November is Financial Literacy Month in Canada, and Canadians are keen to learn more about how insurance affects their finances, according to a recent Pollara survey commissioned by the Insurance Bureau of Canada (IBC). Half of Canadians want to better understand home and car insurance and how it fits into their financial plans and almost 90% think children should learn about home and car insurance at school, according to the survey.
Financial Literacy Month aims to empower Canadians with the knowledge, skills and confidence to make responsible financial decisions in their lives. BMO Financial Group recently released its third annual BMO Financial Literacy Report Card which gauges the personal finance knowledge and understanding of Canadians. The majority of Canadians (91 per cent) give themselves a passing grade for their level of financial literacy. That’s down slightly from 2012 (93 per cent), and up from 2011 (89 per cent). However, according to the report, many Canadians may have a false sense of confidence in their level of financial knowledge. As part of the report card, Canadians were quizzed on three questions related to common financial concepts. The report revealed:
- Nearly one-third (31 per cent) of those who give themselves an “A” were not able to answer more than half of the questions correctly.
- Moreover, while Canadians say they are most familiar with RRSPs, 66 per cent correctly answered that you only pay taxes on RRSP investments when they are withdrawn – down from 80 per cent in 2012.
- Younger Canadians have more trouble with these questions, with only 39 per cent of those under 35 passing the test.
“Understanding how insurance works and how it helps families manage risk is a very important part of financial literacy,” said Bill Adams, IBC Vice-President, Western & Pacific. “After disaster strikes is the worst time for people to learn what coverage their insurance provides. Financial Literacy Month in November is the perfect time for Canadians to increase their knowledge about insurance.”
The Insurance Bureau is urging Canadians to take the time during Financial Literacy Month to find out about their policies. Insurance agents: are you ready to answer these questions for your clients?
- What does my policy cover and how much insurance do I need?
- Is there a specific kind of insurance for the type of home I live in (e.g., house, condo or apartment)?
- Are there risks I can’t buy insurance for?
- What optional coverage is available?
- Should I make a claim for every loss?
- If I get into a collision tomorrow, what kind of coverage can I expect under my policy?
- What coverage is mandatory and what is optional?
- Should I purchase collision insurance on an older car?
- What kind of deductible is recommended?
- What factors affect my insurance (e.g. distance driven)?
- What kind of insurance do I need?
- Are there risks I can’t buy insurance for?
- If my business is home-based, do I need special coverages?
- What does errors and omissions or malpractice insurance cover?
- How is my premium calculated?
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