Why is insurance important?

Written by Ella Plummer on Wednesday, 24 October 2012. Posted in Blog, Life Insurance

It’s no secret that times are tough. Canadians are making changes to their spending habits and according to the TD Insurance State of Insurance Report (http://www.newswire.ca/en/story/999989/from-coverage-to-claims-canadians-are-making-insurance-cutbacks-in-bumpy-economic-times), insurance is one of the areas getting cut.

Among some of the surprising results:

  • 42% of Canadians are less likely to purchase a new insurance policy.
  • 21% have cancelled or forgone insurance in order to save money.
  • 39% do not have a life insurance policy.

The results of this study indicate that Canadians are not placing high priority on insurance.

Why do I need insurance?

Your ability to earn income is your most valuable asset.

Most of us make financial plans based on the core assumption that we will be working indefinitely. The major flaw in this plan is that when we cannot work, we cannot earn income. Then what? Insurance is the element of financial planning that answers that question.

When you cannot work, critical illness insurance pays a lump sum to help alleviate the burdens of lost income, debt, treatment, and anything else that stems from your illness. Should you opt for the Return of Premiums benefit, your premiums get returned to you upon maturity.

Peace of mind

One of the main reasons people purchase life insurance is peace of mind. We all anticipate living a long, full life, but death is a certainty. When it eventually happens, we want our loved ones to be financially secure. We want them to be able to pay funeral costs, bills, and other expenses that occur. We want them to mourn without the added stress of debt accumulation.

Smart business decision

Upon entering a business partnership, life insurance can play a vital role should one partner die. Additionally, life insurance for key employees will allow for a smooth transition into finding a replacement. Life insurance is important not only for yourself, but for protecting against loss of key individuals within your business lines. Although canceling or forgoing insurance may seem like a quick and easy way to cut back on expenses when economic times are tough, only once it is needed will its value be recognized. Insurance is an essential part of any solid financial plan.

About the Author

Ella Plummer

Ella Plummer

Life Insurance and Investment Funds Advisor with Alliance Financial Group

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