Insurance isn't sexy but let's talk about it
It's one of those things where you don't like it until you need it.
I get a lot of questions about life insurance for single people. Do we need it if we're single with no dependents? What other kinds of insurance should we consider? How much is too much coverage?
As with a lot of questions around money and financial planning, the generic answer is, it depends on your financial situation, your family, your goals, etc. You can't make a blanket statement with the hope that it covers everyone and every situation.
Now, I'm not an insurance expert but I am an expert in finding people who know this stuff. I asked Andrew Ostro, CEO and co-founder of PolicyMe* a bunch of insurance questions about life, disability, critical illness and renter’s insurance.
Do I really need life insurance if I don’t have dependents? What about term vs. whole life or universal insurance?
If no one relies on you financially, like a partner, kids, or aging parents, you may not need life insurance right now.
However, if you have debt that someone else would have to take on if something happened to you, or if you’re planning to start a family and want to lock in lower rates while you’re still young and healthy, then it makes sense to get a policy in place early and get a gear up for the future.
When people ask about term vs. whole or universal life, I always say, start with what you actually need coverage for. That’s the most important thing.
Term life insurance is usually the best fit for most people. It covers you for a set period, like 20 or 30 years, and it’s straightforward and affordable. If you’ve got a mortgage, or young kids, or just want to make sure your family’s okay financially if something were to happen, term does the job.
Whole life and universal life, on the other hand, are more complex. They cover you for your entire life, and they include a savings or investment component. But in my experience, most people don’t actually need that level of coverage, and unfortunately, those policies are quite expensive.
What kind of insurance should I prioritize if I’m self-employed or don’t have workplace benefits?
If you’re self-employed or working freelance, one of the biggest things to keep in mind is that you don’t have the built-in safety net that often comes with a traditional job. So it’s on you to create that protection for yourself.
I’d focus on two main areas: life insurance and health insurance.
Start with life insurance if you have anyone who relies on your income. That could be a partner, kids, or even a co-signed loan. If something were to happen to you, life insurance makes sure your loved ones aren’t left with financial stress.
Then there's health and dental insurance, which people tend to overlook until it becomes urgent. While provincial healthcare covers the basics, it doesn’t cover things like dental, prescriptions, mental health support, or services like physiotherapy. If you don’t have access to a partner’s plan, it’s a good idea to look into a policy that can fill those gaps. (Editor's note: There is the Canadian Dental Care Plan but not everyone qualifies.)
Is renter’s insurance worth it if I don’t own a lot of stuff?
If you feel like you don’t own much, it’s easy to think renter’s insurance isn’t necessary. However, the value of renters’ insurance actually goes beyond just protecting your stuff.
Even if your furniture or clothes wouldn’t cost much to replace, renter’s insurance can also cover things like liability, so if someone gets hurt in your apartment or you accidentally cause damage to the building, you’re not stuck paying out of pocket. That’s the part people often overlook.
And when it comes to your personal belongings, it adds up faster than you think. Renter’s insurance is usually pretty affordable, so it’s one of those things that’s worth having, even just for peace of mind.
What’s the difference between disability and critical illness insurance and when and why do I need both?
Disability and critical illness insurance often get lumped together, but they do very different things, and both can play a role in protecting your income if something unexpected happens.
Disability insurance is really about replacing your income. If you get sick or injured and can’t work, disability insurance steps in and provides regular monthly benefits to help you keep up with living expenses. It can support you over a short or longer period, whether that’s months or even years, depending on your policy and recovery.
Critical illness insurance pays out a one-time lump sum if you're diagnosed with a serious condition like cancer or have a heart attack. It’s not tied to whether you can work or not; it’s more about giving you financial flexibility when life gets turned upside down.
So while both protect against health-related risks, they do it in different ways. One helps you manage day-to-day income loss, the other helps you deal with a crisis or recovery period.
Are there any insurance products single people tend to overlook but really should consider?
Definitely. There’s this common idea that insurance is only for people with families, kids, or big financial obligations like a mortgage.
But what single people often overlook are things like critical illness insurance and disability insurance. If you live alone and something unexpected happens to your health, it’s usually only you managing the fallout. Those are the moments where having even a basic safety net can make a real difference.
Critical illness gives you a one-time payout if you're diagnosed with something serious, something that throws your routine and income off track. Disability insurance replaces a portion of your income if you can’t work. You may not think about these things when you’re healthy and everything’s on track, but when life hits, having that financial cushion gives you options.
How can I make sure I’m not overpaying for insurance I don’t actually need?
This is one of the most important questions people should be asking, because unfortunately, overpaying for insurance happens all the time.
The first step is getting clear on what you actually need to protect. If no one depends on your income, you may not need life insurance yet. If you already have good health coverage through work, you may not need to double up. It sounds simple, but when you take the time to match the coverage to your real needs, it becomes clear where you’re overspending.
Pay close attention to the type of insurance you’re buying, especially investment-based products, like whole life or universal life, if your goal is just basic protection. These plans can make sense in some situations, but in most cases, they’re quite expensive, and for most people, a term life policy paired with investing the difference through a tax-advantaged account can be a smarter, more cost-effective approach.
And finally, it helps to revisit your coverage when your life changes. A new job, a move, a relationship change, all of those are good reasons to reassess. The best insurance plan is the one that fits your life today,
What's the best way to compare policies if looking for yourself?
The best thing you can do is approach it the same way you’d shop for anything else. Understand what you actually need, and then do your homework.
Start with the basics: what type of coverage are you looking for? What do you want it to protect? That alone helps narrow things down because not every provider will offer the same types of policies and features, so having clear goals makes it easier to filter your options.
Next, look at the core features of each policy and compare quotes. That means the coverage amount, the term length, what’s included or excluded, and the monthly cost. While price is important, it's important to try and compare apples to apples. Take life insurance for example, you’ll want to make sure the quotes you’re comparing reflect the same term and coverage amounts.
Clarity matters. You want a policy that’s easy to understand, with no surprises later. Ideally, comparing policies should be as transparent and objective as possible, so you should feel like you're being educated, not sold to.
At the end of the day, the “best” policy isn’t necessarily the one with the lowest premium or the longest term. It’s the one that fits your life, your budget, and your priorities.
ICYMI: Why is it so hard to have fun without spending money?
This week’s readings:
How rich is UHNW? We asked 15 advisors to put their sorting hats on (Canadian Family Offices)
Nearly two-thirds of Canadians want interest rate cuts as financial anxiety grows: Poll (Yahoo Finance Canada)
Who bought the original Jane Birkin bag? (The Cut, paywalled)
*No affiliation with PolicyMe.
Housekeeping: I am planning on taking August off from the newsletter to get some things done. I have lined up some amazing writers (paid, thanks to my subscribers) who will be covering topics close to their hearts.