Types of Insurance
Insurance gives people peace of mind by protecting against a significant monetary loss and financial hardship, through the sharing of a risk with someone else – usually an insurance company, which is sometimes partnered with a financial institution such as a bank or credit union.
Here are some of the more popular types of insurance:
Anne-Sophie and Mathieu, who have two children, have been approved for a $250,000 mortgage to purchase a home. Anne-Sophie is the primary income earner, and the family’s ability to make their mortgage payments is largely dependent on her income.
Peace of mind and predictability of expenses are important for Anne-Sophie and Mathieu, so they purchase Mortgage Life Insurance for Anne-Sophie, which will pay out the balance of their mortgage (up to the maximum specified in the certificate of insurance) in the event of her death. They like the fact that their premiums will not change over the life of their mortgage, which means that they are not exposed to higher costs for this coverage as Anne-Sophie ages or possibly develops health issues.
They also like the fact that the proceeds of her mortgage life insurance will go directly to pay out the mortgage balance rather than possibly being used to pay other debts. It’s important to Anne-Sophie that her family will be able to continue living in their family home, without financial duress.
Rob and his wife Leslie are planning a Caribbean cruise vacation from Miami, and they’re wondering if they should buy Trip Cancellation Insurance. The trip will be expensive, and they will have to pre-pay for a number of things in advance, most of which will be non-refundable — such as airfare and the cost of the cruise.
They are worried that should they have to cancel their trip before they leave, they would completely lose the money that they have pre-paid for the non-refundable parts of their trip. And it could take years before they could save that much money again to take the same trip.
Leslie suggests they purchase Trip Cancellation Insurance. She finds a policy she likes because it will reimburse her and Rob for the full amount of pre-paid, non-refundable travel expenses that they have insured, should they have to cancel their trip before departure for an unforeseen event covered under the policy.
A week before they are scheduled to leave on their trip, Rob breaks his leg in a skiing accident. His doctor deems him unfit to travel. So they make a claim under their Trip Cancellation Insurance and receive a full reimbursement of their pre-paid travel expenses.
Linda and Vince are thinking of purchasing Trip Interruption Insurance for their upcoming European holiday.
Trip Interruption Insurance is similar to Trip Cancellation Insurance, but the former covers insured travellers for unforeseen events that occur after a trip has begun, rather than before it starts. If they have to return home for a covered reason, Trip Interruption Insurance will reimburse Linda and Vince for the lost portion of their trip, as well as for any additional expenses for a last-minute flight home.
Since Trip Interruption Insurance can be purchased along with Trip Cancellation Insurance, Linda and Vince decide to get both at the same time so that they will be protected should an unforeseen covered event cause them to have to cancel their trip or end it prematurely.