Even though total and thorough coverage is critical, it’s still possible to have too much coverage. Paying more than you can afford for insurance may leave you financially vulnerable when it comes to other things, such as retirement savings or your emergency fund. How do you determine which types of insurance are a necessity and which ones may be a bit superfluous?
Here’s a quick look at some of the ones you definitely need.
Life Insurance
Life insurance is something everyone needs, and supplemental life insurance is, too. This covers costs that might be associated with dying, like mortuary and burial fees. If you happen to be the one who brings home the bacon in the family, this type of coverage will additionally help your loved ones with the lost income. This is the primary reason people have this type of insurance.
Health Insurance
Health insurance is purchased to cover any necessary medical costs; be they for hospital stays, surgeries, or even just going to the doctor. This type of coverage is arguably the most critical type. People go bankrupt from medical bills. It goes without saying that everyone, young or old, needs health insurance.
Renters or Homeowners Insurance
If you own a home, homeowner’s insurance is a necessity because your home is typically your most valuable asset. If you rent, renter’s insurance might not be that critical, but it can bring peace of mind. It’s typically not very expensive, either. The main difference between the two is that, while homeowner’s insurance will cover damage to the home, renter’s insurance doesn’t usually. Both offer coverage from theft. If you want to insure the property against things like wildfires, earthquakes, and flooding, you’ll generally need additional insurance.
Disability Insurance
Life insurance is, in a way, akin to disability insurance. They both provide a bit of financial cushion in the event that something ever happens to you. Say you get injured or sick and you aren’t able to work. If this happens this type of insurance will reimburse you for the income you’ve lost. Depending on the type you get, it can cover total, partial, temporary, or permanent disability.
Many Americans become disabled at some point in their lives, and that means that this type of coverage is a good idea for everyone, regardless of their age or health status. It’s also typically very affordable and is able to provide great financial assistance if you’re out of commission for one reason or another.
Car Insurance
There are quite a few different types of car insurance coverage you can get. They include coverage for underinsured or uninsured motorists, comprehensive, collision, and personal injury protection as well as simple liability coverage. The thing about car insurance, and indeed all types of insurance, is that you need to shop around for a plan that suits both your needs and your budget, and don’t forget to look for discounts. This type of insurance is a requirement by law in every single state in the US.
The types of insurance you just read about are a necessity for everyone. There are other plans that might not be. These include things like mortgage insurance (unless your mortgage company requires it), disease insurance, accidental death insurance (because it typically comes with so many restrictions and it rarely pays out), and flight insurance.
Whatever your choices are, be sure that they fit into your budget without causing any sort of detriment to the other necessities in your life.