We can’t stop life’s unexpected hurdles, but we can certainly prepare for them and make the most of a bad situation. Insurance coverage offers the protection we need when disasters strike, but it can feel impossible to navigate through all the different types and policies that exist out there.
Let’s make it easy. Here are 4 types of insurance that everyone needs:
- Life Insurance: When you have family members that depend on your salary to pay for life’s essentials, life insurance becomes extremely important. When disaster strikes, you don’t want to leave your family without the ability to fend for themselves. A rule of thumb is to get a policy that covers ten times your yearly income in order to cover mortgage payments, loans, credit cards, and future payments like college tuitions and child care. Always get the advice of a financial expert before deciding on an insurance policy.
- Health Insurance: According to the latest US Census Bureau numbers, there were 48 million Americans without health insurance in 2012 — a full 15% of the population! The uninsured usually get worse health care and end up facing higher health bills that are impossible to tackle with their annual income. Even a minimal policy is better than none at all. The key to finding affordable health insurance that’s right for you is to shop around. Check with your employer, occupational organizations, and the AARP to see what health insurance benefits are available to you.
- Auto Insurance: The latest data shows that there were an estimated 35,000 deaths and over 3.8 million injuries relating to traffic accidents in 2013. That makes auto accidents the most common cause for death in America for people between the ages of 5 and 34. The cost of these accidents, including death and resulting disabilities, was a whopping $267 billion. Thankfully, auto insurance can cover the cost of accident damages, injuries, resulting litigation, and even things like thefts, vandalism, and natural disasters.
- Long-Term Disability Insurance: While health insurance covers your medical bills and hospital visits, it won’t cover you if you need to take off from work for a few months. Nobody expects to become disabled, but statistics from the Social Security Administration shows that 30% of workers entering the workforce become disabled and are unable to finish their pre-retirement work years. Disability insurance fluctuates wildly depending on a number of factors, so check with a financial expert to see what policy is right for you.
Here are 3 policies you probably don’t need:
- Life Insurance for a Child: No insurance policy is going to help recover for the loss of a child. You don’t depend on your child for income and your money would be better spent on an investment for your child’s college tuition.
- Credit Card Insurance: Many times, credit card insurance policies are duplicating what is already covered in disability or life insurance policies.
- Credit Card Fraud Insurance: Your maximum liability for credit card fraud is generally $50 so a credit card insurance policy solely for fraud is typically overkill.