Insurance Policies You Probably Can Do Without

by admin on November 13, 2011

The TD Insurance Risky Business Poll from last year reveals that six in ten Canadians do not have critical illness insurance and three in ten do not have life insurance. This may sound surprising given that Canadians have the reputation of being reserved and careful.  According to Vice President of TD Insurance Dave Minor, not having life insurance does not make sense, regardless of one’s tolerance for risk. Rolling the dice is not right when it comes to securing protection for one’s family and lifestyle. The right insurance plan gives the insured a peace of mind, knowing they are protected against unexpected events, says Minor (CNW Canada News Wire).

Many claim that having life insurance is important, but not everyone needs a policy. If you do not have dependents or do not want to leave extra money to your spouse and children, charities, and friends, you can do without life insurance. The same is true if you do not have multiple debts and large expenses, or you have enough cash to pay your taxes, funeral costs, and other expenses. 

What about life insurance for your child? According to Anne-Marie Thomas from the Insurance Hotline, this is a wise idea as it ensures the future insurability of your children. It is more difficult to get an insurance policy once you are diagnosed with a medical condition, notes Ms. Thomas. Not everyone agrees with this argument. Tom Drake, writing for the Canadian Finance Blog, asks what the monetary loss would be if something were to happen. While the insurance will cover the funeral costs, parents’ responsibilities are reduced as they will not provide for the dependent any longer. Even if funeral costs are a source of concern, they can be taken care of by using one’s emergency savings fund. In fact, premiums may cost more than the cost of the funeral. Regarding future insurability, this sounds a bit like gambling, notes Drake. Insuring your child for this reason makes sense if you are concerned they will have a medical problem in the future. However, those who have a family history that is a source of concern should inform the insurer. Otherwise, they may have their claims denied and for the right reasons (The Globe and Mail)

There are other insurance types you probably can do without. For example, if you are travelling outside Canada, even a minor accident can turn into inconvenience and a medical expense. It is a good idea to plan for the unexpected, and insurers advertise it as giving a tremendous amount of confidence for a small sum of money. However, do you need travel insurance if you do not travel abroad? Then, what about car rental damage insurance? Rentals are covered by most auto insurance policies, so it doesn’t make sense to pay twice. It pays to check your policy first. Flood insurance is another insurance type you do not need, unless you live in a flood plain. Your home is unlikely to be flooded if none of the houses in the area has been. Finally, you probably can do without flight insurance, and one reason is that airline accidents are quite rare. Even if it happened, you should be covered for by your life insurance policy in the event of a catastrophe (Investopedia).

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