According to a new study, less than a third of Canadians have insurance coverage for serious life events.
The study, conducted by investment firm Edward Jones, discovered that many Canadians are vulnerable to unexpected financial crises, whether they are caused by sudden illness or extended disability.
Although most Canadians (63%) have insurance in one form or another, less than one-third are covered for unforeseen life events.
The report found that nearly half (48%) of the respondents to the survey admitted that they do not believe they have enough funds to cover unexpected – or even expected – expenses should a serious illness prevent them from working, or if they are stuck going through a prolonged recovery period from an injury.
Only 15% said they feel “very prepared” financially if they get too sick to report for work. Twenty-one per cent (21%) said they are “not at all ready” should they ever find themselves too sick. Twenty-two per cent (22%) said they would not be able to financially deal with a prolonged injury.
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Twenty-three per cent (23%) of Canadians answered that they are not at all prepared financially if they pass away too soon, the study also discovered. Only 16% said that they have purchased life insurance that would cover their remaining mortgage payments should they ever pass away.
“While Canadians may think they are protected, there is a gap between what many people have and what they might actually need to cover a serious issue,” commented Edward Jones senior insurance specialist James McKeown. “Like most planning and investment tools, there’s no one-size-fits-all approach, and things change from year to year. In the same way that doctors recommend an annual health check-up, we recommend an annual insurance check-up with a financial expert to help determine what would best protect you in a personal crisis.”
The study additionally detailed that only 25% of Canadians have personal term life insurance and just 18% of the respondents said they had personal whole or universal life insurance. Less than 10% said they have personal critical illness or personal long term care insurance.
Find out the benefits and drawbacks of long-term care insurance in Canada in this guide.
Authors of the report suggest that most Canadians lack an understanding of their own insurance needs, which might explain the low figures. Notably, only 26% said that they have carefully reviewed their insurance needs within the past year.
“While planning for the unexpected may seem like an oxymoron, it is a vital part of any long-term financial strategy, and this includes considering worst-case scenarios,” McKeown said. “Smart financial planning is like venturing out to sea - even great sailors pack a life jacket.”
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