Insurance Policies you should consider getting. Life throws us all so many unexpected curveballs. While we cannot always prevent these occurrences, we can choose to provide our lives a measure of protection.
Insurance is intended to provide us with some level of protection, at the very least monetarily, in the event of a tragedy.
Numerous insurance policies are accessible, and many financial gurus advise us to obtain them. Nonetheless, with so many possibilities, it can be tough to identify which type of insurance is truly necessary.
Choosing the appropriate insurance is always influenced by your unique circumstances. When building your insurance portfolio, consider factors such as children, age, lifestyle, and employee perks.
However, the majority of financial experts recommend that we all have four types of insurance. Life, health, auto, and long-term disability.
Each of these focuses on a different element of your life and is critical to your financial future.
Life Insurance
The primary reason for purchasing life insurance is to provide for those left behind. This is critical if you have a family that is financially dependent on your salary. According to industry experts, a life insurance policy should provide coverage equal to “ten times your annual salary.”
This sum would cover current expenses, funeral costs, and create a financial cushion for your family. That cushion will assist them in regrouping following your death.
When determining the amount of life insurance you require, keep in mind not just funeral expenditures. But also mortgage payments and living expenses such as loans, credit cards, and taxes, as well as child care and future education bills.
Traditional Whole Life and Term Life are the two most common types of life insurance. Simply put, Whole Life is a policy that you pay for until you die. Whereas Term Life is a policy that you pay for a specified period of time. When preparing your life insurance needs, you should seek the guidance of a financial specialist.
There are significant distinctions between the two policies. Consumers should consider their age, occupation, the number of dependent children, and other considerations when picking between these two options to ensure they have the coverage essential to protect their families.
Health Insurance
According to a recent Harvard research, “your family is statistically only one major sickness away from bankruptcy.”
Additionally, they concluded that “health difficulties accounted for 62% of all personal bankruptcies in the United States in 2007 and 78% of those filers had medical insurance at the time of their sickness.”
These figures should be sufficient to convince you to purchase health insurance or to increase your current coverage. The key to obtaining enough coverage is comparison shopping.
While enrolling in your employer’s insurance policy is the best and least expensive alternative, many smaller firms do not offer this benefit.
Finding affordable health insurance can be challenging, much more so if you do not have an employer-sponsored plan or if you have a pre-existing disease.
According to the Kaiser/HRET poll, the average cost of premiums for an employee participating in an employer-sponsored health care plan was around $4,100.
With escalating co-payments, annual deductibles, and coverage reductions, health insurance has become a luxury that an increasing number of people cannot afford. However, even a minimum policy is preferable to having no coverage.
A day in the hospital might cost between $985 and $2,696. Even if your coverage is limited, it may provide some financial assistance during your hospital stay.
Enquire with your employer about health care benefits, and with any occupational associations to which you belong about prospective group health coverage. If you are over the age of 50, AARP may be able to help you with health insurance.
Long-Term Disability Coverage
This is the one type of insurance that the majority of us believe we will never need, as none of us anticipates being incapacitated.
Yet, according to Social Security Administration figures, three out of every ten workers entering the workforce will become disabled and unable to work before reaching retirement age. 12 percent of the population is currently disabled in some way, and nearly half of those people are still in their working years.
Even individuals with excellent health insurance, a seizable nest fund, and a sound life insurance policy never anticipate the day when they will be unable to work for weeks, months, or will never be able to work again.
While health insurance covers hospitalisation and medical fees, where does the money come from to cover the daily expenses not covered by your paycheck?
The following are some frightening statistics on disability:
- Causes of Disability Nearly half of all mortgage foreclosures are caused by death.
- Nearly 90% of Disabling Accidents and Illnesses are unrelated to work.
- 498 Americans Have Become Disabled in the Last Ten Minutes.
Would you have enough savings to meet your living expenses if you were injured and out of work for even three months? Consider the financial hardship you could experience if you were diagnosed with a serious medical condition. Such as cancer, and were unable to work for more than a year.
Numerous firms provide both short- and long-term disability insurance in their benefits packages. This is the optimal strategy for obtaining affordable disability coverage. If they do not, seek the services of a private insurer.
If you’re unsure how much coverage you require, AARP provides an excellent disability insurance calculator.
The best policy is one that assures income replacement; more commonly used terminology includes replacement of 50% to 60% of your income. Disability insurance premiums are determined by a variety of factors, including age, lifestyle, and health.
In 2009, the average fee for group or workplace coverage was roughly $238 per year or nearly $5 per week. A minor price to pay if you find yourself with a life-threatening sickness or injury. Disability insurance will ensure that you have some income if you are unable to work.
Auto Insurance
According to data supplied by the Fatality Analysis Reporting System. There were over ten million traffic incidents in the United States in 2009. And 33,808 persons died in motor vehicle crashes as a result of those events (FARS). Auto accidents were the leading cause of death among Americans aged 5 to 34.
In 2009, almost 2.3 million drivers and passengers were treated in emergency rooms, and the total cost of those incidents, which included fatalities and debilitating injuries, was around $70 billion.
While not all states compel drivers to obtain auto insurance, the majority do have financial responsibility obligations in the event of an accident. Numerous states conduct random inspections of drivers for proof of insurance on a periodic basis.
If you do not have insurance, the penalties vary by state and can include license suspension, points on your driving record, and fines ranging from $500 to $1,000.
If you drive without vehicle insurance and are involved in an accident, fines are likely to be the least of your financial worries. Your car, like your home, is a significant asset that you utilize on a daily basis. If your automobile is destroyed in an accident and you do not have auto insurance. You will be unable to replace it unless you have a sizable savings account. Which you probably do not want to do when auto insurance would cover the expense.
If you, a passenger, or the other driver is harmed in an accident. Your auto insurance will cover your medical expenses and protect you from any litigation that may arise. Additionally, auto insurance protects you against theft, vandalism, and natural disasters such as tornadoes and other weather-related occurrences.
Again, like with all insurance, the cost of your auto insurance is determined by your unique circumstances. The best course of action is to obtain multiple rate quotes. Thoroughly analyse the coverage given, and check periodically to see whether you qualify for reduced rates based on your age, driving record, or the location in which you live.
Summary
While it is costly and will undoubtedly consume a portion of your budget, going without it could result in financial catastrophe.
Always check with your employer first for available coverage, as this is likely to be the most cost-effective method of obtaining coverage.
If your employer does not supply it, request estimates from multiple insurance companies.
Make appointments with agents who provide coverage in different locations. As they may give discounts if you acquire multiple types of coverage.
The cost of going without insurance is negligible in comparison to the cost of living without it.