Personal Insurance Definition
A risk-management product that helps individuals limit their exposure to losses from death, disability and illness. Life insurance, disability insurance, critical illness insurance, long-term care insurance and health insurance are all types of personal insurance. You can purchase personal insurance directly from an insurance company through an insurance agent or a website, if you know which company you want to purchase a policy from.
If you need help finding the best policy for you, you can purchase a policy indirectly through an insurance broker, who will survey the available options and purchase the best policy from an insurance agency on your behalf. You can also purchase a policy through a website that provides services similar to a broker’s.
Example
Kyle is a new father who has recently purchased a home, and he wants to buy personal insurance to protect his family. He needs life insurance to help his wife pay the mortgage and other bills and support their child if he passes away unexpectedly. He also needs disability insurance in case he has an accident or develops a serious illness that prevents him from working for an extended time.
This insurance will give him a monthly payment to replace a portion of his income so his family can make ends meet while he is unable to work. His wife Lisa buys both policies as well; even though she is a stay-at-home mom, if she couldn’t care for their child because of death or disability, Kyle would have to pay for childcare in order to keep his job.
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First Foundation Tips
The premiums, deductibles and coverage of a personal insurance policy can vary significantly from company to company. When you purchase personal insurance, you’ll need to decide what premiums and deductibles you can afford and how much coverage you need, then shop around for the policy that offers you the best value (which will not necessarily be the cheapest policy—you might want to pay more for increased coverage).
Before you purchase a personal insurance policy, it’s important to understand how often your premiums can change and by how much, how long the policy lasts and under what conditions it will be renewed. Licensed insurance agents in Canada are required to put the clients’ interests first when recommending an insurance product and suggesting the amount of coverage and policy features that will best meet your needs.