Do I Have Enough Insurance – or Too Much?
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Sometimes when you see the payment for your insurance premiums on your bank statement you wonder – do I have enough insurance, or too much?

Insurance premium payments when can be tough to take when you’re already doing everything to make your paycheque stretch until the next one rolls around. Here’s a summary of the main types of insurance most people have and some tips on where you can save some money.

Auto Insurance

Car insurance premiums vary, based on your vehicle make and model, driving record, city of residence and your insurance company. Try these methods for keeping your premiums down:
• Ask a family member to add you to their policy
• Maintain a solid driving record
• Have your provider install telematics on your vehicle to measure acceleration, braking and cornering

Being in a low-risk category can result in up to 30% off your insurance costs.

Home Insurance

If you rent, you’ll need renter’s insurance to replace the contents of your home and to have personal liability coverage. If you own your home, you’ll need comprehensive insurance that covers you for most disasters. Always read the fine print on your policy.

Extra “riders” such as earthquake coverage are unnecessary for Torontonians. However, you may want to add coverage for sewer backup.

Your insurance premium is unrelated to the market value of your home. The policy only needs to provide you with sufficient coverage for rebuilding or repairs. These can help reduce your costs:
• Install security and sprinkler systems
• Quit smoking
• Consider upping your deductible
• Bundle your home and auto insurance

Life Insurance

Life insurance matters when you have dependents or a family that rely on your income. For low income earners, a term life policy is best because you pay a fixed premium that covers you typically for 10 or 20 years. Of course, the premiums will go up when you renew, but in the meantime it’s the most reasonable way to manage.

Find an independent broker that will help you do an analysis. There are variables that influence the cost:
• Marital status
• Ages of your children
• Mortgage and debts

When you live on a modest income it’s okay to pay for the coverage you absolutely need for the lowest cost.
• Purchase only enough to maintain your standard of living.
• Get what you need to be protected from unlikely events.

Health Insurance

As a citizen or permanent resident you can receive public health insurance through the Canadian universal healthcare system. This covers the medical basics and emergencies for free. You may also need private insurance to cover:
• Prescription medications
• Dental care
• Prescription eyeglasses
• Physiotherapy
• Ambulance Services

Check with your employer about group plans for extended health care. Read the fine print and know what happens to your coverage if you are laid off. Another other option is joining a club or association that offers groups plans.

Travel Insurance

You might be thinking that living paycheque to paycheque leaves little money left over to travel, so why would you need travel insurance. In the event you ever do leave the country, be prepared. A medical emergency on foreign soil is not covered by OHIP and the last thing you need is a medical bill for several thousand dollars. Be clear about what you are purchasing – what is covered and what are the limitations?

Beware of getting insurance through a travel agent – it can be more expensive. Ask your employer or membership association about temporary coverage. Do some comparison shopping for online providers. As well, many credit card companies offer travel insurance as part of their service. You may have coverage and not even know it!

Disability Insurance

Having disability coverage will save you from a financial crisis if ever you contract an illness or are involved in an accident that prevents you from working. There are two types of coverage to consider:

Long-term disability

This provides a monthly income and tends to have monthly payments that a family on a low income could manage.

Critical illness insurance

This pays out a tax-free lump sum if you are diagnosed with a disease covered in your policy, but it can have high monthly payments. Talk to your human resources department to find out how much of your gross income would be covered if you were forced to stop working.

At Pay2Day, we understand that even having the lowest insurance premiums can put a strain on your budget. In the event that your payment comes due before your next payday, ask us how a payday loan can offer a timely, manageable solution.

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