All the stuff you might have ignored before

As you build a career or start a family, the two most important types of insurance are disability insurance, to protect your income if you’re sick or injured, and enough life insurance to pay outstanding debts or cover the financial needs of dependants. Chances are, if you have a benefits plan at work you may already have sufficient coverage for both, so review your workplace policies before making other insurance purchases.

Your guide to how much insurance you need, and what kind, will largely be based on the needs of those who depend on you.

Policy talk: What’s covered

Life insurance. There are two basic types of life insurance: term and permanent. Term life generally costs less, and provides coverage for a specified period of time. Your beneficiary would receive the face amount of the policy. Permanent insurance (such as whole life and universal life) provides coverage over a lifetime. In addition to a death benefit, these types of policies also provide a tax-sheltered investment component that can grow over the life of the policy.

Disability insurance. This will provide an income if you become disabled and unable to work. Some policies are more generous, paying you if you cannot continue in your “own occupation,” while others base coverage on “any occupation,” where you are only paid if you cannot perform any job suitable to your education and experience. If you pay your own premium for disability benefits at work using after-tax dollars, any claim you make will be paid out on a tax-free basis.

Critical illness insurance.  Helps pay for additional personal, family or business expenses that often accompany a critical illness.

Mortgage insurance. This covers the balance of the outstanding mortgage upon death. You might not need this, if proceeds from an existing life insurance policy are enough to take care of this.