In a World of Insurance, Where Do I Start? 

Money & Relationships Types of Insurance

If you’ve ever wondered why having the proper coverage is important – consider this scenario. You’re driving down a steep mountain with family members in the car. Someone yells, thinking they have seen an animal. You’re startled so you quickly steer the car to avoid their observation but then you quickly remember that you’re elevated above the ground on a mountain. Looking to your left and right, your fears feel less threatening since there are guardrails present to prevent an unsightly accident. Insurance works in the same way and serves as guardrails. Think of it as a layer of protection to make any future chain of events less life-altering. We’ll explore varying types of insurance, how to secure the best deals, and most importantly – how to properly protect you and your family.

Auto Insurance

As a licensed driver, you’re legally obligated to have your state’s required minimum amount of coverage. Often times, the insurance companies will inform you of the basic necessities, but it doesn’t hurt to educate yourself before making a final decision. Below are the top five types of car insurance.

  • Liability: This type of insurance will cover you if it is determined you were at fault. Liability insurance covers the repair of any property damage, as well as any medical costs incurred. The minimum amount required differs from state-to-state, so make sure you verify your residing states’ information.
  • Collision: In the instance that there is a covered accident, collision coverage will pay for the repairs needed for your car. If the unfortunate event happens where your car is deemed totaled, this type of insurance will pay out the value of your car. If you are currently making payments, collision coverage is required. Luxury vehicles or more expensive cars could also benefit from having this coverage as well.
  • Comprehensive: While the two types above cover accidents, comprehensive covers things such as weather damage, your car being stolen or a rock damaging your windshield. Typically optional, any accident not involving a collision could fall into this category.
  • Personal Injury Protection (PIP): This coverage is not available in all states but in the case where it is, strongly consider this as an addition. This insurance covers your medical expenses and your passengers – no matter who is at fault. We all know how medical costs can rack up very quickly; this protects you no matter what happens.
  • Uninsured/Underinsured Motorist Protection: In the instance where the other driver involved in the accident doesn’t have sufficient insurance to cover all damages, this type of insurance will protect you.

Home/Renters Insurance

Homeowners insurance covers the cost to repair or replace parts of your home (or belongings) in the event of a covered loss. To make sure you have enough coverage, take inventory of the belongings in your home. Estimate by room the total value to make sure your coverage amount is sufficient. If you live in an area where natural disasters are prevalent, be sure to shop around and see what providers offer.

Renters insurance is very similar to homeowners. The main distinction is this policy covers the tenant’s personal property only, not including the actual building.

Life Insurance

One of the most overlooked types of insurance – but the most important. Life insurance guarantees your family won’t experience severe and immediate financial hardship when a spouse or partner passes away. Typically, the younger you are, the less inexpensive your premium will be. If you are older; it’s never too late! Policy prices can differ based on age and health, so shop around for the policies that are most beneficial to you and your family.

The two main types are term life and whole life insurance. Term life insurance is only active for a designated time period. For instance, if you acquire a 20-year term and pass away during that time, the designated beneficiary will receive the payout. If you outlive the policy, the funds are typically forfeited. This type is cheaper per premium but doesn’t have the same coverage as a whole life policy. Whole life insurance remains active and intact as long as you are paying the premiums. A portion of the money paid in premiums accumulates as cash value and this is one of many benefits.

Health Insurance

Whether you have an employer-sponsored plan or purchased coverage, it’s important to assess medical coverage (and usage) on a regular basis. Life happens and when it does, you want to ensure you and your family are protected. While copays can be inconvenient and sometimes costly, consider how much you would have to spend out of pocket without insurance. Having the right amount of coverage always lessens the blow, providing peace of mind.

Long-term Disability

This insurance policy can protect some of your income if you become too ill or injured to work for an extended period of time. Many employers offer this as a voluntary benefit but can often be overlooked by employees. If you are self-employed, try getting quotes from various companies. Since your income can have varying factors, this could create an added layer of protection over your family and finances.

Insurance doesn’t have to be an uneasy, indigestible topic. Breaking down the types, assessing personal needs and what works best for you and your family should help shape these decisions. Often times, bundling insurance and using the same provider can guarantee some of the best deals.

Don’t be afraid to shop around and take your time! Be sure you’re in the posture to make sound, money-conscious decisions. Balance the coverage you need with what you’re able to afford and don’t be afraid to make adjustments as necessary.

It can be overwhelming but there are so many resources available that provide clarity for topics that can become a bit complicated. As with anything, there are certain times in life where you may not 100% use each benefit and that’s okay. Rest assured knowing that you made the right decisions early on to preserve and protect the ones you love most.

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