Anything can happen to anyone at any time. While you can’t avoid unexpected situations, you can protect yourself and your loved ones with insurance coverage.
Whether because of an illness, an accident, or a disaster, your medical bills can quickly mount up, plunging you into deep financial distress. Purchasing an insurance plan can help reduce the financial burden related to your health, medical bills, liabilities, accidents, and even death.
Here are four most common types of insurance coverage you should get right away:
1. Auto Insurance
If you currently or have ever owned a car in the past, chances are you already know that getting your vehicle insured is required by law. Driving without insurance is prohibited in 49 of the 50 US states and can be very expensive if you are involved in an accident. It is especially true if the accident happened because of your negligence.
Automobile insurance pays for any injuries you sustain any damage caused to your vehicle. It also covers the damage and injuries caused to other parties if you’re responsible for the accident.
Depending on your requirements, there are various coverage options available:
It pays for injuries and damage you cause to other people’s properties in case of an accident. It also pays for legal and settlement fees if you get sued due to a car accident. However, there is a limit on the amount covered by liability coverage. You’ll have to pay the excess out of your pocket if the liabilities exceed that limit.
You can opt for umbrella insurance to avoid these situations. Umbrella insurance protects you and your family when the liabilities exceed your auto or home insurance policy. Some umbrella insurance policies even provide worldwide coverage, covering costs for accidents that happen abroad.
Personal Injury Protection
No matter who is responsible for the accident, personal injury protection provides coverage for your and your passengers’ injuries. It covers medical bills, rehabilitation costs, and even lost wages.
Uninsured Or Underinsured Motorist Coverage
This policy covers your and your passengers’ medical costs if an uninsured or underinsured driver hits your car.
Comprehensive And Collision Coverage
Collision policy pays for the repair or replacement of your vehicle after the accident, whether or not the accident was your fault. Comprehensive coverage pays for vehicle damage caused due to theft, flood, falling objects, hail, and animal strikes.
Medical Payment Coverage
This policy pays for your and your passenger’s medical bills, from $1000 to $5000.
2. Life Insurance
If you’re the only breadwinner for your family, you must purchase a life insurance policy. While it is disturbing to think about your death, think about the financial hardships your family would face if you were not there. Almost 4 out of 10 households say they will suffer financial difficulties within six months of the wage earners’ death, according to research by LIMRA.
To avoid such circumstances, you should buy a life insurance policy. There are two main types of life insurance policies available on the market: term life insurance and permanent life insurance.
Term life insurance, as the name indicates, covers you for a specific time. For instance, you can get term life insurance for 10, 15, 20, or 30 years. Depending on the length of the policy, you have to pay the same yearly premiums.
Once the policy matures, you can renew it on a per-year basis. However, the renewal costs more than the previous one. Term life insurance is ideal for specific obligations, such as debt or college fees. It is also the most affordable type of life insurance available.
Permanent life insurance provides lifelong protection but is more expensive than term life insurance. Permanent life insurance is ideal if you want to provide financial benefits to someone dependent on you in case of your death.
It is also beneficial to build cash value for retirement savings. You can access the cash by making a withdrawal or taking a loan. When you choose the cash value option, the policy ends.
3. Health Insurance
Health insurance provides coverage for medical expenses. Medical bills can prove extremely expensive if you have a chronic illness. A three-day hospital stay can cost up to $30,000. These high medical bills can put you in financial distress if you don’t have health insurance. If you have a job, chances are that your employer already has an insurance plan.
You can buy health insurance through your employer, directly contacting insurance providers or agents, or through the federal health insurance marketplace.
Health insurance from your employer is the cheapest option and covers basic medical needs. You can also upgrade the plan by paying an extra premium. However, you only get coverage while you work for that employer.
If your employer doesn’t offer any health insurance plan or you are currently unemployed, you can get subsidized health insurance from the federal health marketplace. If you don’t qualify for the federal scheme, you’d have to buy health insurance directly from an insurance agent. However, that will cost more than the previously mentioned options.
4. Disability Coverage
While you might think that disability coverage is only for those employed in risky jobs, it is certainly not true. Most disabilities are not job-related. Cancer, arthritis, back pain, and diabetes are the most common causes of disabilities.
If you get disabled for any reason and can’t work anymore, disability insurance provides you with a portion of your income. Depending on your chosen insurance plan, you can have an amount anywhere from 40% to 70% of your total income.
Disability insurance typically has a waiting period before you start getting payments. Disability insurance can be of two types; short-term or long-term disability insurance. The short-term plan covers a period of up to 3 months, while the long-term plan provides coverage for up to 3 years.
Just like health insurance plans, disability coverage is also available through your employer. If your employer doesn’t offer disability insurance, you can get it directly through the agents. Disability insurance plans usually cost around 1-3% of your annual income.
While other types of insurance are also available in the market, the most important ones are health, automobile, disability, and life insurance plans. Most of these options are available through employers’ insurance programs; however, these can also be purchased directly through the agent or the federal marketplace.
Before buying any plan, you should get quotes from different providers and select the most suitable one based on your requirements.
types of insurance coverage for cars types of insurance coverage health What are the two main types of health insurance