Stuff Happens: Prepare Yourself

What’s the deal with insurance?

Young adults often avoid buying insurance because they don’t understand it, don’t feel they need it or decide that they can’t afford it.

This is a pretty common sentiment for many who have limited experience with insurance. Moving out of the home for the first time means you have to take on adult responsibilities and examine your needs for insuring and protecting the safety of your assets.

Insurance Tips for New Grads

  • When you are assessing a job offer you might want to think about the total compensation rather than just the salary- it may actually be better (and cost effective) to take a lower paying job with benefits than one that does not offer such extra’s
  • If you take the higher salary do figure out how you much insurance will cost, how you will meet these needs, and whether you can close the gaps before you sign the contract.
  • If you are in a relationship, you could talk to your partner about being added to their plan.
  • Check into offers of insurance by Mohawks Alumni program. You may receive discounted rates for home, auto, life and other coverages.

Car Insurance

Car insurance protects you from any damages, and covers your own medical expenses and loss of income from driving related injuries.

In Canada, the law requires all drivers to have car insurance. Driving without coverage is an offense punishable by fines or license suspension/seizure. Insurance for young adults can be very costly and so the more you know the better choices you can make.

Insurance is based on:

  • Location
  • Your credit history
  • Your driving history
  • Type of car
  • Age of car
  • Type of insurance.
Do's Don'ts

Check out your car and its premium before you purchase it. Your insurance could be more than your monthly payment.

Don’t assume 3rd party insurance is cheaper than comprehensive coverage. Third Party Property Car Insurance policies provide you with protection against damage caused by your vehicle to another person’s property.  Third Party Property Insurance does not usually provide any coverage for damage to the insured vehicle.

Check into deductibles and coverages before entering into a contract.

 Don’t be tempted to lie – insurance fraud has serious consequences. Your claim could be denied and coverage now and in the future, could be cancelled.

Shop around to make sure you’re getting the best deal you can. You may receive discounts based on your education, workplace or past driving courses.

 Don’t let your insurance lapse due to non-payment. Reinstating insurance can be difficult and result in higher premiums – talk with your insurer if you have a financial problem.

Check out online prices that deal directly with an insurer as opposed to prices obtained through a broker.

  

Watch for “add-ons” that might increase costs of insurance and could skew comparison shopping.

  

Keep the minimal amount of insurance on your car if you are temporarily not able to drive.  Termination of coverage can be very expensive when you try to get it again.

  
Ensure that if you loan your car to a friend that he/she is insured and is a competent driver. If your car is in an accident, the owner of the car as well as the driver will be liable.  

Tenants Insurance

Most students don't take advantage of tenants insurance, despite owning a number of valuables, which could be costly to replace in the event of a fire, theft or loss, including your:

  • Computer
  • Cell phone
  • Tablet
  • Furniture
  • Clothes

Tenants insurance is not very expensive, but before you buy, check your family's policy to see if you are already covered.

Life and Disability Insurance

Life insurance is another type of insurance that is available. The necessity of life insurance for single students is dependent on your personal situation. Obtaining life insurance while young and healthy could save you money in the future. Premiums are lowest as a young adult and when you don’t have any pre-existing medical conditions. Choosing to invest in life insurance later in life or after a medical scare could result in exclusions and higher costs.

What you need to know:
  • There are different types of life insurance – whole life and term insurance. They both have different advantages and disadvantages, before making decisions make sure you understand all the options. A consultation with an insurance broker is recommended.
  • Insurance can be difficult to get and if you are applying for insurance on your own (not with an employer) you may need to get a physical examination and provide a detailed medical history. You may not get approved if you have a pre-existing condition.
  • Consider long term disability as a necessary insurance to keep your dependents and yourself in reasonable financial shape. This is particularly important if you are considering self-employment as this coverage is essential.

For general insurance information see www.fsco.gov.on.ca

Travel Insurance

Did you know when you travel out of the country, even a minor accident or sickness can become a major problem and expense.

A four day stay in a U.S. hospital for an appendectomy could cost approximately $40,000 (USD), with only about $1,600 (CAD) covered by your Government Health Insurance Plan (GHIP).

A one day stay in a U.S. hospital for a broken arm and wrist could cost $30,000 (USD), with only about $400 (CAD) covered by your GHIP.

Travel insurance can help ensure that your medical experience is simplified and expenses are covered. It can give you peace of mind and security in a situation that is full of unknowns.

Consider the typical responses to obtaining travel insurance below:

I'm young, I'm healthy and I bet nothing will happen to me anyway.

In case of an emergency, our government health insurance plan typically only covers a portion of your medical expenses if you are out of the province or Canada. Without additional coverage, you could be left with medical bills that may leave you in significant debt. Why even take the risk?

My health plan through my credit card(s) provides me with coverage.

There are limitations to all types of coverage. Credit card health plans may have limits on the number of days you can be out of the country or the amount you can claim. Be sure to check before you leave, and supplement with an additional plan if you need to!

Buying insurance for every trip is expensive and time consuming.

If you travel frequently, you should consider a multi-trip annual plan. It offers a more convenient and economical way to purchase coverage and ensures that you are covered every time you are out of the country.

Travel insurance only covers me in a medical emergency.

Travel insurance gives you access to non-medical coverage such as trip cancellations or trip interruption services. It also provides insurance against lost or damaged baggage and personal effects. If you are hurt or ill, there is a 24 hour help line, and often an interpreter service for individuals at hospitals in non-English speaking countries.

I will still have to find a way to pay for my care up-front with travel insurance.

Travel insurance makes sure that you have no out-of-pocket expenses. You won’t have to worry about your maxed out credit card or having no cash. All expenses are billed directly to your insurer.

If you receive travel insurance as part of your work benefits, be sure to let your provider know where and when you will be travelling and have your policy documents on-hand in case of emergency.