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June 2019

As Your Needs Change, So Should Your Insurance

Insurance is a key component of every financial plan and should evolve with your life.

Insurance Needs For many people, the subject of insurance and what questions they should ask when considering it, can seem daunting. Fortunately, the answers are more straightforward than most of us realize.

As the world, and life, have seemingly become more complicated, a properly devised insurance plan can provide both clarity and peace of mind about the future for you and your loved ones. Review your coverage often, especially when you go through any major life change such as a change in marital or employment status.

Where to start?

When it comes to insurance, you are not alone. In simple terms, the basic premise of insurance is people getting together to pool their collective resources to reduce each individual’s risk. It’s a fairly simple idea. The complicated part is that the needs and solutions for each individual are different. Understanding your current circumstances and future goals is what will allow one of our BlueShore experts to better devise a personalized solution for you.

The best place to begin is with you - the subject of ourselves is one that we are all experts on. Answers to questions like your age, health, number of dependants, income, assets and hopes and goals for the future are the main factors in determining your insurance needs. Knowing the answers to these questions will allow you to confidently consult with a professional who can then help you focus on your best options.

It’s not about luck

Some people question the value of insurance. As mentioned, not all kinds of insurance will be right for you. True peace of mind, the real value, comes from having the insurance that reflects your specific needs and circumstances. For a more ‘bottom-line’ example about the value of insurance, consider a simple fender bender on your automobile. The right deductible can save you thousands in repair costs. None of us know what’s coming around the next corner and that’s where insurance comes in – protecting you from the unexpected.

A brief history of insurance

For thousands of years, the best insurance we had was simply being with other people. There was (and still is) safety in numbers. Over time, starting with the early Chinese dynasties, the concept of insurance began to develop. As the centuries past, the Babylonians and the Greeks created systems of insurance to protect against loss or theft when transporting goods and cargo. When the Romans rose to power, they introduced a form of life insurance that paid funeral expenses and took care of the deceased’s family.

In the 1300s, Genoa was the merchant capital of Italy. It was here that the first insurance contract was issued. The process involved people signing their name under the amount of risk they were willing to take on. From this, the word underwriter was born.

In the 1600s, the tragedy of the Great Fire of London gave rise to the idea of property insurance. Later in that century, Edward Lloyd and his coffee shop became a popular place for people looking to buy and sell risk related to shipping. When the first true insurance market finally opened, it was called Lloyd’s of London.

A plan for the future

We started our discussion with a simple idea, “Your needs change. So should your insurance”. Each phase and area of life, both personal and professional, will have a different and often specific set of goals and requirements. When it comes to financial security and peace of mind, insurance is a common denominator at nearly every stage.

Here are five significant moments in life when insurance should be top of mind and why.

1. When you’re just starting out

For most people in their 20s, life insurance is not even on their radar. The question often asked is, “I’m single with no dependents, who would benefit?” The short answer is you. The relationship between the value of protection versus the cost of protection is never more in your favour than when you are young. While there are literally hundreds of factors that determine the cost of your personal policy, the biggest factor is age.

Consider a standard 30-year Term Life Insurance Policy. The monthly premium is considerably lower, the younger you are. So, not only will you have a foundation of financial security for when you start a family or buy a home (it happens faster than most of us realize) but you will have it at a significantly lower cost than someone who waited another decade to start considering their insurance needs. When it comes to our finances, it is better, and often less expensive, to plan for the future rather than waiting until the future arrives.

2. As your responsibilities grow

Transitioning towards and into our 30s usually means taking on more responsibility. With marriage, children and home ownership, others now depend on you. Everybody hopes that their futures will be bright. Adding a dash of pragmatism to that hope can ensure that if something unexpected does arise, you and your family have some financial security.

Some examples of coverage to consider at this stage in life that can help you meet your responsibilities include:

These specific types of coverage are straightforward, easy to grasp and essential to a complete financial plan that seeks to protect your family’s assets.

3. Starting a business

If you are a sole-proprietor or business owner, your obligations, especially from a legal perspective, makes it doubly important to ensure your business has the right kind of coverage. Not only will you need to protect your property and assets, but you will also have to address the kinds of liability that your type of business could face. You are in business to provide a better future for you and your family. Inadequate coverage could severely damage or even wipe out everything you’ve worked for.

Another type of insurance that has become increasingly popular for businesses with employees or self-employed individuals is extended health and dental insurance and it has become increasingly popular in the last few years. Not only can it add to your bottom line by keeping you and your employees healthy, these kinds of benefits are also an attractive recruiting and retention tool in today’s competitive job market. Don’t let your hard work go to waste. Protect your business.

4. Mid-life moves

Our 40s and 50s can see many changes in our lives such as a new job, children leaving home, or even in some unfortunate instances, divorce. All of these significant moments in life change your insurance needs. To accommodate these new and altering circumstance means that evaluating your coverage is critical. This stage of life is also usually associated with the highest earning years of your career. As your assets increase, you will want to consult with your financial advisor to ensure that transitions in your life are reflect in your coverage.

5. Moving into retirement

The best plan for retirement is the one that starts decades before the day comes. One powerful perspective on retirement is the idea that one must retire to something rather than from something. That point of view also provides clarity on your insurance needs as you start to enjoy the fruits of your labour and reflect on what life has given you. Insurance can play a role in your legacy too. Shifting to annuities as a part of your insurance portfolio is one effective strategy that can accommodate a variety of circumstances. Some may want to donate to a favourite cause or charity. A life insurance policy can help you do that without negatively affecting your other estate planning goals. It could also help you maximize certain tax benefits. Lastly, yet critically, many want to ensure a legacy for their children and life insurance policies provide excellent flexibility to achieve just that.

Where to go from here?

Reflecting on your needs and circumstances is something that everyone should do regularly. Many people however get into a "set it and forget it" mentality, continuing to pay for insurance products that no longer meet their needs. Things change and your insurance coverage should reflect that change.

The insurance market also changes. New products, new consumer demands and even new pricing. At BlueShore, we have decades of experience and helping you navigate the options is our specialty. Talk to us today about getting the most suitable coverage for your particular situation.

The right advice makes all the difference

Protect yourself, your family, and if applicable, your employees. The best approach is to discuss your needs with our BlueShore Insurance Advisors. They’ll source the best policy at the most competitive price from leading Canadian insurances companies.

If you would like more information specific to your needs, please visit us here and answer a few questions.

Insurance services provided through BlueShore Wealth.

The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any insurance or other securities.

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