5 Types of Insurance Everyone Should Have

Updated on September 2, 2023
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Protecting your most valuable assets is an important part of developing a sound personal financial strategy, and the right insurance coverage can go a long way toward ensuring that your earnings and valuables are safe. While we cannot always avoid the unexpected, we can be protected on occasion. 

Insurance is designed to protect, at least financially, if certain events occur. Insurance can be challenging to understand at times. The risk of being under-insured or over-insured lurks as many make decisions ranging from whether to join an employing company’s dental plan to how much coverage to carry on jewelry.

It’s unlikely that you’ll need to purchase all of the insurance alternatives available to you. Even with these procedures in place, your requirements are likely to alter over time. That is why it is vital to understand what forms of coverage are acceptable for you and your family and how to determine how much coverage is adequate. Most consumers, however, should consider the following five types of insurance.

1. Life Insurance

Life insurance covers the costs of death, such as burial and mortuary fees. Life insurance can also be used to pay off debts like mortgages and loans and day-to-day living expenses. If you are the primary breadwinner for your family, life insurance may help your family make up for lost income. The latter is the most prevalent reason people buy life insurance. It is critical to keep in mind that life insurance has an expiration date.

If you die beyond the expiration date of your life insurance policy, your dependents will not get your death benefit. Furthermore, if your insurer discovers that you have made any false claims, your beneficiary’s claims may be invalidated. If you do not notify your insurer that you smoke and they launch a fraud investigation into your life insurance application, your beneficiaries may be denied the death benefit.

Most people would rather not worry about life insurance. It is, nonetheless, critical. If you have a family, you also have a responsibility to make sure that they are taken care of if you die prematurely, especially if you have children or a spouse not working. When you die, life insurance will assist your family in dealing with financial issues and keep them afloat financially after you’re gone. Check Bestow life insurance reviews to learn more.

2. Health Insurance

One of the most significant types of insurance is health insurance. You can only work, earn money, and enjoy life if you are in good health. According to a 2016 survey, one in every five Americans with medical bills declared bankruptcy. With figures like this, buying health insurance can help you avoid a significant financial catastrophe. 

If you work for the government, for example, OPM.gov allows you to select from a variety of healthcare plans. If you’re a freelancer, you could look into freelancer insurance to create your own benefits package.

When shopping for health insurance, keep the following aspects in mind:

  • Needs: Young, healthy singles require less coverage than families, the elderly, or persons with chronic health issues. If you expect to use your insurance frequently, seek a plan with a low deductible and copays.
  • Doctors: If you like your current doctor, try to find a plan that allows you to keep them.
  • Cost: Determine your financial status and what you can afford. Remember that insurance with higher copays and deductibles often have lower premiums, whereas policies with higher premiums typically have lower copays and deductibles.

3. Car Insurance

In most states, any car that is owned must have at least liability insurance. If you have a car loan, you may be obliged to obtain liability and collision coverage to protect both vehicles in the event of an accident. Vehicle repair and replacement can be costly. 

If you are in an accident, responsibility only covers the other driver’s damages. Collision insurance covers damage to your vehicle. Compare insurance policies and try to pick one with a higher deductible to help you save money on premiums. There are multiple forms of car insurance available to cover various eventualities, including:

  • Liability:  Liability insurance is divided into two categories: bodily injury and property damage liability. Only pedestrians are covered, not the driver or passengers.
  • Personal Injury Protection:  Personal Injury Protection (PIP) is a type of insurance that pays for medical expenses incurred by the driver and passengers.
  • Collision: Whether you’re at fault or not, collision insurance will cover the cost of damage to your automobile if you’re in an accident.
  • Comprehensive:  As opposed to collision insurance, which only covers damage caused by an accident, comprehensive insurance covers any car-related damage, such as a tree falling on your car or vandalism from mischievous neighborhood kids.
  • Uninsured/underinsured motorist: This protects you if the person who hits your car does not have enough insurance to cover the damage.

4. Homeowners Insurance

Many consumers are surprised to hear how much it would cost to replace everything in the event of a total loss, such as smoke damage restoration after a fire.

Home owner insurance will pay for the expense of repairing or replacing damaged or destroyed parts of your home or assets. Of course, homeowners insurance is only available to individuals who own a property. Apart from covering repairs or replacing parts of your home in the event of theft or damage, some policies also cover losses if you mistakenly damage someone else’s property in your home or if a visitor is hurt on your property. Some policies may provide compensation, such as replacement living arrangements, in some situations if the home is rendered uninhabitable due to a covered occurrence.

It’s also critical to make sure your homeowners’ insurance covers what you need. Many consumers are surprised to hear how much it would cost to replace everything in the event of a total loss. Estimating the worth of your belongings can be extremely useful when determining how much coverage you require. Work with your insurance company to determine a total value.

Homeowner’s insurance includes liability coverage. Every insurance policy is a little different, so double-check to make sure you know what’s covered. Natural disasters, for example, are not always covered by ordinary plans. Fires, lightning strikes, windstorms, and hail are normally covered, but flooding, earthquakes, and other disasters may be excluded depending on the conditions of your policy. If you reside in an area prone to these natural disasters, examine if your insurance policy covers them or search around for one that does. 

You may also be required by law or by your lender to purchase additional insurance against specified types of disasters. If you have a government-backed loan and live in a flood-prone area, for example, you will be required to maintain a separate flood insurance policy.

5. Disability Insurance

Disability insurance, like life insurance, provides financial protection if you become disabled. If you are injured and unable to work, disability insurance will reimburse you for your lost salary. Disability insurance can cover permanent, temporary, partial, or total disability. However, it does not cover medical treatment or long-term care services. According to the Center for Disease Control and Prevention, one out of every four Americans has a disability that affects major life events, making this type of insurance appropriate for everyone, including young and single people.

Disability insurance is relatively inexpensive, but it can save you a significant amount of money if you become disabled for an extended period of time. It is also better than workers’ compensation.

Bottom Line

Losses are unavoidable in life, and the impact they have on us varies. Insurance mitigates the impact by providing financial compensation for insured losses. There are many different kinds of insurance, but some are more necessary than others. Everyone should have the following insurance policies: life insurance, health insurance, car insurance, homeowners insurance, and disability insurance.

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.