While it’s never anyone’s favorite thing to shop for, insurance can be one of the more important purchases we have to make. It helps to be well-informed on which coverages are best suited for your individual situation. Not carrying the right coverage or being under insured can leave you vulnerable in the event of a claim. Carrying too much coverage can cause you to pay more than is necessary. There are many different types of insurance that are designed to protect you from a wide range of events. Not all insurance policies make sense for everyone, but those outlined below are the more widely purchased coverages that may make sense for you.
While once considered optional in the United States, citizens are now subject to penalties if they are not carrying health insurance. Most people have health insurance through employer-sponsored plans through their company or a spouse’s employer. Others may be eligible for government programs or purchase their plan through an online marketplace. Since it was enacted, the Affordable Care Act has opened up health insurance to many people that may have been unable to obtain it in the past due to financial constraints or preexisting conditions. Regardless of how you obtain coverage, health insurance is fairly similar. It will help pay a portion of doctor and ER visits, as well as prescription medications and hospital stays. The policyholder will pay regular payments known as premiums throughout the year as well as co-pays and costs leading up to their annual deductible in exchange for coverage above their deductible. With half of bankruptcies being the result of medical issues, it is easy to see why having the correct coverage is vitally important.
The next most widely purchased insurance product will be either a homeowners or renters policy depending on your living arrangements. A homeowner policy is purchased to protect you from losses due to damages to your home. This could come from a number of different events such as fire, water, natural disaster or accident. It may also protect you from some of the costs associated with someone being injured on your property from an event such as an animal attack or fall. Your level of protection will be determined in part by your premium and also the deductible you’re comfortable carrying. You may also be required to purchase separate insurance products to protect against damage caused by floods, hurricanes, or earthquakes depending on the location of your home. Renter insurance, on the other hand, only protects the tenant from loss or damage to items inside the home or apartment.
Compared to the first two policies, auto insurance is fairly straightforward. As an owner, you are required by law to carry state minimum liability coverage, which helps cover for losses to a third party if you are at fault in an accident. It will be presented in the form 10/20/10 when shopping. This example is read as $10,000 per person, $20,000 per occurrence, and $10,000 in property damage. It’s important to note that liability insurance does not cover repairs or replacement of your vehicle — for that you’ll need to purchase comprehensive and collision coverage. Generally referred to as “full coverage,” comprehensive and collision is optional if you own your vehicle but is likely to be mandatory by your lender if your purchase was financed. With auto insurance, if you purchase comp and collision, the provider will pay for repairs or replace your car regardless of whether you were at fault. You will only need to pay out-of-pocket the deductible amount you selected at time of purchase. The higher the deductible, the lower the premium you can expect to pay over the life of the policy.
Other Insurance Policies
In addition to the most common coverages, several other products exist to limit your financial risk. Many people purchase life insurance to protect loved ones from expenses that mount if you should pass away. This can be a great way to ensure your loved ones are taken care of in the future. Another useful policy is disability insurance which can pay for bills or other expenses if you’re hurt and unable to work. Health insurance is a great start to avoiding financial turmoil in the event of an accident. However, roughly 3 out of 4 people who declare bankruptcy due to medical reasons did so while having health insurance at the time of the injury. Having coverage that fills in the gaps left by health insurance can be a great way to avoid financial trouble due to an injury. Having the right type of protection, likely including the products outlined in detailed above, is also a great way to avoid financial trouble regardless of when and what life puts in your path.
This is a guest post from Brian Levesque. He is a freelance writer and family man who contributes articles on a variety of challenges affecting the home and family for Insurance Land, distilling the complexities of the modern world down into practical, down-to-earth advice.