A Guide to Insurance Policies – Which are Essential and Which to Skip
Insurance policies are essential – they offer you peace of mind and protect you against the unexpected. However, such a large number of coverages are on offer that it can become a challenge to know whether to take them or skip them.
So, when creating your financial plan, you should choose wisely. Today, we’ll outline four policies that you must get and discuss four that you can pass.
A Note About Life Insurance
When it comes to life insurance, there are two types of people who must own it.
- People with estates large enough to have to pay estate tax.
- People on whom other people depend financially.
The first condition applies to a tiny pool of people, but the second to most. So, if other people rely on you, you should get a term or whole life insurance.
Having said this, we’ll go into more detail on the policies you need and those you don’t.
Below, we’ve gone through the insurance policies nobody should avoid.
This type of coverage might be the most important one to have. You need good health to work, earn money, and enjoy life.
If you develop an illness or get hurt in an accident without a policy, you may find yourself owing money to the hospital or being unable to pay for the necessary treatment.
Full-time (and some part-time) employees enjoy the benefits of health insurance from their company. So, if you’re not covered at the moment, the first person to talk to is your boss. You may even get coverage for your spouse under a single plan.
Otherwise, you should explore the possible options. Start from the federal healthcare marketplace or contact insurers directly. It may be more expensive to buy your policy, but you mustn’t avoid it.
As mentioned before, this policy is the most important if you have a wife and children. It replaces lost income and could even pay the college education of your children. However, even single people need it – if nothing else, to cover burial costs and pay off debts.
Again, employer plans are the best place to start. There are also hundreds of companies offering various types of coverage. The price will depend on your age and general health.
This coverage is mandatory for most homeowners under a mortgage. The premium might even be built into the monthly mortgage payment. If you aren’t in such a situation, though, remember that your home is your most valuable asset – you should protect it.
Renters policies are an alternative for people who don’t own homes. They can protect you against burglaries, fires, disasters, and much more.
Cars are another valuable asset that you want to protect. Auto insurance covers any possible damage, as well as injury or death of a person in your vehicle if you’re found responsible for it by law. In general, such coverages finance medical payment in case of an accident, too.
You’ll need to purchase this policy by yourself. As the experts say at BrokerLink, car insurance rates vary from one company to another, so it would be best to talk to a broker who works for you to find a policy that fits your needs.
Policies You Can Avoid
Finally, we want to mention several policies that tend to seem more important than they are.
Guaranteed issue is a type of life insurance whose most significant selling point is that you can’t get turned down for it. However, the first two years of coverage don’t count, meaning that the company will return the premium if you die within that period.
Life Insurance for Children
Most children are born healthy, and they live long lives. Besides, they don’t have an income, so you don’t need to ensure that. It may sound cold but skip this one. Save the money for a college education.
These policies are quite cheap, enticing people to get them. Most people will safely arrive at their destinations, though. Belongings can get stolen, but it’s a person’s responsibility to protect their things.
Universal life insurance comes with a higher premium, and the insuring company promises to invest the money for you. Although this sounds great, the cost is too high, so the expenses eat up the possible interest.
The Bottom Line
Insurance is an essential tool for living a responsible life. In some cases, though, the companies selling it will try to sway you into paying much more than you need.
Try to avoid the gimmicks and get the coverage you need – we are sure the rest of your money has a smarter place to go.