Life comes with all sorts of unprecedented twists and turns, and therefore we seek to give ourselves a bit of protection by buying various types of insurance policies. If you are wondering what kind of insurance do I need then make sure to take a look at our guide to 4 major types of insurance policies and do a bit of research on your own to find out the minimum requirements of all these policies.
Insurances are meant to offer a degree of financial protection should a disaster strike us. When it comes to choosing insurance we are often overwhelmed with the choices. There are so many kinds of insurances available in the market such as:
- Motor insurance
- Business insurance
- Home insurance
- Health insurance
- Disability insurance and much more.
Business owners can also choose from different types of business insurance such as property insurance, professional liability insurance, product liability insurance, workers compensation insurance, car insurance policy and more.
However, regular individuals can do well with just 4 basic kind of insurances– life insurance, home insurance policy, drive insurance or vehicle insurance and of course a mandatory health insurance.
There are many different factors such as age, lifestyle, children, employment benefits etc. must be taken into while planning the insurance portfolio.
Must Have 4 Types of Insurance Policies for One and All
The main reason why people go for life insurance is to provide for the loved ones after their death. It becomes all the more important when you have a family which is largely dependent on your income.
According to insurance experts one’s life insurance should ideally cover 10 times the yearly income of the insurance holder. This would ensure that, there is enough money to provide for your recurring expenses, funeral expenses, along with a financial support for your family.
Before determining the amount of insurance coverage you need, consider all kinds of expenses such as credit cards, taxes, debts, everyday expenses, child care etc.
There are 2 main types of life insurance to choose from-
- Traditional Whole Life Insurance
- Term Life Insurance
While the Whole Life policies need to be paid for till your death, the Term Life policies come with a fixed amount of time. Talk to your financial expert to determine which kind is more suited to your individual requirement.
According to a recent study by Harvard University, more than 50% of personal bankruptcy cases occur due to hefty medical bills.
It goes without saying that health insurance is a must have for everybody. If you are wondering what happens if you don’t have health insurance then keep in mind that in case you come down with a serious illness or accident then you might go to debt because of your inability to pay the bill.
Thankfully, most employers in America provide both their full time and part time employees with health care plans. However, the small businesses don’t offer this benefit. The penalty for no health insurance in the US is around $695 per adult and $347.50 per child.
If you are thinking what kind of insurance do I need then make sure to start with a proper health care plan. Choosing an affordable health insurance policy is difficult especially if you already have a condition or if your employer doesn’t offer a proper health care plan.
The average expenses for a day in a hospital is about $1000 -$2500 so even a minimal health insurance policy is better than having nothing.
Those of you who are still wondering do I need car insurance should remember that many states in the USA needs its residents to get car insurance as a law. To find out what car insurance should I get, you need to find out about the minimum auto insurance in your state.
You should go for an auto insurance policy which should be enough to cover you if you find yourself in a terrible car crash. Penalty for no auto insurance in certain states of the USA could vary between $500 to $1000.
If you are not willing to spend a fortune on insuring your car then just go for a minimum car insurance which is going to help you in the long run. There are innumerable number of auto insurance companies which would provide you with minimum liability coverage at a cost effective rate.
You should also consider getting a comprehensive and collision coverage from vehicle insurance companies in case your car is less than ten years old. You definitely need car insurance which would cover any damage on your vehicle and person in case of an accident.
If you have a mortgage then a home insurance is mandatory for you to have. Insurance on your property would cover you against burglary or damage of your possessions in your apartment due to fire or any other disaster.
If you have obtained a bank loan for buying your home then they’d require you to insure your asset. For many homeowners the insurance premium goes as the mortgage payment.
In case you are renting a home rather than owing it then you need to go for a renter’s insurance policy.
Wrapping it up
Though buying all these kinds of insurances can take a toll on your bank account, not having them on the other hand could lead the way to financial ruin.
If you are thinking I need insurance but not sure which one to start with, then make sure to consult a financial adviser. You also need to talk to your employer and ask about the coverage available.
When your employer is not providing you with any sort of coverage, you need to contact a number of insurance companies and get their quotes. Go for agents offering coverage in more than one area since at times they offer discounts when you buy more than one kind of insurance.