New homeowners: does your life and health insurance meet your needs?

On your own or with a life and health insurance rep, you'll first want to evaluate your existing coverages.

You've contacted a mortgage advisor, the inspector and the movers. You've chosen the 26th as the date and "Caribbean teal" for the colour of the living room. Looks like you've taken care of everything. Well done! But what does this big life change mean for your individual insurance coverages? Now's a good time to find out.

Our specialists have some things for you to consider to help you determine if your coverages meet your needs at this stage of your life.

Evaluate your current situation 
On your own or with a life and health insurance rep, you'll first want to evaluate your existing coverages. Gather all the information you need to get an accurate picture of your coverages and payments.

Information to gather:
  • Your insurance coverages
  • Amounts debited from your bank account for insurance payments
  • Group insurance plan booklet
  • Pay stub to determine how much your group insurance premiums cost
Coverage: Too much can be as bad as not enough
Are you overinsured? Many people believe they have too much insurance, when actually, they're more likely to be poorly insured. Thoroughly evaluating your needs will help you choose the right coverages to help you meet your financial obligations in the event of death or illness.

"When it comes to personal finances, every situation is different. And with life and health insurance, you need to evaluate your coverage needs to determine the right strategy for you," says Angela Iermieri, a financial planner with Desjardins.

A new home means new financial responsibilities 
This is the stage when you need the most insurance, but it's also when you have the least cash available. That's why there are a variety of insurance products for every budget to meet primary needs. 

1. Products to help you maintain your standard of living
"If you suffer an illness or accident, your income is reduced or stops completely, but your financial obligations don't. And you might have other expenses on top of that--for healthcare, equipment or home adaptation," says Nathalie Tremblay, a product manager at Desjardins Insurance. 

"The question you need to ask yourself is this: if I lost my income, would I be able to make my payments?" says Iermieri.

Disability insurance offsets lost income and helps you meet your financial obligations, including your mortgage payments. 

If you determine that your disability insurance covers all of your basic needs, you might want to take out additional critical illness insurance.
Critical illness insurance pays a lump sum if you're diagnosed with cancer or you have a heart attack or are diagnosed with any of the other 26 covered illnesses. You can use it as you see fit, based on your needs and priorities; it allows you to cover the additional expenses caused by a critical illness and focus on what's most important: your recovery. 
2. Products that help your family maintain their standard of living
What do you want to happen to your home in the event of your death? "It's a matter of values," says Tremblay. "Some people want to leave a debt-free home, while others prefer to let their heirs sell the property and discharge the mortgage."

"A couple needs to consider each other's wishes and evaluate the other person's ability to pay the mortgage in the event of their death. "Discussing your needs and wishes with respect to financial security and maintaining your family's standard of living can influence your decision," says Iermieri.

Life insurance can help your loved ones deal with the financial impact of your death.

The tax-free death benefits from a life insurance policy can be used to:
  • Replace your income so your family can maintain their standard of living
  • Provide for your dependent children or family members
  • Pay funeral expenses
  • Pay off your debts, including your mortgage
You can name a beneficiary, who will receive the benefits from your insurance policy when you die or name your estate as the beneficiary.

The final word-things to avoid:
  • Taking for granted that the coverages provided by your employer meet your needs without reviewing them
  • Adding coverages over time without evaluating if they're really needed
  • Letting years go by without re-evaluating your needs 

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