Insurance exists to protect you, the things you own, and the people you love from financial distress. However, there’s no master class on insurance, so many of us aren’t sure what types exist or benefit us the most. That’s where we come in! Let’s get to the bottom of insurance basics!
What Types of Insurance Are There?
Many different types of insurance are available, but today, we’re looking at the most commonly sought-after insurance options.
Auto Insurance
If you’re driving, you need auto insurance! In fact, it is illegal in most states not to have it, and it could cost you a lot of money if you get into an accident and don’t have it. But luckily, there are options!
- Liability: This type of auto insurance pays for damage and injuries you cause to others if the accident is your fault.
- Uninsured: This coverage pays for you and your passengers’ medical expenses if an uninsured or underinsured driver causes the accident.
- Personal Injury Protection: This type covers injuries to you and your passengers, no matter who was responsible. This type may also reimburse you for lost wages, rehab, and childcare.
- MedPay: Regardless of who is at fault, MedPay coverage covers medical costs for you and your passengers.
- Comprehensive and Collision: These two policies work together to pay for vehicle damage. Collision covers the cost of repairs or replacement after an accident. Comprehensive covers theft and damage due to extreme weather, vandalism, falling objects, and more.
Homeowners Insurance
While homeowners insurance isn’t required by law, lenders typically prefer it in case your home is damaged or destroyed. Home insurance policies vary depending on your needs, and the type of coverage ranges from dwelling (which protects the structure of your home from fire, wind, or theft) to personal property, which protects what’s inside your home. When it comes to homeowners insurance, the best thing you can do is talk to different agents, find the most suitable option, and then reevaluate your plan yearly to ensure you have the best coverage.
Life Insurance
Easy, Dateline fanatics; life insurance is seriously something to look into, especially if someone in your family financially depends on you. There are two main kinds of life insurance: term and permanent. Term life locks in rates for a set amount of time. It is typically more affordable and allows you to cover something specific, such as debt or college. Permanent life insurance provides lifelong coverage. It includes a cash value component and a death benefit. This is the pricier option but the way to go if you want to supplement retirement or savings or provide for someone who may be financially depending on you with a death benefit.
Disability Insurance
Arthritis, diabetes, cancer, and back pain are all qualifiers for disability insurance, among a number of other ailments, so don’t think that just because your job isn’t dangerous, you don’t need or qualify for disability insurance. If you become ill or injured, this insurance typically replaces 40%-70% of your income.
Long-Term Insurance
Whether it’s in-home assistance or a nursing home stay, there’s a chance that one day you may need one of these services – and none of them come cheap. Long-term care insurance assists with the cost to make that transition less of a financial burden. The best time to begin shopping around for this coverage is in your 50s or 60s; that way, you have a plan in place if the time comes.
Insurance Tips
- Regarding auto insurance, always check with your agent about your deductible and how increasing it might affect your premium. Make sure you can afford it before agreeing to it.
- Always ask about discounts. What do you have to lose? The worst thing an agent can tell you is that you don’t qualify – but at least you tried.
- Occasionally check your policies for unnecessary coverage. It never hurts to double-check that you aren’t overpaying for insurance.
- Always report a claim or multiple claims to your broker ASAP. Failure to do so may result in a denied claim. And your broker can give you peace of mind when you need it. If you have questions or want to ensure things are moving along during this process, contact your broker.