What type of insurance to get - MoneySense

What type of insurance to get

The trick to insurance is to be covered today for what’s important today.


When I bought my life insurance policy at 30, it wasn’t because I was planning to have a family or had recently had some omen of impending doom. Nope, I bought my insurance policy and it’s sister disability plan because my mother bugged the crap out of me to do so.

Insurance is one of those financial products that we’re never really sure we need. With sellers fighting each other over what the best policy to buy is, it’s not only a downer talking about death, disability and illness, it’s damn confusing trying to decide which option to go with.

No matter how much insurance you buy you are going to die…eventually. And the greatest insurance policy in the world won’t stop you from becoming disabled if that’s in your cards. Regardless of the type of insurance you’re buying, what you’re really insuring is your family’s ability to cope with the loss of your income. You’re making sure that just because you’re unable to provide for them directly, they don’t have to watch their lives go into the dumper because there’s no money.

Life insurance can be used to protect both your cash flow and your assets. For younger people who simply want to ensure their kids can continue riding lessons or eating, a term policy fits nicely and is relatively inexpensive. Folks with an elderly parent who is dependent on their income might also need term insurance. For the financially well established who want to minimize the impact of the taxes due on their estate at their death, a permanent policy will stay in place to meet a longer-term need.

Mitigating your risks doesn’t stop with a life insurance policy. Did you know that you’re more than twice as likely to become disabled than die by age of 30? And if you’re disabled for more than 90 days you’re likely to be disabled for at least three years. That would throw a mighty big wrench into your financial works, wouldn’t it? Not if you had a private disability policy.

Over time, as your circumstances change, your insurance needs will change. And not all types of insurance will suit at any given point in time. The trick to managing the insurance continuum is to be covered today for what’s important today, and to have an eye on what may be important tomorrow. If you’ve still got your head in the sand on this one, consider this your kick in the rump. And if you have young adult kids, it’s time to do some rump-kicking of your own.