INSURANCE

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What is it Used for?

Insurance policies financially protect your person or property from specified loss, damage, illness, or even death.

If you've insured something, like your car, house, or health, you won't be financially liable if something bad were to happen.

Instead of paying from your own pocket, you will file a claim against your insurance policy.
If your claim is granted and you'll receive an insurance payment.
When you purchase life insurance, your beneficiary (the person you designate) will receive an insurance payment upon your death.

An insurer will mix individual insurance risks into large pools. Each pool member will pay an equal share of risk through premium payments. This makes insurance more affordable for those with very high risks.

Key Features

Premium

A regular fee you pay in return for protection.
Determined by your insurer - you'll complete a questionnaire / provide documentation regarding your credit history, current debt, ability to pay financial obligations, any other insurance you may have, the value of the property you're insuring (home insurance), your age and driving record (auto insurance), or lifestyle choices / health (life / health insurance), and your insurance history.

Limit of Coverage and Deductible

Limit of coverage is the maximum amount an insurer will pay to cover a loss. Higher limits tend to carry higher premiums.
Deductible is the amount you would have to pay, from your own pocket, before the insurer's coverage kicks in. Insurance with lower / no deductibles tends to carry higher premiums.

Quality of the Insurer

Do they have a good online platfrom / sales team?
Is it easy to make premium payments?
Is it easy to file claims / receive compensation?
Do they have a good reputation and financial standing? Remember, your insurer won't be able to pay claims if they go bankrupt.

How can you learn about the quality of your insurer? Check consumer reports - for example, JD Power's rating of insurers at https://canada.jdpower.com/.

Key Features Tips

Find a competitive premium for your desired coverage. Be wary of low premiums - always make sure you're comparing policies with the same coverage. Remember, the more the insurance covers, the higher its monthly premium.

Check for special offers / discounts, but don't be swayed by them - you'll be stuck with the regular coverage / premium once the offer expires.

How do you buy insurance?

You can buy insurance as an individual or opt into a group insurance plan, for example at your employer or college/university. Group insurance tends to be less expensive.

An insurance broker helps you shop around and find good deals. A broker sells insurance of many competing providers. In contrast, an insurance agent works for one insurer only.

What if your insurer goes bankrupt?

If an insurer goes out of business, a guarantee industry association will transfer the policy to a solvent insurance company, which will continue coverage. For life, health, disability insurance, such association is called Assuris. For car and home insurance, it’s called Property and Casualty Insurance Compensation Corporation. Not all coverage is protected (it ranges from 70% to 90%) and there are maximum dollar limits too (like $250,000 for a single occurrence of damage adn $1 million for life insurance).

Types of Insurance

There are two kinds of insurance:

Property & casualty insurance is for your home (or rental) and car.
Life insurance companies also offer health and disability insurance. This is private health insurance - over and above the provincial health insurance every Canadian permanent resident and citizen is entitled too (and we all pay for through income tax).