Becoming an adult comes with big responsibilities, bills, and sometimes challenges. Fortunately for you society has created a few mechanisms to help make life easier and less costly. Insurance was created to help offset the cost of what might happen. It’s the one thing you need but you hope you never have to use it.
This guest post from Jo Bisenio tells you all about insurance and the four types you need to protect your health, income, and life.
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4 Types of Insurance You Need
We have no idea what is about to come. Unforeseen adversities can cause significant emotional and financial stress for you and your family. For example, you could experience sickness, injury, or even death.
While you may currently be in a stable financial situation. You will never know when these calamities will strike and put your financial security in jeopardy. Fortunately, you can ease your or your family’s financial burden and focus on healing and rebuilding your life with insurance.
However, it’s important to have all of the necessary insurance in place before something happens. You know what they say, “better safe than sorry.” So, while insurance policies can take care of you in the future, you should have them in place now.
There are several types of insurance, each of which covers a particular risk. Before choosing the insurance you need, it is critical to assess the kind of help each insurance provides. Detailed below are four of the most common forms of insurance and the coverage and benefits they give.
#1: Health Insurance
As the narrative goes, health is undoubtedly wealth. If you got sick, you would not only gamble with your savings, but your life could be at risk too. Thus, health insurance is essential, if not the most important, type of insurance you should get.
Healthcare coverage can pay various expenses related to medical care. There are different types of health insurance. What you choose depends on the coverage a company provides. For instance, your healthcare coverage can help you pay off hospital fees, clinic visits, and diagnostic tests.
#2: Life Insurance
Death, although bittersweet, is inevitable for all of us. However, you cannot know beforehand when and how you are going to die. Hence, it is integral that you have life insurance in place as early as possible.
Life insurance pays a sum of money, also known as a death benefit, to your selected beneficiary when you die. You can leave the death benefit to individuals, corporations, or trusts. Plus, your death benefit is divided based on your instructions, if you have several beneficiaries. Before you die always do proper estate planning.
Your family can use life insurance to replace lost income, pay off debts, or fund your children’s college education. If you’re single, it might cover your funeral expenses, as well as any debts you leave behind.
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#3: Auto Insurance
This type of insurance is essential if you own a car or drive most of the time. Auto insurance protects you from monetary loss in the case of a crash, theft, or accidental damage to your vehicle. If you own a car, this can be a godsend if you are involved in an accident.
There are three types of car insurance–liability, collision, and comprehensive.
If you cause an accident and others experience damage to their vehicle or injury, liability insurance can offset your costs. Collision coverage will cover repair or replacement costs incurred due to an accident involving you and another car.
Finally, comprehensive insurance covers damage to your car caused by situations other than crashes, such as robbery and environmental disasters.
#4: Disability Insurance
Disability insurance is also known as loss of income insurance. This type of insurance helps you pay your bills when you’re sick or injured and unable to work.
There are different types of disability insurance policies available. A disability policy can cover long-term or short-term disability. However, short-term disability coverage often replaces a more considerable amount of your income.
Moreover, disability coverage defines what it means to be handicapped, and they only pay a fraction of your pre-disability earnings. This fraction typically varies between 60% and 70% of base income for short-term disability coverage. Whereas, under a long-term disability policy 40% to 60% of your base salary is covered.
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Prepare For What Lies Ahead
Life is a rollercoaster of events. You will never know what will happen. Thus, it is always better to be ready than sorry. You can protect yourself and your family from financial loss due to unforeseen situations with an insurance plan.
You should buy the types of the coverage mentioned above to ensure you are ready when life happens. In addition, there are supplementary coverages or riders that you can look up and get as an add-on.
Check out more great content on The Purpose of Money like this story about how to leave a legacy.