Not many people enjoy insurance shopping. Insurance policies use legal jargon that often makes the contract hard to understand. Sometimes the end goal doesn’t seem to be worth the effort. After all, why would you buy a policy if you can’t understand all the details about its coverage? Despite the downsides, insurance usually wise. Let’s explore the 10 types of insurance everyone should consider:
1. Health Insurance (Mandatory)
Health insurance is probably the most important form of insurance. Not only do you want to make sure you have doctor’s visits and prescription medication covered, but you want to make sure you have insurance in case you fall extremely ill. If you aren’t offered health insurance through your employer, there are plenty of private health insurance plans you can buy. There is also Obamacare. There are also state plans for people who have financial difficulties.
Also not that health insurance may affect your tax refund.
2. Dental Insurance
Unfortunately, a lot of health insurance plans don’t offer dental insurance. Dental insurance is important to have, especially considering that it’s incredibly expensive to have teeth pulled, filled, or drilled. A lot of people pay out of pocket for dental visits or surgery when they could have a portion of that visit covered by insurance. If you have an employer that offers health insurance without dental coverage, consider seeking out additional coverage.
3. Auto Insurance (Mandatory)
If you own a car, auto insurance is also important to have. Auto insurance differs depending on various factors such as location, age, the type of vehicle, and your driving history. Shop around for an insurance policy before settling on one. The main purpose of auto insurance is to cover the financial loss or liability of your vehicle if you’re involved in an accident. While liability coverage varies depending on your policy and the extent of the accident, having an auto insurance policy can save you a lot of money if you are ever involved in an accident or lawsuit.
4. Homeowner’s Insurance (Mandatory with Most Mortgages)
Homeowner’s insurance policies cover the protection of private homes and any items of value that are stored inside. It also acts as liability insurance for any accidents that occur in the home, such as vandalism or theft. Homeowner’s insurance policies vary depending on the location and size of your house, and policies are usually more expensive when you have more items or add-ons you want covered such as a covered garage or house extension. Additionally, it’s important to see whether or not your homeowner’s insurance covers damage from natural disasters since not all policies will cover those events.
But remember… sometimes homeowner’s insurance is not enough.
5. Renter’s Insurance
If you rent an apartment or house, you should definitely consider buying renter’s insurance. Some issues that fall under homeowner’s insurance might be covered through your landlord, such as vandalism or unexpected natural disasters. However, it’s still a good idea to purchase renter’s insurance to cover the cost of your belongings in case of theft or other unexpected occurrences.
6. Property Insurance
Property insurance falls under a different category than homeowner’s and renter’s insurance policies. While some of the previous forms of insurance don’t cover natural disasters, property insurance usually does cover damage from floods, hurricanes, earthquakes, or fires. However, there are two different types of property insurance policies: open perils and named perils. Open peril policies cover all losses that are not excluded in the policy, and those exclusions are usually items like terrorism, earthquakes, war, or nuclear incidents. Named peril policies mean that the exact cause of loss – i.e., floods, hurricanes, theft, fire – need to be listed in the policy.
7. Life Insurance
If something happens to you, life insurance will provide your beneficiary with monetary compensation. Life insurance is generally purchased for people who have financial dependents. Single people really don’t need this type of insurance.
You want to make sure to purchase a policy that would provide your financial dependents with the same amount that you would annually make. There are many different types of life insurance policies out there, including ones that accumulate cash values and others that allow you to liquidate a certain amount when needed. Again, ignore this type of insurance unless you have someone who depends on your income.
8. Disability Insurance
Disability insurance covers a portion of expenses if you are suddenly unable to work due to injury or illness. Short-term disability insurance usually covers you for up to six months and provides a monthly stipend to cover your expenses and missed wages.
9. Liability Insurance
Liability insurance covers an insured party in the event of a lawsuit for certain events. For instance, if someone comes over to your house and slips on a sidewalk and then sues you for negligence, liability insurance will cover your legal bills. Liability insurance is also important if you run your own business. It protects you from employees who might damage your property or litigation costs caused by employee errors.
10. Natural Disaster Insurance (Sometimes Mandatory – Depending on Location)
If you don’t have coverage for natural disasters through your homeowner’s, renter’s, or property insurance, you might want to consider buying an insurance policy. In certain areas (like flood zones) this type of insurance is mandatory.
You won’t need to buy every single policy for a natural disaster, since it’s impossible to know when those might occur. But if you live in an area that has frequent earthquakes or floods, for instance, earthquake insurance or flood insurance should be something to consider.
Suggested further reading: 25 ways to save money on all types of insurance.