​Seniors Matter(s): Insurance needs as you age

If you are retired and don't have issues paying bills or making ends meet, you likely don't need life insurance. If you retire with debt or have children or a spouse that is dependent on you, keeping life insurance is a good idea. Life insurance can also be maintained during retirement to help pay for estate taxes.

The decision to get insurance depends on your circumstances and your stage in life. Insurance protects you and your loved ones from financial loss or hardship.

There are many insurance products that cover different types of risks.

Do our needs for insurance change as we age? They certainly do.

Your insurance policy specifies:
 

• Which risks are covered by your insurance company?
• Under what circumstances the insurer will make a payment to you
• How much money, or what type of benefit, you'll get if you make a claim

The amount of money or benefit you'll get if you make a claim depends on:
 

• The amount of damage or loss to your car or home
• Your policy for life or health insurance

The amount you pay as a premium may change over time for some types of insurance. The amount you'll pay as a premium is based on the probability that you'll make a claim. Insurance companies charge higher premiums to people they think are more likely to make a claim. Generally, the amount you pay as a premium depends on factors such as:
 

• The type of insurance
• Your age
• Your gender
• Your medical history for life and health insurance
• The value of the goods insured for home insurance
• The type of car you drive for car insurance
• The amount of coverage you need
• Your deductible
• Your claim history
• The amount you owe for credit protection insurance

When you get car or home insurance, an insurance company can charge higher premiums based on your credit rating.

Some provinces have regulations that ban the use of credit reports and credit scores in determining insurance premiums for certain types of insurance.

The Insurance Bureau of Canada (IBC) represents most home and car insurance companies in Canada. It provides standards to protect consumers when insurers choose to use credit information.

Insurance companies agree to:
 

• Request your consent before collecting and using your credit information
• Advise you of your right to opt out of releasing credit information
• Advise you of the consequences of opting out of releasing credit information (for example, you may not qualify for the insurer’s best rate or discounts if you have a good credit report)

To confirm if your insurance company is allowed to collect and use your credit information when determining your coverage and premiums, contact your provincial or territorial insurance regulator.

Risk is the likelihood that an insured event will happen while your policy is in effect. For example, if you have a history of medical issues, you may pay higher life insurance premiums than someone who has few. Similarly, if you have several accidents on your driving record, you may pay higher car insurance premiums than someone who has none.

Health, dental, home and car insurance policies may require that you pay a deductible. A deductible is the amount of your claim that you agree to pay before your insurance company pays the rest. The higher your deductible, the less you may pay in premiums.

Exclusions are things that your insurance policy doesn't cover, such as:
 

• Some health insurance policies may exclude certain medical conditions you had before you applied
• A travel insurance policy may exclude claims made if you travel to a high-risk country
• A home insurance policy may exclude claims for some types of water damage
• A credit card balance insurance policy may exclude claims for some types of illnesses

You may be able to buy extra insurance at an additional cost to pay for risk that your basic policy doesn't cover.

Unfortunately, auto Insurance for seniors often costs more. Older, senior drivers as a group, are more accident-prone than their middle-aged counterparts. The reasons for this include age-related changes in hearing or vision, slower reflexes, health conditions and medications.

Car insurance rates for seniors tend to rise after the age of 65 but really spike after age 80. Insurance companies base their rates on age norms, and the insurer’s previous claims.

In addition, regardless of accident severity, older drivers suffer graver injuries and more fatalities than younger people. This makes seniors more expensive to treat following an injury. These factors can increase insurers' claim costs, and those costs are passed on.

Will your insurance premiums increase just because you join the ranks of "older" drivers? What if you have no accidents or tickets? That depends on your insurance company, but the answer is "probably."

Insurance rates are partly determined by the entire group to which you belong, not just your own driving record. In most cases, if you drive a flashy coupe, you're statistically more likely to have an accident than if you've got a mundane minivan.

Most homeowners’ insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available and, increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of liability coverage.

Can you be over-insured? Certainly. Over-insurance occurs when an insurance policy covers an amount that exceeds the actual value of the risk or property that is insured. In simple terms, over-insurance describes the situation wherein a party purchases too much insurance coverage, that it surpasses the actual value or replacement cost of the property.

For instance, a car with a market value of $36,000 that is insured for $100,000 is over-insured. Similarly, a single-family home with a market value of $280,000 that is covered under an insurance policy of $300,000 is also receiving too much coverage.

Over-insurance is a typical occurrence among property owners. As a result, they end up paying more in premiums for coverage that their properties do not even require.

No policyholder wants to pay for more than what they need. If you are experiencing over-insurance, you are essentially paying an amount that is significantly higher than the value of your property. Simply put, you’re wasting money.

Insurance policies may have the same name, but not all insurance policies are created equal. Take the time to review your entire insurance policy to make sure that it meets your investment property’s current and anticipated needs. A great place to start is by understanding the types of perils that are covered. Typically, homeowners’ insurance covers risks, such as damage caused by lightning, hail, hurricanes, fires, and other natural disasters.

Many people make the mistake of insuring the property at its market value. Ideally, your insurance policy should cover only the replacement cost of the home. The replacement cost refers to the amount that it would take to replace the home if it is destroyed. The market value is much higher, as it is the total value of the home including the land that it is built on. Have your property assessed to determine its replacement cost. By doing this, you can significantly reduce your premiums.

The replacement cost and current construction costs go together. Asking construction companies in your area will help you determine the probable replacement cost for your property. Try calling local builders to ask for your area’s average construction cost per-square-foot. If the current rate is $150 and your home is 1,000-square-feet, then you’d need to purchase $150,000 in coverage.

There are so many risks involved with owning a property. Aside from ensuring that your insurance covers structural damage, you also need to ensure that it covers bodily injuries too. If your guest slips into your swimming pool and breaks his ankle, you’ll be glad that you paid attention to your insurance’s liability coverage policy.

Your policies need to be reviewed yearly to ensure they meet, but don’t exceed, your requirements.

I changed my policies after 15 years because I realized that the cost had automatically risen each year for no reason.

Combing house, car and health insurance with company can also reap huge savings. (AAA, CARP)

Happy shopping!

‘Till next time!