Accidents happen. You never know what life will throw at you, and one disaster can be devastating.
That’s why you need insurance to be part of your financial plan – to protect your health, earning power, and assets.
But with so many types of insurance out there, how do you know which ones are worth it and which ones you don’t need?
This article will help answer that question by going over the 5 types of insurance that everyone needs and why.
Let’s get started!
1. Health insurance
The first (and most common) type of insurance you need is health insurance. You never know when you might have a medical problem, and it can get expensive quickly. In 2017, the average cost of an ER visit was
Most people get health insurance through their employer, but if you are self-employed or unemployed you can also get it through the federal marketplace. healthcare.gov. Depending on your income, you may qualify for a government-sponsored plan.
Otherwise, you can always get health insurance from a health insurance company. Consult a health insurance broker to find the best one for your situation.
There are many types of health insurance plans out there. For example, you can get a very low-cost plan with a health savings account (HSA). This has many advantages.
For one, a low-cost plan will lower your co-pay (although it will also raise your co-pay so you can pay more out of pocket for each doctor’s visit). But it also qualifies you to have an HSA where you can set aside money to pay off medical bills. The advantage of an HSA is that it is highly tax-efficient: You can put money into it tax-free (ie, tax-deductible), invest the money tax-free, and withdraw the money tax-free. It’s triple stupidity!
2. Car insurance
Every state requires car insurance to protect you, your car, and others in the event of an accident.
Here are the different types of cars you can get:
- Importance of debt-This covers any damage or injury you may cause to others. It is required in almost every state.
- Access to uninsured/underinsured motorists (UM)—This covers any medical expenses, lost wages, pain, or suffering that you or your passengers experience when you are hit by an uninsured driver.
- Personal Injury Protection (PIP)-This covers any injuries, lost wages, or expenses for you and your passengers, regardless of who is at fault in the accident.
- Medical bills-This helps cover any medical expenses (usually between
$1,000and $5,000) regardless of the problem.
- Collision propagation –This covers damage to your car, no matter who is at fault.
- Full description –This includes any damage to your vehicle or damage that occurs outside of an accident, including theft and damage from flood, hail, fire, vandalism, falling objects, and animals.
- Student driver insurance–This is a flexible spread for those who are working on getting their driver’s license.
You don’t need all kinds of cars, but you do need to have less credit, and preferably more. Talk to your car insurance agent to find out what is best for your situation.
3. Life insurance
Life insurance protects your financial dependents (such as your spouse and children) in the event of your death. Since we will all die at some point, this is a very important thing to have. And yet, Only 54% of Americans have life insurance.
Life insurance can also help cover the cost of your funeral and burial, which often places an unexpected financial burden on your family.
There are two types of life insurance: term insurance and whole life insurance. Term insurance is for a fixed period of time (such as 10, 20, or 30 years) and is usually less expensive, while whole life insurance covers you for life and has a portion of your retirement income.
Most experts recommend term life insurance for the average person, and the sooner you get it, the cheaper it will be because the risk of dying is low. So look into other life insurance options today!
4. Long-term disability insurance
Just like you never know when you’re going to die, you never know when you’ll have a terrible accident that could leave you disabled again.
This is why you need long-term disability insurance. Most employers pay 3 to 6 months of short-term disability. But beyond that, you’ll need long-term disability insurance, which usually kicks in after you’ve made a temporary payment and replaces 40% to 70% of your income.
5. Homeowner’s or renter’s insurance
Finally, you need homeowner’s or renter’s insurance. Homeowner’s insurance helps to repair or restore your home if something happens, while renter’s insurance only covers the contents of your home (since you don’t own the property).
That said, you should look for a homeowner’s insurance policy that covers damage, loss of property, and the cost of living somewhere else while your home is being rebuilt or repaired.
If you paid off your home (ie, you have a mortgage), the lender may require you to obtain homeowner’s insurance. And if you rent, your landlord may require you to get renter’s insurance as well.
At the end of the day, the point of getting insurance is to reduce risk. You don’t want to put yourself in the impossible situation of getting a bill you can’t pay or leave your loved ones in financial trouble.
So buy insurance policies in all the five areas mentioned above. Compare prices, coverage, benefits, and reviews online at sites like policygenius.com. It may take a long time to find the right plan, but it’s worth it. And you can always find an insurance broker to help you figure out your options and make an informed decision