Life in Canada

What a Newcomer Needs to Know about Insurances in Canada – with Tips from a Financial Advisor

Different types of insurance are being offered in Canada. If you are a newcomer, you may get overwhelmed with the options available.

A financial advisor is the best person to communicate with regards to this topic. That is why I interviewed a certified financial advisor from Ontario, Canada to help us figure out which ones are important for people who just landed in Canada.

Home, family, and car inside a secured area drawn by a pen

How does insurance work in Canada?

Insurance is a contract you obtain from an insurance provider wherein you pay a fee called premium. In cases you loss something insured, or an insured property gets damaged, you expect to be compensated.

You may encounter the word “deductible” when you read your insurance policy. I was also clueless with what it was the first time I saw it. Deductible is an amount that you have to pay before the insurance provider covers the claim. (Claim is the term used when you submit a file to your insurance provider prompting them to cover the expense for the loss/damage of an insured property.)

To understand better what deductible is, let’s put it into a scenario. Let us say you purchased a tenant’s insurance to insure all of your apartment’s content. Then one day, your apartment had some water leakage when you were out for a weekend holiday. Upon returning, you noticed a lot of your personal belongings were partly or completely wet due to the water droplets from the ceiling – and it happened the whole weekend!

Now, after informing your landlord about the situation, you communicate with your insurance provider’s agent to start a claim. The cost of the damage needs to be calculated. Let’s say the total cost is $2000. If your insurance deductible is worth $1000, it means you have to initially cover $1000 before your insurance provider pays you the remaining $1000. That is how deductible works.

Now, when you arrive in Canada, you become busy settling down and working on necessary documents such as Social Insurance Number, provincial  health insurance, etc. You may overlook the importance of getting an insurance. Let us find out why you need to consider getting it for yourself and your family members.

As a newcomer to Canada, what type of insurance do I need to get?

“All provinces and territories in Canada have provincial health program that must cover all medically necessary hospital, physician, surgical-dental and other medical services. For newly land immigrants, they are not automatically covered by our OHIP or other provincial health program in Canada. All provinces have three months waiting period before a new immigrant becomes eligible for this health coverage. Their option is to get their own private coverage that is mainly known as Visitor to Canada Emergency Medical Insurance, at least for three (3) months, before their provincial coverage starts. It is best to secure the insurance before they land in Canada so that their coverage will automatically be effective upon arrival,” says Lea Hernaez, a Chartered Life Underwriter and Certified Health Insurance Specialist in Ontario, Canada.

She is totally right. I waited for exactly 3 months from the day I arrived here in Canada before I received my Ontario Health Insurance Plan (OHIP).

Lea also suggests that every single person coming to Canada, whether as a permanent resident or a visitor, must obtain a private health insurance.

“I have one client who never thought of having emergency medical insurance when they land to Canada during the winter season. And there is once incident that he slipped through the ice. With that simple incident, he spent almost $4,000 for casts on his injured leg, together with other medical costs,” Lea shared. “For a new immigrant who does not have a job yet and income, even $400 would cost him a fortune. Having an insurance for 90 days that approximately costs from $160 to $300 (depending on age, gender and type of coverage) would be worth spent in protection for an unexpected event.”

Do I need to get additional insurance when I start working in Canada?

“Every Canadian, as well as immigrants, should consider the following types of insurances for themselves. Every type of insurance has its specific needs and criteria to be able to claim and maximize the benefits. There are also some types of insurance coverages that a workplace can provide with limitations and some also has waiting periods.” Lea said in writing.

“It is best to consult to an advisor to know more how each insurance can be part of their financial plan.” She added.

According to her, below is the suggested order of priority for each type of insurance:

  1. Life Insurance
  2. Disability Insurance
  3. Critical Illness insurance
  4. Personal health insurance
  5. Long-term care insurance

Do you have any additional advice for newcomers to Canada?

“For newcomers, there is a lot of things they need to know about Canada especially about financial matters. Canada is one of the country who is known to have high cost of living and that managing finances is one of the biggest challenge.

A lot of people have different ideas, experiences and comments [on financial challenges], but really there is NO definite answer and NO definite plan that is good for everybody because each individual is unique and their financial status, preferences, family structure are different altogether.

It is best and recommended to speak to an expert financial advisor to help you create a plan that best suits your specific needs based on your personal goals. Your financial advisor can work with you and guide you along the way in achieving your financial goals,” Lea advised.

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