This is a very common question. Let’s start by defining “insurance”. Insurance is an arrangement by which a company provides financial compensation for a specified loss, damage, illness, or death in return for payment of a premium.
Obviously, insurance policies are complex and usually have deductibles and exclusions. But their basis is to provide financial protection.
To help you determine if you need insurance, here is a series of questions:
- If you have an accident or become ill and can’t work, can you pay your bills?
- Can you also pay for the medical costs not covered by the BC MSP or other provincial plans?
- If you die, will your spouse and/or children suffer a major financial loss? Can they pay for your funeral and after-death tax/expenses?
- If you have a car accident, can you pay for the repairs to your car?
- If your home sustains damage, can you pay for the repairs and replacement of your belongings?
- If you cause damage to another property, can you reimburse any amount assigned to you?
If you answered “no” to any or all of these questions, you need the applicable insurance. Period.
A lot of people argue that premiums are expensive. It is true that, depending on needs, they can add up to a significant chunk of the household budget. But compared to the actual costs of healthcare, living expenses, property damage, funeral…etc. premiums are pennies!
By the way, one of the leading causes of bankruptcy is long-term disability, not reckless spending. And, yes, disaster can strike anyone, not “just other people”.