Identify the Protections You May Need for Your Assets and Your Loved Ones’ Futures
Life has a funny way of throwing us curveballs, doesn’t it? While it’s not inevitable that something catastrophic is in your future, investing in insurance allows you to gain financial peace of mind no matter what may happen. Of course, there are many options available, and you’ll need to do your research to identify the right insurance types to protect your assets and your loved ones. Read on to learn more about five of the most common insurance policies and what they could mean for you.
1. Life Insurance
Life insurance is one of the most common insurance types because it offers a broad stroke of protection for those who depend on you financially. Many people think of it as a way to ensure their spouse or children could remain in their home, afford monthly expenses without anxiety, and fund higher education. Even if you don’t have dependents relying on your income for everyday expenses, life insurance could be used to pay off any debts you’ve incurred if you pass away suddenly.
If you aren’t sure how much life insurance you need, do some basic math. Add up how much you earn in a year and multiply it by the number of years you plan to continue working until retirement. Your policy should be for at least an equivalent amount, while also covering end-of-life expenses like your burial costs. If you have large debts that you hope your life insurance could pay off for your loved ones, then purchase a policy large enough to cover them, too.
2. Long-Term Disability Insurance
Every year, more than 375,000 Americans become disabled, and there are approximately eight million Americans who cannot work at all or who have workplace limitations due to disability or illness. So, while none of us wants to believe it will happen to us, it’s something we should all prepare for. It’s generally advantageous to have a hopeful mindset about the future, but hope is not a strategy when it comes to protecting your future earning potential and your family’s lifestyle.
One insurance type to consider is long-term disability, which gives you a portion of your salary (typically a percentage; often 60% or 70%) if you are unable to work. To receive these benefits, you’ll typically need to have concluded short-term disability, and potentially also a mandatory waiting period.
Though there are some similarities between long-term disability insurance and workers’ compensation, the biggest difference is that this insurance type isn’t limited to injuries or disabilities that occur while you’re at work.
3. Health Insurance & Prescription Drug Coverage
Due to the increasingly high cost of medical care and medication, health insurance and prescription drug coverage are necessities even if you are a healthy and fit person. Even routine visits to your family physician can rack up a significant cost, not to mention more serious injuries or illnesses that require visits with specialists, surgeries, or other extensive treatment.
Health insurance can be costly in and of itself, causing many people to select a cheaper plan with less favorable coverage. With this insurance type, one size does not fit all so do your research on plans regardless of whether you’re purchasing through an employer or from the federal marketplace.
4. Homeowner’s Insurance
If you own your own home, you know there are many benefits – and a whole lot of responsibilities, too. If anything happens to your house, homeowner’s insurance is the insurance type that you can rely on for protection during the process of replacing or repairing your home. When you’re looking for the right policy, consider this crucial consideration: your policy should cover both the replacement of the structure itself and the contents of your home. Some policies will also cover your costs for living elsewhere during home repairs, which is a true value-add.
How much of this insurance type you’ll need depends on things like your home’s location, age, and amenities. To get an estimate on replacement cost, research how much builders in your area charge per square foot. Then, multiply that number by the square footage of your home.
Note: If you rent, rather than own, renters insurance will be the right insurance type for you.
5. Auto Insurance
In most states, automobile insurance is required by law. There are a few places where it’s not mandated, but even then, it pays – quite literally, at times – to have your vehicles covered. When you have no auto insurance policy or minimal coverage, you could unintentionally find yourself facing an avoidable financial risk in the event of an accident. If you’re subject to a lawsuit, someone is injured, or their property is damaged, the resulting costs can easily reach five figures or more.
What Insurance Types Could You Benefit From?
No one can see the future and we can’t prevent unfortunate surprises from happening, but it’s possible to give yourself more financial peace of mind. The insurance types mentioned above can help you protect yourself, your family, and your assets. Might losses still happen? Yes, they may. However, having insurance can lessen the burden by helping to reduce your financial anxiety.
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