In return for protection, you pay a regular fee - called insurance premium.

Your insurer will determine your premium based on what insurance you’re buying, your credit history, current debt, ability to pay financial obligations, and any other insurance you may have. They will also consider:

• The value of the property you’re insuring / neighbourhood you live in (home insurance)
• Your age and driving record (auto insurance)
• Certain lifestyle choices and your current health (life / health insurance).

Find a competitive premium for your desired coverage. Be wary of low premiums - always make sure you’re comparing policies with the same coverage. Remember, the more the insurance covers, the higher its monthly premium.

When you borrow money, ‘principal’ refers to the amount you have to return. Insurance isn’t a loan – you only get money if something bad happens, and you don’t have to repay it.

An insurance policy will only cover you up to a certain amount – your limit of coverage, minus your deductible. What are those?

• Limit of coverage is the maximum amount your insurer will pay to cover a loss. Higher limits tend to carry higher premiums.
• Deductible is the amount you have to pay, from your own pocket, before the insurer's coverage kicks in. Insurance with lower / no deductible tends to carry higher premiums.

Always read the policy so you understand what damage / events you will be compensated for and under what circumstances.

Check consumer reports - for example JD Power’s rating of insurers - https://canada.jdpower.com/

Consider the following:

• Do they have a good online platform / sales team?
• Are premiums easy to pay?
• Is it easy to file claims / receive compensation?
• Do they have a good reputation and financial standing? Remember, your insurer won't be able to pay claims if they go bankrupt.

Check for special offers / discounts, but don't be swayed by them – you’ll be stuck with the regular coverage / premium once the offer expires.

Liability insurance pays for damage and injury / death you cause to others and their property during an accident (including their medical expenses / loss of income).

• 'Liability' refers to legal responsibility.

Collision insurance covers damage to your car.

Auto insurance does not cover any personal items you have in the car - your home insurance might.

There is also comprehensive insurance that covers non-accident related damage to your car, like vandalism / theft.

Accident benefits cover your own medical expenses.

If you’re unable to work after an accident, insurance may reimburse you for lost income.

General coverage includes:

• Damage to your property (your home and what’s in it).
• Additional living expenses in case you need to move out of your home temporarily (during repairs, renovation, or natural disasters).
• Damage to / loss of personal property (like vandalism or theft).
• Accidental damage you cause to someone else's property.

Should someone get injured on your property, liability insurance helps cover their medical bills and legal fees if they sue you.

Pet insurance exists, but it’s not part of home insurance.

You’d have to arrange it on your own directly with an insurance company and pay a monthly premium.

• Individual insurance tends to be most expensive.
• Maya’s young and healthy. Most of her healthcare needs will be covered by Canada’s social system. It’s unlikely she’d make full use of her policy anyways.

If you're generally healthy and your expenses mostly include routine check-ups, it may cost less to self-insure than to buy private insurance.

• Instead of paying premiums to an insurance company, add the money to your savings account (your rainy-day fund).
• When you need money to cover medical / health expenses, ‘pay as you go’ with money from your savings account. Don’t forget to replenish your account – it’s your rainy-day fund after all.

Many employers provide group insurance for their employees.

• You may still be required to pay a premium (or part of it) – some employers pay it for you.
• Group insurance mixes different insurance risks into large pools. However, each member of the pool pays an equal share of the risk through premium payments, regardless of their individual risk.
• If you’re young and healthy, you may be paying more than your actual risk is worth, since your premium subsidizes (pays for) older workers whose medical expenses tend to be higher (higher risk).If that’s your case, it may be less expensive to opt out of your employer’s group insurance and consider self-insuring.

You may already have coverage from your parents / guardians, family, or spouse. It’s even possible to have coverage from more than one insurance company. For example,

• Both your parents may have insurance plans that cover you.
• You may have bought a student union's plan – and one of your parents’ insurance covers you as well.
• You and your spouse may both have employer / other insurance plans that cover each other.

Insurers have double coverage rules - which steps in first and which second (usually based on the insurance policy holders' dates of birth).

• The first insurance policy pays its usual claim amount.
• The second pays a portion or all the remaining claim – depending on its claim amount.

In the event of your death, life insurance can cover certain costs, like burial expenses or mortgage / other debt payments. It can also replace income for beneficiaries.

• Temporary life insurance provides coverage if death occurs within a certain time frame, usually 10-20 years (called 'term' life insurance).
• Permanent life insurance provides coverage for your entire lifetime, as long as you don't cancel the policy.

Pets are not dependents - they cannot be beneficiaries of any life insurance policy, Mr. Fluffy included. If Maya had dependents (children or someone else whose living expenses she pays for), she might consider a life insurance policy. In the event of her death, her beneficiary would receive financial compensation.

Disability insurance protects you from unexpected illnesses or accidents that leave you unable to work / earn income. 'Disability' can mean various things, depending on your insurer and coverage.

This insurance replaces a portion of your income, up to a maximum amount (usually 60-80%) for a specified period of time.

• Short-term - up to 6 months.
• Long-term - starts after you've used up the short-term insurance and lasts up to 2 years. You may receive benefits for longer if you're unable to work any job for which you're reasonably suited).

You can purchase health insurance for your pet – to cover the cost of veterinary treatments and procedures. It’s also possible to insure certain breeds and types of pets against theft.

• Maya needs to decide whether it makes sense to pay Mr Fluff’s vet fees out of pocket – most people do that.