While we can’t always avoid the unexpected from happening, we can occasionally be protected. Insurance is intended to protect us, at least financially, if certain events occur. However, there are several coverage choices available, even though it can be difficult to figure out what kind of coverage you require.
Your situation will always dictate the type and amount of insurance you should get. When it comes to developing your policy portfolio, factors like children, age, lifestyle, and employment benefits all play a part. However, most financial gurus recommend that we all obtain four types of insurance: life, health, vehicle, and long-term disability packages.
1. Life Insurance
The capacity to cover your funeral expenditures and provide for those you leave behind is one of the most significant advantages of life insurance. This is especially critical if you have a family that relies on your income to make ends meet. According to industry experts, you should buy a life insurance policy that covers ten times your annual salary. However, that is a figure that not everyone can afford.
One in three households may not be able to cover their day-to-day expenses within a month of the major breadwinner’s death, according to a 2018 report by LIMRA, formerly known as the Life Insurance and Market Research Association.
Therefore, in calculating the type of insurance coverage you need, factor in the cost for the funeral as well as everyday living expenditures such as mortgage payments, outstanding loans, credit card debt, taxes, child care, and future college bills, and so on.
Traditional whole life and term life are the two most common types of life insurance. Simply said, whole life insurance can be utilized as a source of income as well as a form of coverage. Whole life insurance insures you until you die as long as you pay the monthly installments.
Term life insurance, on the other hand, is a policy that provides coverage for a specific period. Other significant variations exist between the two types of insurance, so you should consult a financial expert before deciding which is best for you. Age, occupation, and the number of dependent children are all factors to consider.
2. Health Care Insurance Coverage
According to research published in the American Journal of Public Health in 2019, you and your family are only one serious sickness away from bankruptcy. Two out of every three bankruptcies, according to the Journal’s poll of more than 900 Americans who filed for personal bankruptcy between 2013 and 2016, were caused by medical bills, income loss due to illness, or both.
Those figures should be enough to persuade you to get health insurance or examine and maybe expand your current coverage. However, as co-payments, deductibles, and coverages have climbed, health insurance has become a luxury that fewer and fewer people can afford.
Participating in your employer’s insurance program may be the best and most cost-effective alternative, but many smaller firms do not offer this opportunity. If you don’t have health insurance via your employer, look into prospective group health coverage through trade organizations or associations.
3. Insurance Coverage for Long-Term Disability
This is the type of policy that most of us believe we will never need. Nonetheless, according to Social Security Administration figures, one out of every four workers entering the workforce will become disabled and unable to work before reaching retirement age.
Even people with excellent health insurance, a sizable savings account, and a decent life insurance policy sometimes fail to plan for the possibility of being unable to work for weeks, months, or even years. While health insurance covers hospitalization and medical fees, you’re still responsible for the day-to-day costs that your wage usually supports.
4. Insurance for Automobiles
According to the National Highway Traffic Safety Administration, there were 6.7 million car accidents in the United States in 2018, and a projected 38,800 people died in car accidents in 2019. According to 2018 CDC data, auto accidents were the leading cause of death for Americans aged five to 24.
According to data, auto accidents cost the economy $242 billion in 2010, including deaths and severe injuries. Although not all states compel drivers to obtain auto policy coverage, the majority do have financial responsibility laws in place in the event of an accident. States that require insurance perform random checks of drivers for proof of coverage regularly.