It seems like insurance is always too expensive…
Once you experience an unfortunate event, you realize how useful and necessary insurance is. Before anything happens, you have the impression that you’re paying “for nothing” and you think it’s too expensive. And once something has happened, it’s often harder to become insured and the premium is too costly.
For the same reason, when a lot of people shop for personal insurance, they only look for the lowest premium, and they overlook the fine print. Yet, in terms of insurance, the devil is often in the details.
Are people generally under-insured?
They don’t hesitate to pay for a warranty on their electronics and don’t think twice about insuring their cars, but when it comes to their life or their income, it’s a completely different story! Just having an insurance policy isn’t enough either: you need to make sure that you understand all of the clauses in a policy and that they are adapted to your situation.
In case of premature death, what will your loved ones receive? That’s a question that few Quebecers are able to answer, even if four out of five of them hold life insurance. I’ve also noticed that disability insurance is frequently omitted from personal coverage. However, you are more likely to suffer a disability than die prematurely. If you’re sick and you can’t make any money, what will happen?
We all know that we need to protect our assets, but the pandemic is a good reminder that we need to insure our liabilities as well. If you lost your income due to job loss or illness, would you be able to make all your payments? In 2019, according to The Annual BDO Affordability Index, 53% of Canadians were living paycheck to paycheck. This leaves no room for the unexpected. But rest assured that there are solutions to support you in the event of a loss of income. If you have loan insurance that protects your finances or your credit card, check to see if it includes Involuntary Job Loss coverage.
If you are covered on your credit card, this protection could provide up to 20% of your monthly balance. The best way to protect yourself is to ask our advisors.
Often, people insure their house or their car, but not their life…
Or their working life! It’s not just when you’re sick or old that you need to think about life or disability insurance. By then it’s too late, and few insurers are ready to take this risk, at least without making you pay for it.
It is obviously important to insure your assets, but what about protecting your quality of life and that of your loved ones?
“In terms of insurance, the devil is often in the details.”
Let’s get this straight, a financial planner can’t sell insurance policies…
As a matter of fact, that’s the role of an insurance broker. Financial planners are here to identify clients’ needs and to help them figure things out by asking the right questions. See, people incorrectly think that their debts will disappear when they pass away and that bills will stop piling up when they’re sick.
Financial planners present a clear picture of what will really happen if they get cancer and can’t work throughout their treatment while having to cover the cost of their care and medication. For example, is the 50% of their income covered by their insurance enough? Probably not. Contrary to popular belief, it’s not unheard of for your cost of living and expenses to increase during a disability! Clients then have the responsibility of contacting an insurance broker, who will help them select the right product for their needs. We can also make referrals if they don’t know where to go.
What perspective can financial planner provide on my insurance coverage?
Financial planners have an overview of their clients’ financial situations. We can make calculations according to different scenarios to ensure that the coverage is adequate.
We have a pretty good understanding of estate planning issues and their tax implications. Moreover, life insurance is a good inheritance to pass on to your loved ones, and it is also tax exempt…
Four good reasons to be insured
- Take care of yourself
If you happen to get sick, you get the chance to rest and recover without worrying about financial hardship.
- Take care of others
Our loved ones are also exempt from all of the debts we’ve taken on during our lives. A big relief for those who are already grieving.
- Take advantage of tax benefits
The amount paid under insurance is generally tax exempt, meaning that the money is transferred completely and directly to the beneficiaries. This is particularly beneficial for the surviving spouse and children, who can only take advantage of tax rollover in the case of an inheritance.
- Put luck on your side
The chances that something will go wrong in your lifetime aren’t negligible. Professional burnout, an incapacitating concussion, cancer… You never know what life has in store, and with longer life expectancies, it’s better to be prepared.
All of the comments and solutions above are for information purposes only. For legal advice, we recommend that you consult a lawyer or notary.
*National Bank financial planners are registered with National Bank Investments (NBI). NBI is a subsidiary of NBC.
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The information in this article is for informational purposes only and is not exhaustive. It creates no legal or contractual obligation on the part of National Bank of Canada or its group entities.
For any advice concerning your or your business’ finances, please consult your financial advisor or another professional as necessary (accountant, tax expert, lawyer, etc.).
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