What Types of Insurance Do You Need?
In order to protect your long-term financial stability, it's crucial to buy the right types of insurance coverage for your personal situation. With all of the insurance options out there, it's can be difficult to know what is necessary and what is superfluous.
To keep your insurance costs down, it's best to not buy insurance to pay for small medical bills, auto repairs or financial losses. Build an emergency savings account to handle life's smaller financial surprises. Think of insurance coverage as protection against more expensive catastrophes.
You can lower your insurance premiums significantly by taking larger deductibles. Also, look for comprehensive insurance, not coverage for one specific event. For example, buy a comprehensive health insurance policy rather than just a cancer policy on it's own.
Auto insurance generally includes bodily injury, liability, property damage, collision, and comprehensive coverage. You should understand each type of coverage and how much it adds to your monthly premiums. There are also different deducible levels to choose from which affect your premiums.
Your homeowner's insurance should be reviewed annually to be sure your plan's coverage takes increased construction replacement costs into account. Also, check your coverage on household contents as they may have changed substantially since you took out the policy. It's also a good idea to document your household structure and contents with photos or videos.
Coverage for your personal property should include the contents of your home and related storage areas. If you're a renter, there are renter's insurance plans designed to cover just your personal items. Also, valuable property such as jewelry, art, collectibles, boats, or airplanes will likely need their own coverage if they're not already covered by another policy.
Health insurance coverage is often offered through most people's employers. However, self-employed individuals and entrepreneurs must find their own policies and pay the premiums. Generally speaking, you should purchase a good major medical policy with the highest deductible you can afford to handle.
There are two kinds of life insurance coverage: term and cash-value insurance. When you buy term insurance, you purchase pure protection because your beneficiaries receive the policy amount only when you die during the policy term. Cash-value insurance comes in numerous forms such as whole life, variable life, and universal life. What they all have in common is a combination of insurance and a savings or investment feature. The premiums for term insurance are much lower than for cash-value insurance, usually one-fifth to one-fourth the cost. Typically, younger adults benefit from the lower cost of term life insurance, and older adults with more disposable income benefit from cash-value life policies which have investment potential.
You may have as much life insurance as you need, but not enough disability insurance. Disability insurance will provide you with income if you become disabled and cannot work, a situation that is four times more likely to happen than dying before age 65. Disability coverage is an often over-looked category of insurance that is worth looking into for most people.
If you own a business, your insurance policies should include coverage for building and equipment, inventory, receivables, errors and omissions, key man life insurance, joint-venture insurance, and whatever might apply to your specific business or industry. It's a good idea to review all of your business insurance coverage at least once a year including purchases and sales of assets.
Business owners or independent contractors may want more protection than business insurance policies provide. Also, some lines of work may have local regulatory requirements for contractors to carry general liability insurance. You can obtain an umbrella liability policy to give you that protection or to supplement your other business insurance coverage.
Anything can be insured, even a racehorse or a movie star's legs. Common specialty insurance includes such things as rental car insurance, cancer insurance, vacation insurance, contact lens insurance, and air travel life insurance. Most of these types of insurance coverage are not necessary or are redundant because you may already have coverage under another plan.
If you have questions about your unique situation, feel free to contact us for advice in navigating the world of insurance coverage.