No one really gets excited about insurance, and it's usually expensive and boring. But it's one of those things where you're happy to have it when the time comes when you need it.
There isn't a single insurance policy that offers all the coverage you need, though. Do an inventory of your insurance policies to make sure you’re adequately covered. Below are the 5 crucial policies you absolutely must have.
How many of them do you have?
1. Life Insurance Policy
With a life insurance policy, your dependents are protected should you meet an untimely death. Think about what your loved ones are going to go through if you die unexpectedly.
So how much life insurance should you take out? These things must be considered:
- Your income
- Expenses on your last illness
- Funeral costs
- Debts (e.g., mortgage) you want to pay off so your loved ones won't have to deal with those when you pass away
This isn't something that we like to think about, but it's something that we should deal with sooner rather than later.
If you take care of all these things for your family, your death wouldn't be so much as a financial burden as it is an emotional one for them.
2. Health Insurance Policy
You may balk at the cost of health insurance these days, but think about how much it would cost you if you were to get sick, require surgery, or need special care and you don't have health insurance. That would be really expensive!
If you don't have health insurance, you'll have to pay a couple hundred dollars or more just to see the doctor. If you have to undergo surgery that requires hospital stay for a few hours, that can cost you more than $10,000.
Sure, the cost of health insurance today can put a strain on your finances, but this is nothing compared to the cost of a genuine medical issue. If your employer doesn't offer health insurance to employees, you'll need to find a good coverage for you and your family.
3. Long-Term Disability Insurance Policy
If you get sick or become disabled, this policy will replace a portion of lost income. How much you pay for this policy depends on your age, health, how much income you want replaced, length of coverage, and limitations. Long-term disability policies tend to differ based on what insurance companies consider a "disability".
Like health insurance, this insurance policy is expensive. If you're employed, ask if your employer offers this type of policy.
If this isn't offered at work, you'll need to contact your health or life insurance agent and discuss the details of this policy.
4. Homeowner’s Insurance Policy
A homeowner’s insurance policy is required by lenders, especially if you still owe money on your home. But even if you have full equity of your home, you can protect yourself with this policy.
Think about how much your house and all the things in it would cost to replace. For the coverage you're going to get, the cost of homeowners insurance is well worth it.
There are policies that not only cover the house and its contents, but also the cost of putting you in an alternative lodging (e.g., hotel) while your house is being repaired.
Should someone get injured within your property, your homeowners insurance will cover the cost of that as well.
When you're shopping for homeowners insurance, consider your needs. You've got plenty of options when it comes to benefits, coverage, price, and limits.
5. Automobile Insurance Policy
Except for New Hampshire, automobile insurance is required by all the other states. Your 1975 Chevy Nova may have been paid off for years, but you still need to have coverage for that.
If you damage other vehicles or properties, you're responsible financially. If you don't have automobile insurance, you may lose everything if you're faced with a lawsuit.
You need to make sure that you've got the coverage you need — both for your vehicle and yourself.
Insurance is a necessity. When you're shopping for new policies, take the time to explore the different companies. You'll see that coverage and prices greatly differ among insurance companies.
Here's a tip that can save you money: Go with a policy that has a high deductible. Premiums tend to be lower the higher your deductible is. But get something that is still reasonable because you will have to make up this difference should you need to use the coverage.
Do your research. Talk to a good insurance agent. Insurance is expensive, but think about how much money you'll have to spend if you don't have insurance when you need it.
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