There are 5 basic types of personal insurance, and each serves a different purpose.
|Insurance product||How it works||Benefits to you|
|1. Life insuranceLife Insurance Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.+ read full definition||Pays a tax-freeTax-free Money that you do not pay tax on.+ read full definition, lump-sum amount to your named beneficiaries upon your death||Ensures your named beneficiaries can pay off your debts and maintain their standard of living after you die|
|2. Disability insuranceDisability insurance Insurance that gives you income in case you get sick or hurt and can’t work.+ read full definition||Provides a monthly payment that replaces part of your lost income if you’re unable to work because of illness or injury||Allows you to maintain your standard of living if you are disabled and unable to work|
|3. Critical illness insurance||Pays a lump-sum amount on the first diagnosis of a serious medical condition (e.g. cancer, heart attack) covered by your policy||Allows you to cover additional costs associated with an illness, or use the payment for any other purpose during or after recovery|
|4. Long-termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition care insurance||Provides cash payments if you require care in your home or in a private or government facility||Allows you to cover some or all of the costs of long-term care instead of using your savings|
|5. Health insuranceHealth insurance Insurance that covers some or all of your medical bills if you get sick or hurt.+ read full definition||Covers a portion of health care costs not covered by your provincial health insurance||Gives you and your family affordable access to the health care you may need – at home or out-of-country|
- Disability insurance replaces lost income, so you need to be employed to buy it.
- You need to survive your illness for a specified time (typically 15 to 30 days) to receive a payment from critical illness insurance.