The average American is $38,000 in debt, excluding mortgage debt. Does this mean Americans are bad at budgeting? Or does it mean disaster strikes and most people have no way to afford a disaster?
This is why insurance is important to include in your financial plan. While it’s easy to forego insurance to save money, a powerful insurance policy can help you save thousands when the unexpected occurs.
But there are many types of insurance. Fortunately, you don’t need to purchase every type of insurance. Which ones are the most necessary? Here are 9 types of insurance you need.
1. Life Insurance
Whether you’re married with children or you’re single with a dog, everyone can benefit from life insurance.
For example, let’s say you lose your job. Your life insurance policy can help supplement your income until you can find a new job. If you have children, your life insurance policy can help you pay for their college tuition.
Most people use their life insurance toward any debts after their death. Life insurance can also be used for a funeral and other death expenses.
2. Health Insurance
We often take our health for granted. What happens if we’re severely ill, injured, or find out we have a detrimental disease? Health insurance will come in handy.
The average hospital bill costs $10,000. If you don’t have that money readily available, a health insurance policy can help bring down that price.
Most people get their health insurance through their employer. But sole proprietors and freelancers should utilize private health insurance.
3. Auto Insurance
Auto insurance is required in the United States. Did you settle for cheap insurance to fulfill your needs as a law-abiding citizen? Don’t skimp out on auto insurance for cheaper premiums.
Let’s say you’re in a car accident. Your insurance helps cover the damages inflicted upon your car or the other individual’s car. Most policies also cover bodily injury and even death of yourself and another driver.
Basic car insurance only covers liability.
If you’re financing a car, you’re also required to purchase collision coverage. Opting for a more expensive plan can help support you if you’re in an accident or even simple maintenance and car repairs.
4. Homeowner’s Insurance
Homeowner’s insurance is also often mandatory, especially if you have a mortgage. Even if you don’t have a mortgage, homeowner’s insurance is a necessary asset.
Your home is your most precious item and it’s essential to protect it. Homeowner’s insurance can protect you from a fire, burglary, or another disaster.
Without homeowner’s insurance, you have to pay for the cost of these damages.
What if you want? Renter’s insurance is also useful and it’s also affordable. Many property managers and landlords are starting to require their tenants to have a renter’s insurance policy.
5. Disability Income Insurance
Do you suspect you will suffer from a disability at any point in your life? It could happen, even if it’s just a temporary injury or sickness that prevents you from working.
If this happens, you can’t rely on social security. Fortunately, disability income insurance is an option. This insurance can help supplement your income if you’re out of work on disability leave.
Because of its significance, more employers are offering this insurance option. If you’re self-employed, you may be able to find this insurance in a bundle.
6. Long-Term Care Insurance
This type of insurance has its benefits and disadvantages. If you’re not familiar with this insurance, it helps you cover expenses related to nursing home care.
Alzheimer’s is a common example of an ailment that’s covered under this insurance policy.
It’s best to invest in this insurance when you’re younger. Long-term care insurance can get expensive when you’re older. It’s also impossible to know how much coverage you’ll need if you even need it.
7. Identity Theft Protection
In 2017, there were 16.7 million victims of identity fraud. Unfortunately, criminals get smarter and anyone can have their sensitive information compromised. Identity theft protection can help you if your identity gets stolen.
Keep in mind, this technically isn’t insurance. But you can save as much as billions of dollars.
You’ll also experience other benefits of identity theft protection. This includes informing you of flag attempts, credit score monitoring, and other recovery options.
8. Travel Insurance
Are you an avid traveler? Don’t go on your next trip without investing in a travel insurance policy.
What if something comes up you plan your trip? Will you be reimbursed? Probably not. Travel insurance may also protect you from other issues, such as delays, medical emergencies, and lost luggage.
Keep in mind, not all travelers will need travel insurance. For example, if you’re only going on a small trip, you can probably pass up this type of insurance.
You can also pick and choose your policies. For example, only option to purchase flight insurance rather than insurance for your whole trip.
9. Flood Insurance
If you live in an area prone to flooding, it’s important that you invest in flood insurance. Flood insurance can help you pay for damages to your home and even your belongings.
Should you only purchase flood insurance if you live in a flood-prone area? You never know when a major storm will hit. This is why flood insurance is necessary.
If you’re still confused, read this ultimate guide and learn more.
The Insurance You Need to Prevent a Disaster
The last thing you want is debt. That’s why it’s important to do what you can to safeguard your finances.
Do you think you can pass on insurance? You never know what the future will hold. These are examples of the insurance you need to keep your finances safe. You may not need all of these policies, but it’s useful to look into each one.
Need more information about debt? We offer more advice than just about insurance. We can educate you on loans and other finance topics. Continue reading our blog!
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