Types of Insurance
Insurance is your protection against life’s many curveballs. While we can’t predict the future or prevent unexpected things from happening, we can access protection. Insurance gives you financial protection in the case of a disaster.
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There are a number of different types of insurance, and each pertains to a different situation. How much you pay for insurance often depends on factors such as your age, children, and lifestyle.
Does everyone need insurance? The short answer is yes. But not everyone needs every type of insurance. The following are the four most common types of insurance.
Life insurance is a measure of providing for the people you leave behind in the case of a tragedy. This is extremely important if you are the main breadwinner in your family. If your salary pays a percentage of the bills in your household, you should have a life insurance policy. Experts recommend choosing a premium that covers your yearly income multiplied by ten. This amount will provide your family with enough income to cover their day-to-day living expenses, in addition to funeral costs. In the case of your death, a life insurance policy provides valuable peace of mind for your family, without which they’d be left financially destitute.
Going through life without health insurance is a gamble that most financial advisors would say is not worth the risk. A serious, long-term illness can deplete your bank account very quickly, whether you have emergency savings or not. In the United States, a study concluded that 62% of all personal bankruptcies were directly caused by health emergencies. More surprising still, is that 78% of those who declared bankruptcy due to a health emergency actually had health coverage. Other statistics indicate that 48 million Americans are without health insurance.
Finding reasonably priced health insurance can be difficult, especially if you have a health condition or your employer doesn’t offer an employee benefits program. But even if you can’t afford a high premium, opt for the minimum amount of coverage, which can reduce the financial burden of short hospital stays, medication, and doctor’s visits.
Long-Term Disability Coverage
Few of us like to think that we’ll ever need protection against disability, but unfortunately, we can’t always know whether we’ll need it or not. Staggering statistics from the Social Security Administration indicate that three out of every ten workers that enter the American workforce eventually become disabled and unable to work—before the age of retirement. If we consider the entire population, approximately 12% are currently disabled, and half of all disabled individuals are working-age adults. Having health insurance isn’t enough to protect you in the case of a disabling accident or health condition.
In 2009, there were more than 10 million traffic-related accidents in the United States. Over 30,000 people died in traffic accidents—automobile accidents were the number one cause of death for people between the ages of 5 and 34 years. Automobile insurance is required in most states. Police will ask for your automobile insurance if you are pulled over. But if you get into an accident, the fine for driving without insurance will be the least of what you’ll have to pay. When your car is damaged in an accident and you don’t have insurance, it will be difficult to replace the vehicle without dipping into your savings.
While most insurance helps cover damage or occurrences that happen to you, liability insurance covers those things that are caused by you or your business. This is kind of a big difference. Accidents are going to happen. That’s just the nature of life. So being covered for these accidents.
Liability insurance is very important and part of your life. It’s mandated by law in almost every state for car insurance. This makes sure that if you were to injure someone and were at fault, they would be taken care of for their injury. Liability insurance can also cover damages to other people's vehicles or property.
Liability insurance is also important for businesses. There are a lot of people out there looking for a quick payday without a lot of work. If they can find some way to claim your products or services have harmed them, they are going to attempt to file a lawsuit against you. Liability insurance makes sure you are covered in these cases, or if there are actual accidents you’re still covered!
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