The 8 Types of Insurance Policies You Need

Looking for an insurance policy and don’t know what to choose from? Here are 8 types you could weigh and choose one or so depending on your needs. 

Types of Insurance Policies Everyone Needs

There are many surprises in life. Some of them are exhilarating, but others are financially and emotionally devastating. Car accidents, damage to property, and sudden life-threatening illnesses are just some of the few things that could happen without you expecting it, causing a lot of financial setbacks. 

Such things are the reason why insurances exist. Different types of insurance are designed to ease financial strain during unexpected disasters. 

If you are wondering what types of insurance are worth your money, this article will provide you with a comprehensive list of the primary insurance policies you should consider. They include auto insurance, home insurance, life insurance, etc. Read on to learn more.   

1. Auto Insurance

Auto insurance is a legal driving necessity in most states, meaning driving without insurance coverage is illegal. Additionally, it would be significantly expensive to cover damage costs if your car is involved in an accident, especially when you are at fault. 

Various car insurances cover injuries and vehicle damage costs after accidents. They include:

  1. Liability damage – covers injuries and property damage caused if your car was at fault, your legal defense, judgments, and settlements. 
  2. UM coverage – if an uninsured driver was at fault, this auto insurance covers the medical expenses. It can also compensate for pain, suffering, and lost wages. 
  3. PIP – covers medical expenses regardless of the driver at fault. 
  4. MedPay coverage – covers medical expenses regardless of the driver at fault. The amounts are low. 
  5. Comprehensive and collision coverage – covers damage to your car regardless of the driver at fault. It also covers theft and damage from floods, fire, etc. 

2. Home Insurance

Home insurance is not a legal necessity, but lenders usually require home insurance coverage if you are financing the home. Home insurance helps you cover replacement and repair costs in case of damage to your home. 

The following are types of insurance coverages:

  1. Dwelling coverage – covers the house structure from unexpected damage such as fires, wind, vandalism, and theft. 
  2. Personal property coverage – protects personal belongings such as clothing, appliances, and furniture from explosions, fire, and theft. 
  3. Liability coverage – covers property damage and injuries you accidentally cause to other people. It also covers attorney fees. 
  4. Additional living expenses – pays living costs after temporary displacement. 

3. Renters Insurance

Renter’s insurance covers replacement costs for belongings like clothing, furniture, and electronics should they be damaged or stolen while renting a house. The coverage offers protection from explosions, natural disasters, and fires. 

The following are types of renters insurances:

  1. Personal property coverage – reimburses the cost of stolen or damaged personal belongings.
  2. Liability coverage – covers injury and personal property costs to other people if you are at fault.
  3. Additional living expenses – covers living expenses if the rental is destroyed or damaged.

4. Umbrella Insurance

Insurance policies usually have a liability limit. Umbrella insurance provides coverage for additional liability if your renters, home, or auto insurance cannot sufficiently cover the costs. 

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5. Life Insurance

Life insurance provides coverage to people who depend on you financially. The coverage replaces your income in case of unexpected death and saves your dependents from financial hardships. 

The following are the two main brackets of life insurance:

  1. Term life insurance – lets you lock in your insurance coverage rates for a set duration. Your premiums will be level during this set duration. The coverage is renewable. 
  2. Permanent life insurance – provides lifelong coverage. It has two components: a cash value and a death benefit. 

6. Health Insurance

Medical expenses can cause a lot of financial hardship. Health insurance helps to reduce the financial strain by covering medical bills. 

Health insurance is usually provided through employers, but you can get a health insurance plan via the federal health insurance marketplace. They have eligibility and income requirements. 

Additionally, you can buy health insurance directly from an insurance company, broker, or agent. 

7. Disability Insurance

Having disability insurance is critical if your job involves dangerous activities, but remember that most disabilities do not arise from work-related activities. Back pain, diabetes, cancer, and arthritis are among the most common disability causes. 

Disability insurances are therefore a wise addition to financial plans. If you become disabled or sick, the coverage will help supplement part of your income. The supplement ranges from 40% to 70%. It has a waiting period. 

The most common ways to get disability insurance are by qualifying for Social Security disability benefits, individual policies you can buy, and group insurance at work. 

8. Long-Term Care Insurance

There is a 70% chance that you will need long-term care after turning 65. The assistance can include in-home care, assistance for everyday tasks, and staying in nursing homes. 

Long-term care can be pretty expensive. LTC insurance helps cover long-term care expenses such as stays in nursing homes, adult day care, and in-home care. The most cost-effective way to buy LTC care is when you turn 50 or 60, as the cost increases the older your get. 

Conclusion

Getting an insurance overage is a clever way to avoid financial and emotional strain after fires, accidents, vandalism, or natural calamities. Be sure to sufficiently research any coverage before purchasing it. 

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