Types of Insurance everyone Needs
The world they say has a life of its own. While we don’t have control over everything that happens around us, we can protect ourselves from the risks of the unknowns. Think insurance.
The idea of having insurance is to safeguard yourself from financial dips and provide some sort of financial cushion for yourself and your loved ones.
Having said that, there are lots of insurance options out there and it’s making it difficult for most people to decide which insurance coverage is best for them.
What kind of insurance do you need?
Making the right choice of insurance is no easy task, especially if you are not an insurance expert. You have to consider your current situation and other factors like employment benefits, lifestyle, kids, and of course, your age.
All of these play a role in helping you to determine the right insurance policy to sign up for. Insurance is broadly categorized into four major groups or types.
- Life insurance
- Health insurance
- Auto insurance
- Long-term disability
And experts recommend that everyone has them.
What is life insurance?
The highlight of life insurance is that it caters to the needs of your loved ones when you are no more and they won’t have to deal with the challenges of financing funerals.
Life insurance is especially important for people who have a family that depends solely on their salary. To ensure that your family is adequately covered, experts suggest that a life insurance policy should cover ten times yearly income.
While making your choice of life insurance and determining the amount of coverage, you must have two things in mind — funeral expenses and living expenses.
Funeral expenses pretty much explain itself. Living expenses include taxes, credit card debts, outstanding loans, mortgage payments, child care, and future college costs for your kids.
In 2018, a study by the Life Insurance Market Research Association (LIMRA) shows that at least one in three families can’t keep up with financial obligations within a month after the demise of the breadwinner of the family.
Then, you will have to choose between traditional whole life insurance and term life insurance policy.
Not to bore you with insurance jargon, the difference between these types of insurance policies is that the former covers you for life ( as long as you continue to pay the premium) while the latter covers you for a fixed or pre-determined amount of time.
Going by statistics, it’s an open secret among insurers that an average family is one serious illness away from going bankrupt. And this is based on a study published in 2019 by the American Journal of Public Health.
Between 2013 and 2016, the aforementioned study reported that over 900 million Americans filed for bankruptcy as a result of medical expenses or income loss as a result of illness. And they make up two out three cases of bankruptcies within the period in view.
These figures should serve as warning signals and push you to obtain health insurance if you already don’t have one or increase your present coverage.
However, getting health insurance is no child’s play and it’s fast becoming a luxury only a few can afford because of increasing deductibles, rising co-payments, and dropped coverages.
To best way to go about obtaining affordable health insurance is to take advantage of the employer’s insurance program. If your employer doesn’t have one, you can check with other trade organizations or associations that offer health coverage. If you run into brick walls with these options, the only option left will be to consider buying private health insurance.
Long term disability insurance
As you can imagine, this type of insurance provides coverage for people who become disabled and can no longer remain in employment work.
Though it is often overlooked, there are higher chances that one may need it. Statistics from the Social Security Administration show that one in four workers may become disabled before getting to their retirement age.
Sadly, even those who have great life and health insurance coverage tend to overlook the possibility of the day when they may sustain injuries and can no longer go to work.
While your health insurance caters to hospitalization and medical bills, you still have to make provisions for other daily expenses in the future and that’s where a long-term disability coverage comes in handy.
According to the National Highway Traffic Safety Administration, the United States recorded over 6.5 million car accidents in 2018. The estimated fatalities recorded was 38,000 in the following year, 2019.
In 2010, the economic cost of auto accidents, including deaths and disabilities was in the region of $242 billion. Now, with such scary figures constantly making the headlines, you will be doing yourself disfavor if you still go around driving without auto insurance.
Beyond getting fined, which will be the least of your worries if you get involved in an accident, you will be covered in costly medical bills. Having auto insurance will help you cushion whatever financial implications that may arise while also protecting you against car theft, vandalism, or natural disasters such as hurricanes or similar incidents.
If you followed from the start of this article, you will agree that everyone should obtain these (four) insurance coverages. The best place to begin your search is your employer and you can move on to other insurance coverage providers.