What Kinds of Insurance Do You Need?

Insurance provides peace of mind for the unexpected. Although you can find insurance that covers almost everything, some policies are more important than others. It all depends upon your needs.

These four types of insurance are important to consider when planning your future.

1.Auto insurance

If you are a driver, auto insurance is essential. It is required by most states. However, it is very expensive to cover damage caused by car accidents. A car accident can result in more than $12,000 for anyone who is not injured. If the crash is serious, it could even cost $1.7 million. These costs include medical expenses, vehicle damage, and wage and productivity loss.

Most states require basic auto liability insurance to protect you against legal fees, death or injury, as well as property damage, if you are legally responsible. You may also need to have personal injury protection (PIP) and/or uninsured driver coverage. This coverage covers medical expenses for you and your family, regardless of who was at fault. This coverage also covers hit-and-run collisions and collisions between drivers without insurance.


You may need collision and comprehensive coverage if you purchase a car using a loan. This will cover damage to your car due to theft, vandalism, or other hazards. This coverage is especially important if you have to repair or replace your car.

Home Insurance

Mature middle-aged couple family wife and husband counting funds.

Many people consider their home to be their most valuable asset. Home insurance provides both financial protection and a financial safety net in the event of damage. Your lender will likely require you to have a policy if you have a mortgage. However, if you don’t own the policy, your lender may be able to purchase it for you and send you the bill. You might pay more for it and have less coverage.

Even if your mortgage is paid off, home insurance is still a smart idea. It protects you from property damage expenses. You are also protected against injuries to your guests and property damage caused by your family or pets. You can get it to cover your home if you are unable to live there after a covered loss. It can also pay for the repair or reconstruction of detached structures such as your shed or fence that were damaged by a covered loss.

A renter’s policy is equally important if you rent your house. You may need it. While your landlord’s insurance will cover the structure, the value of your personal belongings can be quite costly. Your renter’s insurance should cover the majority of the cost in the event of a fire, burglary, or other natural disaster.

You may be able to use it to pay for lodging while your home is being fixed up. And, like home insurance, renter’s provides liability protection.

Health Insurance

The most important type of insurance is Good health is the foundation of your ability to work, make money, and live a full life. What if you became seriously ill or were injured in an accident and did not have insurance? You may find yourself ineligible for treatment or having to pay high medical bills. According to a study published in the American Journal of Public Health, nearly 67% of respondents felt that medical expenses contributed to their bankruptcy.

According to Harry Stout, a former CEO and president of an insurance company as well as a personal finance author, purchasing health insurance is an important part of managing your key financial risks.Because of the high cost of healthcare, it can be financially disastrous for households to not have coverage.

Marketplace health plans can cover preventive services like vaccines and screenings. This way, you can ensure your health and well-being so that you are able to live life to the fullest.


You can deduct any health plan premiums that you pay out-of-pocket when you file your tax returns if you are self-employed or a freelancer. Spending more than 7.5% of your adjusted income can be deducted.

4. Life Insurance

Experts agree that life insurance should be an integral part of your financial plan. How important is it? It all depends on you.

Stephen Caplan, CSLP(tm), a Neponset Valley Financial Partners financial advisor, stated that “the need for life insurance varies and it changes over time.” A person who is young and single will not have a need for life insurance. It is essential to ensure adequate protection for those who are responsible for supporting a family.

What can life insurance do for married couples with children? It can replace your lost income, pay off debts, and pay for a college education. It could be used to pay your burial costs or pay off any outstanding debts if you are single.

The cost depends largely on your health and age. The cost of your exam will be lower if you’re younger and more healthy. While you may still need to have a medical exam done, some companies offer no-exam policies, which can be more expensive.

Caplan recommends asking these questions if you are unsure if a life insurance policy is right for you.

  • How much would your family’s immediate financial costs be if you died?Consider outstanding debts and funeral costs.
  • What would be the financial support needed by your dependents if you died today?
  • You may also want to provide for your family’s immediate needs. However, you might consider leaving money to cover important but less urgent expenses. For example, think about your children’s education, inheritance, or charitable donations.

You might also need disability insurance.

Contrary to popular belief, their car or home is not their greatest asset. It is their ability and willingness to work. John Barnes, CFP, owner of My Family Life Insurance, stated that many professionals don’t insure against the possibility of a disability. He continued, saying that “a disability happens more often than people think.” According to the Social Security Administration, one-fourth of all 20-year-olds will experience a disability before reaching retirement age. “Disability insurance will provide a benefit if you become disabled or are injured, and you can’t perform your job.”

You can get worker’s comp disability benefits for injuries sustained while on the job. Barnes warns that worker’s compensation does not cover on-the-job injuries and illnesses, such as multiple sclerosis, cancer, and COVID-19.

The good news about disability insurance is that it is affordable and can fit into most budgets. Barnes stated that the average cost of premiums for disability insurance is two cents per dollar. Depending on your age, profession, earnings, and health, the premiums will change. According to Barnes, if you earn $40,000 per year, that works out to $800 (or $67 each month).

The bottom line:

Caplan stated that insurance plays a simple but important role. It can replace economic loss in the case of a disaster.

You can protect your assets and yourself with insurance. To make sure these policies work for your needs, speak with licensed agents.

Your financial planner can offer advice on other types of insurance you should consider.

Frequently Asked Questions (FAQs).

Is there any other type of insurance worth considering?

Insurance for identity theft covers you against any loss if your identity is stolen. If you ever need long-term care insurance, it covers you. You usually purchase travel insurance for a short time, especially if you are traveling outside the United States. This policy covers you for any medical treatment that may not be covered by your current insurance, as well as emergency medical transport back to the U.S. in case of injury or illness.

What is an umbrella policy and what type of insurance?

You can have umbrella insurance that covers your liability beyond what is covered by your regular policies. An umbrella policy will cover you for liability if something happens outside of your home. An umbrella policy can cover damage if your dog runs down the street and bites someone. This type of insurance is not necessary for everyone, but it can be useful for those who are more susceptible to lawsuits.

What are the different types of life insurance?

There are many types of insurance, but you are most familiar with whole and term life. Term life insurance only pays beneficiaries in the event of the insured’s death during the policy term. Whole life insurance pays regardless of the date that the insured dies. Whole life policies can also be redeemed at any time.

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