coverage amount. But that approach is fraught with problems. It is too simplistic.

A much better approach is to break down the individual expenses your family and loved ones will need to meet following your death. In addition to funeral expenses and outstanding debts, these might include a mortgage payment, car payment, college tuition for your children, and contributions to retirement accounts.

The next step is to review the value of your current investments, and forecast a reasonable rate of annual growth. You’ll also need to predict a reasonably accurate annual inflation rate since inflation erodes purchasing power.

Going through this process will require more time than simply buying 5 times your annual salary. But it will help you to more accurately calculate a coverage amount that will adequately protect your loved ones.

The bottom line? Buy what you need, and not a penny more.

#4 – “Can I Change My Beneficiaries After I Buy Coverage?”

Yes. You can change your beneficiaries whenever, and however often, you like. Moreover, you will not need to provide a reason for doing so.

Don’t assume you’ll never need to update your policy’s listed beneficiaries. Numerous events can occur throughout your life that can make doing so necessary. For example, your chosen beneficiary may die before you; you might get divorced; or, your beneficiary may become wealthy, and no longer need the death benefit offered by the policy.

#5 – “How Do I Save Money On Life Insurance?”

As may be clear from our earlier comparison of term life insurance and permanent life insurance, the former costs less. Thus, buying term life is a popular option for those whose priority it is to save money.

Also, invest the time to calculate the amount of coverage your loved ones will need (see #3 above). Purchasing too much wastes money since you’ll be needlessly paying a higher premium. Buying too little, and realizing your mistake years later, will also end up costing more money than necessary; you’ll have to pay higher premiums at an older age.

Consider combining your policy with that of your spouse. A joint term life insurance policy will shave up to 15 percent of the cost you would otherwise pay for two individual policies.

Lastly, shop around. Just like car insurance, premiums for life insurance vary by company. The best way to find the lowest premium is to compare quotes from competing insurers online.

Buying term life insurance may not be pleasant, but it may be crucial for your family’s financial security. Use a methodical approach when choosing a suitable product, and compare quotes to find the lowest possible price for the coverage you need.

A lot of people dismiss life insurance as an investment that can wait. Because few people think they will die early, there is little urgency prompting them to purchase coverage for their families. But this is the precise reason life insurance is important. It provides financial security for your loved ones and other dependents in the event you pass away unexpectedly.

Nearly every person – even those who are single and without families – can benefit from a term life insurance policy. The coverage can pay for your outstanding debts, funeral expenses, and other items that might otherwise burden your loved ones. The problem is, there are a lot of options available, and it may be difficult to determine which are the most suitable for your circumstances. We’ll provide a few helpful suggestions below.

Pros And Cons Of Buying A Term Life Policy

The first decision you’ll need to make is whether to invest in a term life policy or a permanent life (sometimes called whole life) policy. They differ in several ways, but the main distinguishing factor is that the latter option contains a cash value. A portion of your annual premiums is allocated to a “savings” component through which you can build equity. This feature contributes to the price disparity between term and permanent life insurance policies.

One of the most significant advantages of a term life policy is that it is less costly than a permanent policy. It is also an ideal solution for people who need coverage to hedge the risk of specific ongoing or future expenses. For example, a couple with a 20-year mortgage might need coverage that will pay the loan’s outstanding balance in the event one spouse passes away.

A potential drawback of this type of insurance is that it lacks the savings component offered by a permanent life policy. However, depending on your coverage needs, and considering that the cash value feature substantially increases the annual premium, you may decide this “drawback” is not an issue.

Another downside is that the premiums attached to a term life policy often rise dramatically when the coverage period ends. That said, proper planning upfront may preclude a need to renew your coverage at the time of your policy’s expiration.

Different Products To Accommodate Different Coverage Needs

When you purchase term life insurance, you’ll be able to choose the duration of your policy. Your options include 10, 20, 30, and 100 years. This flexibility is important because it allows you to tailor your coverage to better suit your circumstances.

For example, let’s return to the couple that has a 20-year mortgage (mentioned earlier). They would likely benefit from a 20-year term life policy. If one of the spouses dies, the surviving spouse’s income may not be enough to cover the mortgage payments. The policy’s payout would help to pay the outstanding balance. If both spouses survive, the policy would expire near the time the mortgage is paid off.

A 10-year policy is a good solution for those with expenses that will end within a shorter time frame. An example would be parents with teenagers who are planning to attend college in a few years. The parents can continue to set money aside for tuition, books, and room and board, with confidence that the life insurance coverage will meet their needs if one or both parents die.

For those with longer-term goals, a 30-year policy may be more appropriate. This is often the insurance product of choice for people with younger families and newer mortgages. The cost of raising a family, paying a mortgage, and attending to numerous bills and expenses along the way can place a substantial financial burden on a single spouse. The policy’s payout upon one spouse’s death can remove much of the burden.

The most important thing to remember is that you can design your coverage to accommodate the financial needs in your life. The product you choose – whether 10, 20, 30, or even 100 years – should reflect your plans for the future.

Is Permanent Life Insurance Ever A Good Idea?

There are a few situations for which a permanent life insurance policy may be suitable. For example, you might have a preexisting health condition or be in poor general health. Whole life insurance may be a good option since you can purchase it without taking a medical exam. It may also make sense if you are currently caring for someone who is disabled, and will require lifelong care.

Most people will find term life insurance to be a boon for their families’ financial security. As with all types of insurance, compare quotes from several insurers to find the lowest rates.

Many people assume their provincial health plans will provide for their needs in the event they become ill, injured, or need an operation. They believe their government insurance will pay for prescription medications, hospitalization, orthodontic care, and many other health and dental-related services as the need arises. Many of these people would be surprised by the items left uncovered by provincial plans, or the extent to which such plans will cover them.

Our goal below is to highlight some of the shortcomings associated with government health insurance, and explain how supplementary coverage can fill the gaps. You’ll learn whether the latter is suitable for your circumstances. We’ll also clarify the types of services covered by supplemental health plans, so you’ll be able to customize a plan that meets your needs.

What Is The Purpose Of Supplemental Health Insurance?

Government health plans do not cover everything. To be sure, they provide substantial coverage for basic health, dental, and medical services. But beyond those services, the consumer is usually forced to pay out of his or her own pocket. In addition, even basic services may not be entirely covered. For example, the provincial health plan in Saskatchewan covers only 70 percent of the cost for prescription drugs.

Supplemental health insurance fills the gaps left by government plans. For instance, a person living in Saskatchewan can purchase coverage that pays the remaining 30 percent of drug costs.

What Health And Medical Services Does The Government Cover?

Government health plans vary by province. All of them address the basic services, such as dental and vision care, hospitalization, at-home nursing, and prescription medications. But the amounts covered for these services, as well as the criteria that must be met in order to be eligible for them, are often different.

For example, Nova Scotia will pay the entire cost of basic dental care provided to children under ten years of age. In Manitoba, children between the ages of five and fourteen are fully covered.

Check with your province to identify areas in which you and your family need additional coverage.

When Is Supplementary Health Insurance Appropriate?

Insurance needs vary from person to person. Think about your circumstances in light of the types of services you and your family use. For example, does someone in your family rely heavily on prescription medications? Do you require the specialized care provided by a physiotherapist? Does a member of your family require a full-time nurse? These are services that are rarely covered in full by government health plans.

If you are self-employed, nearing retirement, need special care, or lack health insurance through your employer, a supplementary plan may be valuable.

What Does A Supplementary Health Plan Cover?

With a government plan, you’re forced to accept the types of coverages your province offers. If you and your family require services that are left uncovered, you have to pay for them on your own. With a supplemental plan, you can customize your coverages to fit your insurance needs.

Most plans cover the basics, such as dental and vision care. The levels of coverage are usually higher than those offered by a provincial plan. You can also add coverage for orthodontic surgery, massage therapy, ambulatory services, and prosthetic limbs. You can purchase full coverage for contacts and eyeglasses, hearing aids, and at-home nursing services.

One of the benefits of a supplemental plan is that it can be tailored to your needs. You’re not forced to accept your province’s “one-size-fits-most” scheme.

Are There Additional Costs Besides The Premiums?

Supplementary health insurance plans impose deductibles in the same manner as other types of insurance. The deductibles may be handled as an annual limit. For example, your insurer might pay once you have paid $1,000 out of your own pocket for the year. Or, the deductibles may be applied for each claim on each type of coverage, similar to car insurance.

How Do I Find The Lowest Premiums?

The most reliable way to ensure you receive the lowest rates on a supplementary health insurance plan is to request quotes from multiple insurers, and compare them. Most people are unaware how large the difference in premiums can be between companies. Shopping around gives you the best opportunity to find the additional coverages you and your family need at the lowest rates available.

Consumers preparing to buy car insurance are sometimes intimidated by certain terms and requirements that are found in insurance policies. Part of the shopping process for finding great deals on auto insurance involved demystifying a car insurance policy and understanding what the terms mean.

There are also several myths associated with car insurance that consumers need to tackle head-on in order to get the best deals. Rumours get started and people find themselves avoiding important parts of car insurance shopping such as asking questions and comparing multiple quotes. To help you gain confidence with your auto insurance shopping, it is time to take some of the mystery out of auto insurance.

This is a long term that most consumers hear when they start shopping for auto insurance. Liability insurance is your protection against having to pay for medical or property damage expenses in case of an accident. These specific kinds of liability insurances protect you from having to pay medical bills for anyone you get into an accident with, and protect you from having to pay for property damage you may have caused during an accident.

The most common kind of auto liability insurance is called 100/300/50 insurance. This means that you are covered for up to $100,000 for an individual you injure in a crash, up to $300,000 for the total amount of people you injure and $50,000 in coverage for property damage you cause.

It is important to remember that liability insurance limits do not mean that the damages are kept to those levels. If you injure an individual in an accident and his medical bills come to more than $100,000, then you are personally liable for the remaining balance.

#2 Uninsured Motorist

There are a lot of rumors surrounding the term “uninsured motorist.” This covers your damages and medical costs if you get into an accident with someone who does not have liability insurance, or if the other person’s liability insurance is insufficient to cover your costs.

#3 Collision Coverage

Collision coverage is insurance for your auto in case of an accident. If you run into a telephone pole because the weather caused slippery road conditions, then your collision coverage would cover it.

Collision coverage is the complimentary coverage to liability if you get in an accident. Your liability insurance pays to have the other vehicle repaired and your collision coverage pays to have your vehicle repaired.

#4 Comprehensive Coverage

Comprehensive coverage could be one of the most mysterious aspects of car insurance to an uninformed consumer. Most people can guess at what liability or collision coverage offers. But comprehensive coverage can often be a complete unknown.

Comprehensive coverage helps pay for damages caused by any qualifying event that is not an accident. A tree limb falling on your car, theft, fire or a cracked windshield caused by a flying stone are all covered by comprehensive coverage. You will need to talk with your insurance agent to determine exactly how comprehensive your comprehensive coverage is. But it does offer peace of mind when things go wrong that are out of your control.

#5 Discounts

People hear commercials on the radio that offer lower car insurance premiums for good student report cards or people who have good driving records. The truth is that you should ask your insurance agent for a complete list of the discounts available through your insurance company. Student grades, driving record, car alarms and anti-lock brakes are just some of the examples of things that can save you money on your car insurance.

Car insurance can be intimidating if you are not familiar with the lingo or the real discounts that can be available to you. Spend some time becoming familiar with what auto insurance really is and what it should really cost you to demystify the insurance shopping process.

Accidents, illnesses, and other unplanned circumstances… these are a few of the reasons to purchase travel insurance before leaving the country. Situations can quickly develop that will derail your trip, causing you to scramble for new lodgings, flights, transportation, or in the case of lost luggage, new clothes. A single misstep may cause a situation in which an emergency evacuation becomes necessary. Traveling abroad without insurance coverage for these and other unanticipated events may leave you without options when options are critical.

Below, we’ll present six reasons to buy travel insurance before you leave for your next trip. Whether you are traveling on vacation or for your job, it pays to be prepared for the unpredictable.

#1 – Your Luggage Is Lost While In Transit

Although it rarely happens, airlines lose travelers’ luggage. In most cases, the lost bags are simply delayed; they are routed poorly, and need to be rerouted to reach the proper destination. The airlines know exactly where they are, and can provide you with a reasonable estimate regarding when they will arrive. Other times, the luggage is actually lost. The airlines have no knowledge regarding the bags’ whereabouts, and thus are unable to provide an estimate for delivery.

Travel insurance can provide compensation for necessities you need to purchase while waiting for your luggage to be delivered. If your bags are lost, you’ll be compensated for your items. Coverage helps you to enjoy your trip despite the circumstances.

#2 – Your Destination Or Accommodations Are Damaged

Suppose you have planned an expensive trip to a faraway locale. Before leaving for the vacation, a heavy storm severely damages the resort at which you had reserved accommodations. Your travel plans are essentially ruined.

Many insurers offer coverage for situations in which lodgings are damaged due to inclement weather. Depending on your policy, you may be able to recoup the majority of the amount you paid for the trip.

#3 – You Need To Cancel Your Trip

There are countless reasons you may be forced to cancel your travel plans prior to leaving. For example, you may be summoned for jury duty; you might lose your job; your house may be destroyed in a fire; or, you may become injured or sick. If your plans entail little more than a weekend jaunt to the U.S., your investment may be small. But suppose you have spent thousands of dollars on a major vacation. The money may be lost.

Travel insurance provides coverage for cancellations due to unforeseen events. Your policy will make clear the events that are covered. The cost is small, making this type of coverage a good investment.

#4 – You Become Injured Or Ill On Your Trip

You may become severely ill or suffer an injury while visiting another country. Such situations are more common than many travelers realize. If you need to be hospitalized, you will be required to pay for your stay as well as any treatment you receive. Don’t assume your health insurance provider will cover the expenses. In most cases, they will refuse unless your policy includes coverage while you are traveling abroad.

By purchasing travel insurance, you can avoid being saddled with a large bill for medical care and hospitalization. Many insurers will also cover transportation to hospitals near your location.

#5 – Your Destination Suffers A Terrorist-Related Incident

There is a substantial amount of civil unrest in several areas of the world. In addition, many locations, including those that attract travelers, cope with an ever-present specter of terrorism. If, prior to leaving on your trip, your destination experiences an attack, you’ll need to cancel your plans. The question is, will your insurer compensate you for the money you spent?

We mentioned earlier that coverage for trip cancellation is a valuable part of travel insurance. But realize that all policies are unique. Not every event is covered. Assuming you decide to purchase this endorsement, review your policy for exclusions.

#6 – Your Passport And Identification Are Stolen

It’s common for passports and wallets (with IDs, credit cards, etc.) to get stolen while traveling in other countries. They may also be lost. Unfortunately, replacing them can be problematic and time-consuming.

Travel insurance protects you in the event your passport and ID are stolen or lost while abroad. Your insurer will help to replace them so you can resume your plans as quickly as possible.

If you’re planning a vacation, business trip, or other adventure outside Canada, consider purchasing travel insurance. The coverage will help to protect you from the unexpected and unpredictable.