Insurance is one of those “love ‘em and hate ‘em” expenses in life. It is absolutely necessary to protect your financial future. Remember, the purpose of insurance is not to make you rich in the event of loss. It is to transfer the risk of major loss from you to the insurance company, in exchange for policy premiums.
So which types of insurance do you need? Which are a waste of money?
- Medical Insurance – this is now mandated by our government. And for good reason. Health expenses are the number one cause of foreclosures and bankruptcies in our country. You don’t want to be thinking about financial consequences while you battle cancer. You must protect your health.
- Home Insurance – your home is often your greatest asset; it must be covered against major loss. Liability insurance is a key ingredient with home insurance, be sure to cover your assets against accidents. Click here to learn more.
- Auto Insurance – a certain level is required by law. You’ll also want to be sure you have liability coverage (consider “umbrella” coverage with your agent)
- Life Insurance – how would your family fare financially if you died tonight? If you don’t know the answer to that question, life insurance is your answer. Click here to learn more.
- Disability Insurance – your ability to earn an income is often your greatest asset. Disability insurance protects your income in the event your employer doesn’t have worker’s comp or a policy in place to cover you. Self-employed people need to pay special attention to this. This is often the most forgotten insurance.
- Pet Insurance – recent progress with medicine makes it more likely a pet’s health can be restored with advanced procedures. Pet insurance can help you avoid having to make the very difficult decision of whether to pay for that $5,000 surgery. Click here for more info on different kinds of pet insurance, and what you should consider.
- Identity Theft Insurance – most people waste money on credit monitoring, but have no plan for how they will recover their identity in the event it is stolen. It has been estimated that 600 hours is the average amount of time spent on recovering from an ID theft occurrence. Most people don’t have that time to waste. Click here for more info on credit monitoring vs. ID theft Insurance.
- Long-Term Care – this is a tough one. It’s not for everyone and should be assessed on a case-by-case basis. It is expensive, but necessary to receive good care and protect assets. Talk to a trusted agent.
- Mortgage Life Insurance – the only reason to have this is if your health prevents you from acquiring regular life insurance. Otherwise, you will badly overpay for this scheme.
- Private Mortgage Insurance – there are many home loan options these days to help you avoid private mortgage insurance. Click here to learn more.
- Insurance on Small Electronics – as mentioned in the opening paragraph of this article, insurance should be acquired to protect major loss. The loss of small electronics like headphones, iPods, etc. would not financially cripple you. This is where a reserve fund is handy. Keep a maintenance savings account to handle these small incidents. Don’t go broke insuring them!
This article was not intended to give you an all-inclusive tutorial on insurance, but rather to make you aware of the types you should consider and research further. We hope this helps!
What are your thoughts on insurance? What types of coverage do you have? Any that we didn’t include above?