You might wonder how these plans work, what they actually cover, and if they’re really necessary. The mere selection available can paralyze you to inaction. And isn’t it nicer to think that nothing will ever go wrong? Consider how many of us really want to acknowledge the reality that life can (and will!) surprise us with unexpected challenges on any given day.
The only thing simple about any type of insurance is this: it is one of the most important tools you need in order to protect yourself and take care of the ones you love.
Here’s a brief introduction to the most popular types of insurance, along with some candid advice from real people to help you decide which coverage is important for you.
Renters Insurance & Homeowners Insurance
Renters insurance is the best purchase I’ve ever made. For $250 a year, all of my belongings are protected.
A couple of years ago my purse was stolen from a taxi cab. Not only was the purse itself expensive to replace, all the items inside really added up—I had to replace my phone, wallet, makeup and sunglasses. Guess what? Renters insurance covered everything. It’s really a no-brainer.
Renters and homeowners insurance are very similar, with the exception that homeowners insurance also covers the physical dwelling or structure that you live in. In both cases, the tenant’s personal property is covered against fire, theft and vandalism. When purchasing a policy, it’s important to take note of the deductible. For example, if the policy’s deductible is $500, you will not receive coverage for the first $500 of loss.
“I was in perfect health and had my life planned out one day, and the next I was partially paralyzed and my life turned upside-down,” says Kristen. “It just goes to show that disability can happen to anyone, at any time.”
Disability insurance insures a beneficiary’s income should he or she become disabled and not be able to work. This type of insurance typically covers psychological disorders, injury, and illness that prevents the insured from performing the core functions of their work. This is often an overlooked form of insurance, but 18.5% of Americans are currently living with disability, and one in four people in the United States workforce will suffer a disabling injury before they retire.
In hindsight, Kristen wishes she had purchased disability insurance. “From experience, I know that everyone needs to take the time to prepare for the financial impacts that come when the unexpected happens.”
Life insurance pays out a sum of money either after the death of the insured person or after a set period of time. The benefit goes to specified people surviving the insured, so it’s a very important form of insurance for those with dependents. Dependents are people that depend on you for support such as a spouse, children or other family.
By opting to have life insurance, you’ll have peace of mind knowing that your loved ones will be taken care of, come what may.
A friend of mine has high medical bills; having health insurance saves her over $10,000 a year on just one of her medications. That’s very significant!
Health insurance provides coverage against the risk of incurring medical expenses and typically covers losses from an accident, medical expenses, disability, and accidental death or dismemberment. This form of insurance allows the beneficiary to make monthly or bi-weekly payments to ensure that money is available for their healthcare.
Should you incur significant medical expenses, having health insurance coverage can save you a lot of money and mitigate financial risk.
Purchasing insurance is a very personal decision that depends on various factors in your life, as well as your risk personality. Information is power. An understanding of the benefits, your risk, and how each type of insurance works are key factors in making the best insurance decisions for yourself.