Insurance policies can cover up medical expenses, vehicle damage, loss in business or accidents while traveling, etc. Life Insurance and General Insurance are the two major types of insurance coverage. General Insurance can further be classified into sub-categories that clubs in various types of policies. Think of insurance as protection for your wallet. Having the right types of insurance has many advantages and can potentially save you a ton of money. The main type insurance that you need for Life, Personal & Health, Pets, Homeowners & Renters, Long-term care, Disability, Dental.
Especially in the event of an emergency, unplanned life occurrence, or a medical need. Car insurance can pay for the costs of a car wreck, like repairs and medical bills.
If you’re in an accident, expenses can run high, from vehicle repairs to medical expenses, to property damage. Without a car insurance policy protecting you from those sizable financial obligations, you’re susceptible to serious money issues in the event of a collision.
A homeowner’s policy can help you rebuild your home after a devastating fire. Health insurance can pay for expensive emergency room bills after an injury or illness.
In exchange for paying money (premiums) to an insurance company, you get coverage. It means you can protect yourself without having to impact your long-term financial plans. Not having enough insurance policy types can derail your financial goals, and you definitely don’t want that.
Before you start signing up for any additional insurance coverage and adding new premium payments to your budget, you need to make sure that the insurance policy types make sense for your life situation.
You also want to make sure that the additional monthly costs are justifiable. You don’t want to be making monthly payments for insurance coverage if you don’t necessarily need it.
Check out these types of insurance you may need — and that you might not have considered otherwise.
Life insurance is something to consider if you have other people who depend on your income, such as a spouse or children. This policy is vital if you have large financial commitments such as a mortgage, child education expenses, or any major debt. Sometimes you even need a policy if you’re getting a small business loan.
Life insurance is a contract between an insurer and a policy owner. A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime (see Largest Life Insurance Companies in United States).
The purpose of life insurance to provide a lump sum (and usually tax-free) payment to your dependents in the event of your death.
How much life insurance you buy is a personal decision. Generally speaking, it depends on the number of years of income you want to cover for your household after you’ve passed away. There are three main types of permanent life insurance: whole, universal, and variable.
Policy owners make regular monthly payments during the term. Term life insurance covers a set period, such as 20 or 30 years. Parents often buy term life insurance while their children are younger and before they go to college or establish careers.
Essentially, in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death. Your beneficiaries can use the money for whatever purpose they choose.
The two most popular insurance products you’ll come across are term life insurance and whole life insurance
Term life insurance
Term life insurance, as the name indicates, only covers you for a specific term or a number of years (e.g., 10, 20, or 30 years). As long as you pay your premiums and keep your policy active, your beneficiaries should get a lump sum in the event of your death.
If you outlive your policy term, the coverage expires, and you can either renew (if offered) or apply for a new policy. The premiums can be affordable, but they get more expensive as you get older.
Whole life insurance
Whole life insurance coverage lasts your entire lifetime as long as you keep up with your premium payments. It may also offer cash value benefits like a form of savings or investment account associated with it (see Global Insurance Markets Trends and Forcasts for Life & Non-Life Insurance).
Over time you may get money credited to you. While this type of life insurance sounds attractive, it is also substantially more expensive.
Regardless of what type of life insurance you choose, you want to make sure you fully understand what is associated with each, how much coverage the premium provides, and if there are any conditions or requirements. Check out our article on if you really need a million-dollar life insurance policy.
Do you have an expensive engagement ring or wedding ring set? An expensive watch? A laptop you take with you everywhere? The costs of replacing items like this can be really expensive. If you have any personal items that are of value and you often have them outside of your home, you should definitely consider insuring them through a personal articles policy (see North America Personal Accident and Health Insurance).
Having adequate personal insurance cover provides you and your family with financial protection in the event of unexpected death, illness or injury.
You may even be able to add a floater to an existing policy to cover valuables like jewelry (ask your renters or homeowners insurance company). This will ensure that you can replace them without having to incur any major financial setbacks in the event they get lost or stolen.
Health insurance protects you from unexpected, high medical costs. You pay less for covered in-network health care, even before you meet your deductible. You get free preventive care, like vaccines, screenings, and some check-ups, even before you meet your deductible.
Health insurance carries both advantages and disadvantages. But the advantages far outweigh the disadvantages. Health insurance covers some or all of the costs of routine care, emergency care, and treatment for chronic illnesses.
Health insurance makes health care more affordable and more accessible, thus helping us stay healthy and ultimately live longer lives.
However, health insurance can be expensive, you’ll still have some costs for medical care and plans can have coverage restrictions.
Health insurance costs are driven, in large part, by costs of managing long-term medical conditions, the costs of caring for an aging population and the expense of new medicines, procedures and technologies. There also has been a trend toward consolidation in the insurance industry, resulting in fewer companies, reduced competition and ultimately higher health insurance prices.
Growing demand for pet insurance market policies and rise in need for financial safety in case of surge in uncertainties boost the growth of the global pet insurance. In addition, surge in number of veterinary centers positively impacts the growth of the market. However, lack of awareness regarding pet insurance policy and high premium cost hampers the market growth.
60% of Americans have a pet of some kind, and many times people don’t consider the associated medical costs with bringing home a pet. Pet parents should expect at least one $2,000 to $4,000 emergency vet bill during their pet’s lifetime, according to the ASPCA.
Pet insurance can save you a lot of money if your pet needs major surgery or has expensive medical care, so it is definitely something to consider. Talk to your vet to see which policies are accepted at their office before buying any coverage.
Pet insurance helps to pay for veterinary treatment for your pet so you can concentrate on getting them on the road to recovery. Veterinary care can be eye-wateringly expensive but most cats and dogs will need treatment for an illness or injury at some point in their life. Horses might need to have a vet called out to them, which will increase costs, and even smaller animals like rabbits can be surprisingly costly to treat.
Some carriers have different levels of coverage for the customer to choose from, while other carriers have one-size-fits all type plans.
Most pet insurance companies exclude pre-existing conditions and hereditary or congenital conditions. Some insurance companies will not accept pets after a certain age and many companies have waiting periods before benefits begin.
Financial institutions require you to have homeowners insurance. However, you absolutely should have homeowners insurance even if you own your home outright. Homeowners insurance protects you if your home is damaged or destroyed.
Homeowners insurance is a form of property insurance that covers losses and damages to an individual’s residence, along with furnishings and other assets in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property (see US Property & Casualty Insurance).
A standard homeowners insurance policy provides coverage to repair or replace your home and its contents in the event of damage. That usually includes damage resulting from fire, smoke, theft or vandalism, or damage caused by a weather event such as lightning, wind, or hail.
This policy includes dwelling insurance, which covers the amount it would take to rebuild your home. Homeowners insurance can cover your personal belongings and include liability insurance if someone were accidentally injured on your property.
Review your policy thoroughly to ensure you have the correct types of insurance in place. For example, flood insurance is excluded from most homeowners insurance policies. Invest in a flood insurance policy to prevent major expenses in the event of a flood.
Other types of insurance, such as earthquake coverage may not be included either. You should speak with your agent to ensure you are properly protected. And be sure to explore ideas to potentially lower your homeowner’s insurance cost without sacrificing coverage.
Homeowner’s insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary.
When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance.
If you’re renting, you’re not responsible for the building itself or major repairs. That’s your landlord’s responsibility. That being said, you definitely want to consider getting renters insurance to cover your valuables within your home.
Renters insurance is relatively affordable, costing an average of about $18 a month, or $219 a year. Free quotes, secure form, no spam. Your renters insurance cost depends on the amount of coverage you want, as well as your claims history and location.
Renters insurance protects you if your belongings get damaged by flooding, fire, or in the event that your home is broken into. This is also why it’s a good idea to keep an inventory of your stuff — like your expensive electronics or musical instruments — to know how much protection you actually need so you’re not overpaying.
A renters insurance policy covers any personal liability of the tenant in case a non-family member gets injured while at your apartment. For example, if a guest gets electrocuted because of a faulty wire and gets hospitalized, your home insurance company will pay for their medical expenses on your behalf.
Your electronics and other valuables are the things that your renters’ insurance would cover. Renters insurance also covers items stolen from your vehicle, even if it’s parked away from home.
What Affects The Price Of Renters Insurance?
The landlord will have a policy on the physical structure where you live, but your belongings inside are your own responsibility. Could you afford to replace everything you own if a catastrophe occurred? When you decide that having renters insurance is the answer, there are various factors that affect the price of a renters insurance policy.
The amount of coverage
How much coverage you choose has the most impact on the price of the policy. You need to insure all of your property because, in case of a fire, you could lose everything. If you have some particularly valuable items such as expensive jewelry or antiques, they probably won`t be covered in your general renters insurance policy. You may need a rider to include extra coverage for those items not included in the general policy.
Where you live
This is one of the factors over which you do not have a lot of control. The cost of insurance fluctuates from one part of the country to another. However, if you live in an area that is prone to flooding or earthquakes, those losses are usually not covered by a standard policy. Insurance will cost you more because you will need a rider or separate policy for those events in addition to your standard policy.
A deductible is the amount you pay for a loss before the insurance coverage starts. The more you are willing to pay for the deductible, the less the insurance premium costs. This will keep your cost down, but be sure that you can afford the deductible if you have a loss.
Actual cash value versus replacement cost
The difference between actual cash value and replacement cost insurance has an influence on the cost of your insurance premium. When your policy states that it will pay actual cash value, it means that it pays for the value of the item at the time of loss, minus depreciation. For example, a microwave you bought for $250 four years ago may now only be worth $75.
On the other hand, replacement cost coverage allows you to replace your lost or damaged possessions with similar items at current market value. Replacement cost coverage costs more in premiums, but you would have enough of a payout from your insurance company to replace your stolen or damaged item.
Most insurance companies offer discounts for such things as having smoke and fire detectors, sprinkler systems, fire extinguishers, burglar alarms, and dead bolts on all exterior doors. When speaking with an agent, be sure to ask what discounts are available and which ones you qualify for.
Long term care insurance
One of the most essential types of insurance is long-term care insurance. None of us want to think about not being able to take care of ourselves, but we need to prepare in advance. Health insurance does not cover the types of services that long-term insurance covers. This policy covers costs such as assistance with daily activities and if you have a chronic medical condition.
Long-term care services are financed primarily by public dollars, with the largest share financed through Medicaid, the federal/state health program for low- income individuals.
Care usually is provided in one of three main stages: independent living, assisted living, and skilled nursing.
The major downside of long-term care insurance is the same as with any insurance: you may pay premiums for years and never use the coverage.
Premiums for “qualified” long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses, exceed 7.5% of the insured’s adjusted gross income.
For instance, if you were to need help bathing, using the restroom, etc., this would be covered with the policy. It’s important to purchase long-term insurance sooner than later because it’s one of the types of insurance you may not qualify for once you have a condition.
Long-Term Disability Insurance
This insurance covers you by replacing your income if you’re unable to work due to a permanent or temporary disability. Regardless of whether you have dependents or not, if you have monthly living expenses, then it’s a good idea to consider getting disability insurance.
Short term disability is intended to cover you immediately following a serious illness or injury, and long term disability insurance is intended to maintain income replacement if your condition keeps you out of work past the end of your short term disability benefit period, even to retirement, depending on your plan.
If you have a fully-funded emergency fund, then it could cover you if you can’t work for a little while but it may not be enough.
Adding on short-term disability might not be a bad idea depending on the cost — especially if your employer offers it at a low cost or free. It can help you keep your emergency savings intact in exchange for the monthly premium you pay for coverage.
Dental insurance is one of those insurance types people don’t think about until they are in pain. If you have a history of dental work or have young kids with growing teeth, dental insurance is certainly worth the consideration. Even if only for preventative care.
Most health insurance companies in India do not provide any coverage for dental procedures as they fall under the cosmetic treatment category. However, procedures arising out of accidental injuries are often covered by insurers.
However when it comes to determining if dental insurance is worth it for you, be sure to weigh the various cost and coverage options out there.
Dental insurance policies cover some portion of the cost of preventive care, fillings, crowns, root canals, and oral surgery, such as tooth extractions. They might also cover orthodontics, periodontics (the structures that support and surround the tooth) and prosthodontics, such as dentures and bridges.
Dental insurance does cover crowns, but only when they are medically necessary. The coverage for a crown is usually 50% of the cost of the procedure, with the patient liable for the rest. Waiting periods of up to one or two years after you have purchased dental insurance can apply to its coverage of crowns.