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How Insurance Factors Into Financial Planning

September 21, 2021


By doing your financial planning, you’re making sure you and your loved ones will be taken care of long-term. You’re trying to reduce surprise and upset, and lock-in as much financial security as you can. You’re making sure your family is as prepared as they can be even if—especially if—life throws them curveballs. And, by mitigating unexpected costs, managing the financial side of unwanted surprises, and helping to protect your family long-term, insurance supports you in accomplishing these exact same goals. Which is why factoring insurance into your financial planning only makes sense!

How Does Insurance Factor Into Financial Planning?

Insurance takes the financial guess-work out of any potential losses, whether that’s lost income, damages due to liability, or personal property. Having the right insurance policy will give you the peace of mind knowing that you and those you love will be protected should the unexpected happen.

At its core, insurance exists to help you financially manage the unexpected. It can help you and your loved ones manage and respond to accidents, illnesses, disability and death—all of which come with high financial costs and are nearly impossible to predict. But, insurance also protects your peace of mind. Suffering a financial loss, like loss of income that results from sickness, injury, or the loss of a family member, can seriously affect your life and lifestyle. Things like whether or not your children can continue playing hockey, your plans for a family vacation, or your university savings can continue all come under question. Even going out for dinner or picking up take-out once per month can become a big decision. 

So while insurance can’t take away or stop you from having difficult experiences, at the very least, it can cover you financially while you navigate through them. For all of these reasons and more, insurance and financial planning really do go hand-in-hand.

Types Of Insurance Worth Planning For

Most Manitobans will have a need for at least one of these key types of insurance in their lives: 

Life Insurance

Life insurance helps to cover any final expenses you may leave behind including accumulated debt, and minimize the impact the loss of your income may have on your family members.

Living Benefits Insurance

Disability, accident and sickness insurance, and critical illness insurance can all cover you and your family financially when a disability impacts your income (and your ability to earn an income).

Mortgage Insurance

Mortgage insurance ensures that your loved ones won’t have to shoulder monthly payments should you pass away before your mortgage is paid off.

Property Insurance

Cover your land, your home, any structures on your property, and all of your belongings, as well as any damages you have to pay following a liability claim on your property.

Auto Insurance

Make sure you have the right protection in place to help you manage the costs associated with in-town or out-of-town auto insurance.

Travel Insurance

If you’re a frequent traveller—or even going on one exciting trip!—making sure you have the right insurance protection in place can be a lifesaver. A medical emergency while abroad can be incredibly expensive, sometimes wiping out your life savings or putting loved ones into debt.

Planning For Insurance? Consider This:

There are several things to consider when you begin working insurance into your financial planning. Things like:

Insurance Types

Generally speaking, the type of insurance you are looking for will affect your planning. For example, if you’re looking into life, disability or critical illness insurance, you’ll want to consider your age, your general health, and sometimes, the genetic health of your family members.

Future Plans

Do you want to get married one day? Will you have children? How long do you want to work? Will you stay in the same career? All of this matters when determining the amount of insurance that’s right for you. It’s important to keep an eye on the horizon regarding what you think might happen down the road and plan for it today. 

When considering property insurance for example, you’ll want to consider what type of property insurance is of most value to you, or how much liability insurance is the right amount—based not only on what you know is true today, but also what could be true in the future.

Pro Tip: Don’t Fall For Short-Term Thinking

It’s easy to approach insurance with a short-sighted view—looking only at the present moment or the very short-term future. But, change is a fact of life, and what you have today is no guarantee of what you’ll have (or more importantly, what you’ll need) tomorrow. 

It’s important to consider that your life may look different a few years down the line. Your job, your insurance benefits at work, your family, and your housing could all be different. Try to think long-term by asking yourself questions like:

  • What plans do you have for your future? 
  • How could your current choices affect your future insurability? 
  • What will your income potential look like down the road? 
  • Is it worth stretching your budget now to get the protection you need, considering your income will probably increase over time?
  • Do you have an emergency fund put aside? 
  • What are those funds typically set aside for? 
  • Would they be enough to cover significant losses?

Also, if you have any existing insurance in place, reflect on the original purpose it served and whether or not it meets your current life and needs. If things change dramatically and your coverage needs are different than what they were when you originally bought that policy,  you may have coverage gaps. Ask yourself how you would cover those gaps, and whether or not it’s time for an insurance update.

We know this can be a lot to think about all at once. Especially if you’re not sure or you haven’t started planning yet! Try not to stress too much. Everyone starts somewhere, and the fact that you’re starting to plan now is great! And, these are all questions an Insurance Consultant can help you think about strategically.

If you’re in your 20s or 30s and want to start planning for the future, download our free Guide To Insurance For Manitobans in their 20s and 30s.

In this simple, easy-to-read guide, we’ll walk you through what insurance makes sense at this time in your life. We’ll also break down each type of policy and why you may– or may not– need it

3 Reasons People Avoid Buying Insurance (And Why You Should Ignore Them)

There are three reasons people cite when they avoid buying insurance: It’s too expensive, it’s not for me, or it’s not necessary because of a plan they have through work. And while we completely understand that not all insurance is for every person, generally speaking, most people who cite these reasons simply don’t have all the information. We’re here to set the record straight.

#1 It’s Too Expensive

Insurance isn’t something you can touch, feel, love or hug, so we know it can be difficult to spend money on. But think about the costs of NOT having insurance! Medical bills, legal fees, damages, car repairs, home maintenance…even ONE of these events would set you back significantly. Insurance premiums, on the other hand, will only ever cost you a fraction of any one cost. 

Also, consider how you spend your money today. Most of us don’t blink an eye when we purchase a coffee from our favorite local shop or go out for lunch once a week. Instead, why not put that same amount of money towards securing your financial future through an insurance policy? Chances are you wouldn’t even notice the change.

#2 I Don’t Need It

We all want to believe that we’re indestructible, invincible, and that nothing will happen to us. Whether it’s because they’re young and healthy, they don’t have a family right now, or any other reason, some people can’t imagine ever having property damage, getting sick, or having an emergency while on vacation. And while we love that optimism, the fact of the matter is: nothing in life is a guarantee, and things can change on a dime. 

Getting the insurance you need is a way to do your future self a favour by investing in you now, when things are going well, you’re healthy and young, you don’t have any (or many) dependents. We promise, it will be well worth it down the road. 

#3 I Have A Plan At Work

If you have a group insurance plan at work, that’s great! Just make sure you take the time to understand exactly what you are and are not covered for, especially when it comes to life and disability insurance. Most of us tend to glaze over our benefits packages because we’re told we have a great plan and we want to trust that. (And because reading HR documents isn’t exactly thrilling!) By taking the time to familiarize yourself with your coverage, you give yourself the opportunity to look for gaps in your coverage. If you find any, you may want to purchase additional insurance for yourself. And if not, you can rest even easier.

Also, keep in mind that you don’t own your insurance policy at work. In essence, you are “renting it” from your employer for the duration of your tenure there. That means that at any time, your company can make changes to the plan as they deem necessary. And that if you leave your job, you could lose your coverage.

Bottom Line: Insurance it’s worth every penny. It’s for literally everyone. And group plans aren’t often enough!

Renewing Your Insurance & Financial Plan

We recommend that you review your financial and insurance plan any time you experience a significant life event like marriage, a divorce, having a baby, welcoming a grandchild, buying a house, moving, traveling, or getting a new car.  We also recommend that you review your insurance policies annually, to ensure that your needs are still being met.

And when you go to review, make sure you meet with a licensed insurance agent. While it’s great to seek advice from family and friends, a licensed professional knows the ins-and-outs of what will be best for you. At WIB, we have licensed Insurance Consultants and Advisors just waiting to answer your questions!

Ready To Build A Financial Plan That Incorporates Insurance?

Reach out and chat with us! When you do, our Insurance Consultants will go over a series of questions with you, helping you identify your short- and long-term needs before providing you with options and solutions that fit your life.