Include insurance in your overall financial plan
When most people think of a personal financial plan, they think about saving for retirement and paying off debt. That’s definitely a great start, but what about protecting your most valuable assets? Ask yourself: how does insurance fit into your financial plan?
If you have a house, a car, kids or like to travel, insurance should be a consideration when planning your financial life. If you’ve already started planning and didn’t think about insurance, don’t worry, the great thing about plans is that they can always be adjusted to fit your changing needs:
Here are three ways to incorporate insurance into your personal financial plan:
Review what you already have
According to MoneySense.ca the first place to start when deciding if you have enough protection is to review your current coverage. “Consult an independent insurance agent for a quick review,” MoneySense suggests. “If you need extra coverage, make a note of it so you can include that in your final financial plan.”
Review your travel, life, house and auto insurance policies to make sure they’re up to date and ensure you have enough coverage. This includes both group insurance coverage that you may have with your employer as well as private insurance that you may have purchased on your own.
Calculate how much more coverage you need
After reviewing your current coverage, if you’ve discovered gaps the next step is to calculate how much more insurance you need to ensure you, your assets and your loved ones are all covered in case of an unforeseen event.
Some types of insurance such as car and home are long term policies and they’ll always be in your personal financial plan because you’ll always need them as long as you have the asset. Some types of insurance, such as travel insurance, are temporary and only needs to be taken into consideration when you are travelling out of the province or out of the country. Then there’s life insurance. Life insurance will always be around as long as you are.
MoneySense.ca helps compare what you have versus the industry norm when it comes to life insurance: "The general rule of thumb is to get enough life insurance to cover 10 times your income if you have children under the age of 10 and five times your income if you have children over the age of 10 plus the amount needed to pay off your debt.”
Shop around for prices
If you do have additional life insurance needs once you know how much additional coverage you need to purchase, it’s time to start shopping around for the best insurance rates.
The first place to start shopping is with your current provider. If you have your current insurance policies with several different providers, contact each one and get quotes on the new services. Often, insurance companies offer discounts to have all of your policies in one place. Individually different providers may be cheaper, but bundled together the overall discount can be greater.