5 Insurance Policies Everyone Should Have
Insurance may not be the most exciting topic to talk about, it’s definitely an important one—especially when it comes to your financial well-being.
It may be tempting to skip coverage for certain types of insurance, especially when you consider that policy premiums can really add up. Plus, no one expects their house to burn down, or to be involved in a serious car accident—but these things can and do happen.
But these things can and do happen—which is why owning the right policies is critical for protecting your investment in the face of disaster. Stick with us as we cover the most common insurance coverage types that everyone should have.
Life Insurance
The greatest benefit of life insurance is that it protects the people that are financially dependent on you. That’s why, if your children, spouse, parents, or other loved ones would face financial hardship after your death, life insurance should be a top priority on your list of insurance policies. So what will it cover?
Life insurance can replace your lost income, help pay debts and funeral expenses, or pay for your children’s college education. If you’re young and single, you may think that your need for life insurance is pretty low. But it’s not only necessary if you’re responsible for supporting a family, or you’re planning to someday. Even if you’re single, it could pay for burial costs and pay off any debts you leave behind.
- The types of life insurance: The two basic types of life insurance are traditional whole life and term life. Simply explained, whole life can be used as an income tool as well as an insurance instrument. As long as you continue to pay the monthly premiums, whole life covers you until you die.
Term life, on the other hand, is a policy that covers you for a set amount of time. There are other considerable differences between the two types of insurance, so you may want to seek the advice of a financial expert before you decide which is best for you. Factors to consider include your age, occupation, and number of dependent children.
Health Insurance
The rising cost of medical care is reason enough that health insurance should be a top priority for everyone, regardless of age or health status. After all, even a basic visit to the family doctor can result in a hefty bill. More serious illnesses or injuries that require a hospital stay, especially an extended one, can be financially devastating, racking up five-figure costs. Typically, the best and least expensive option involves participating in your employer’s insurance program. If your employer offers coverage, you’ll enroll directly through them.
However, many smaller businesses do not offer this benefit. If you’re purchasing your own coverage, either because your employer doesn’t offer health insurance or because you prefer an alternative plan to what they offer, there are a few ways you can get coverage:
- Use the Government’s Health Insurance Marketplace (also known as the health insurance “exchange”): To enroll in the online health insurance marketplace, simply enter your zip code during open enrollment. From there, you’ll be sent to your state’s health insurance exchange if one has been created for your state. Otherwise, you’ll continue using the federal marketplace exchange.
Depending on your income and your eligibility for other health insurance coverage, you may qualify for subsidies—also called premium tax credits—that will lower the cost of health insurance for you and your family. These are available for eligible members at both the state and federal health insurance exchanges.
- Buy Through an Online Health Insurance Brokerage: Comparison shopping through a private exchange can help you find affordable rates, but it may not be able to show you each plan that meets your requirements. The other downside is that if you buy your policy through a private exchange, you also won’t benefit from premium tax credits, as offered by the Marketplace.
- Enroll Directly With an Insurer: Because the Health Insurance Marketplace doesn’t include every health insurance plan available, the best way to find a plan that meets your needs is to buy a plan outside the marketplace.
Auto Insurance
An auto accident can happen in the blink of an eye, and yet the physical and financial consequences can last for years. But having a car insurance policy protects you, your family and passengers, and other drivers on the road. Here’s how.
If you or any of your passengers are injured, auto insurance will help pay for hospital visits, doctor bills, and surgery. So what happens if you’re involved in an accident and another driver is injured or their property is damaged? That’s where auto coverage steps in to save you from a potential lawsuit that could cost you everything you own. In this case, you’ll be covered against legal fees, injury or death, and property damage to others when you are legally responsible. Auto insurance will also protect your vehicle against theft, vandalism or a natural disaster, such as a hurricane or other weather-related incidents.
Even if you live in a state that doesn’t require car insurance, most states have regulations regarding financial responsibility in the event of an accident. States that do require insurance conduct periodic random checks of drivers for proof of insurance. If you’re stopped and found to be lacking insurance coverage, you’ll face steep fines, in addition to racking up points on your driving record.
Homeowners Insurance
If you’re like most people, your home is one of your greatest assets. And that’s why home insurance is a type of coverage you can’t afford to skip, even if you’ve already paid off your mortgage—and even if you haven’t, your lender probably requires a policy.
Home insurance protects you by giving you a financial safety net if an event covered under your policy—such as fire or theft—damages or destroys your home or personal items. Homeowners insurance consists of three main purposes:
- Covers the cost of repair for your home, yard, and other structures
- Reimburses you for damaged or stolen personal belongings
- Pays for personal liability in the event that you’re held legally responsible for damage or injury to someone else.
In certain cases, you may be able to add policies for events that aren’t covered by your regular home insurance, such as flooding. It can also cover you if your home is uninhabitable after a covered claim.
You may be thinking “what happens if I don’t own my home”? If you’re a renter, your renters policy is just as important—if not already required. Your landlord’s insurance will cover the structure itself, but your personal items won’t be covered—and they can add up to a lot of money. But in the event of a fire, burglary, or other disaster, your renter’s policy should cover most of the costs. Just like with homeowner’s insurance, it may also help cover the cost if you have to stay elsewhere while your home is being repaired. Even if you don’t have a mortgage, renter’s insurance is always a wise investment, since it gives you both property and liability coverage.
Long-Term Disability Insurance
The idea of a long-term disability is frightening, and many of us don’t want to consider that it could happen to us. But according to the Social Security Administration, more than one in four young workers entering the workforce will become disabled before they reach the age of retirement.
Even if you have a great health insurance policy, which will pay for hospitalization and medical bills, you’ll still be left with the daily expenses if you’re unable to work. But if you become disabled because of an accident, injury or illness, long-term-disability insurance replaces your income when you’re unable to work. LTD covers disability that lasts for three months or more and provides monthly payments equal to a percentage of your salary—typically 50 percent to 60 percent of your income. The length of time the policy pays varies—according to the Council for Disability Awareness, the average duration of a claim is nearly three years, although some policies pay until you reach age sixty-five.
Affordable Health Insurance Is Just a Click Away
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