A recent survey conducted by Desjardins Group as part of its Personal Finance Index found that most Canadian consumers know very little about insurance products. To measure their general understanding of these products, eight personal money management questions were added to this year's survey. The results indicated that:
• Only 44% knew that not all insurance policies come with surrender value
• 30% did not know whether their credit card comes with travel insurance, whereas 32% knew that it does but knew little about the coverage itself.
In terms of other types of insurance, a third of respondents have refused a mortgage insurance product offered by a lending institution, without first assessing their financial situation or comparing costs with other mortgage insurance products available on the market. And less than half of the respondents showed a real understanding of how they were protected by their home insurance.
These results indicate that there remains a gap in the public's understanding of personal finance.
We asked Reh Bhanji, an insurance expert from Desjardins Financial Security for his assessment. "Clearly, there is still much we can do as financial advisors to help Canadians improve their financial knowledge," said Bhanji. "Of course, some people are uncomfortable to talk about money, but it actually can be fun. We have tools that help illustrate different scenarios which can help re-ignite a person's enthusiasm towards their finances and insurance coverage. And it's actually very important because it allows you to better manage life changes like a new addition to the family, a new home, a new job, etc."
What's the best way to start improving personal financial habits and to learn more about insurance?
One way is to sit down with a financial adviser or an insurance representative to discuss your current life, health and disability insurance needs. A properly trained representative will then suggest a suitable product that offers the best protection. You may be interested in trying the online self-evaluation tool available on the Desjardins Group's Co-opme Program website at www.desjardins.com/co-opme.
And here are two brief descriptions of some life insurance products to help get you started:
Permanent life insurance can be adapted to long-term goals and premiums can be paid as fixed amounts for the entire coverage period, in installments or in full in a certain number of years.
Universal life insurance is very flexible and totally conforms to your needs because you can add or remove features and increase or decrease premiums at any time. The savings component can be accessed anytime, barring any restrictions attached to the investment type, making this an ideal emergency or retirement fund.
For more information about these and other insurance products, visit the insurance product section of the Desjardins Financial Security website at www.desjardinslifeinsurance.com.
Courtesy of Newscanada