What Types of Insurance Do You Really Need?
Insurance is not easy. There are more types of insurance than you will ever need, but some are absolutely necessary or even required by law. Here are a few types of insurance that you should definitely take care of.
The types of insurance that almost everyone will need
Most people need the following types of insurance as they cover the biggest potential costs in life and otherwise protect your bottom line. While other forms of insurance may be helpful or complementary, these types of insurance are generally considered compulsory.
Health and disability insurance : Half of the country is worried about bankruptcy due to a health event, according to a recent Gallup poll . Not surprisingly, the average cost of a three-day hospital stay is about $ 30,000. The dollar amounts are mind-boggling, which is why health and disability insurance is so important, whether you get it from your employer (or partner employer), union, or individually – perhaps through the federal health insurance market or the state’s equivalent . Disability insurance, which is also usually offered by your employer, will cover your income if you are injured and unable to work. Your health is your most important asset, and insurance can help you keep it.
Homeowner or renter insurance : Homeowners and renters must have some kind of property insurance that pays for or replaces their property in the event of fire, burglary, weather or some other natural disaster. Even if your apartment has little value other than furniture, laptop, or phone, renter insurance can be cheap enough to justify the costs for many. In some cases, you need to take out homeowner insurance as this may be required on a mortgage. Note that flood and earthquake insurance is not always included in your regular policy, so ask your provider if yours does.
Auto Insurance : If you don’t drive or own a car, you can skip this, but it’s included here because auto insurance is required by law in most states. You must have sufficient insurance to cover losses or injuries you may cause (liability insurance), or pay for damage to your vehicle (collision insurance), as well as for events other than accidents such as theft or vandalism (full insurance ). You don’t want to wait until after the accident to find out what your policy does and doesn’t cover.
Life insurance: You need life insurance if your death causes financial hardship for someone else (spouse, children or parents), as if you die, they will be paid a certain amount of money. Many employers offer life insurance, and your car or property insurance company may offer life insurance as well. What if you are lonely? Consider taking out a short-term life insurance policy if you have joint debts or want to pay for end-of-life expenses such as a funeral (which average $ 8,000 to $ 10,000, according to Policygenius )
Before buying insurance, first find out what you have – always check with your employer for available coverage before paying for a policy that you can get for free.
Other types of insurance
There are many other types of insurance, from pet insurance to boat and personal insurance … the list goes on. The best way to decide if they are worth it is to understand exactly what risk is covered and what the payout will be, and then weigh that against the premiums you will have to pay. the need to protect against risks is much more obvious, but for other types of insurance the premiums will be too high and the policy will not cost money . Just remember that you are paying to get rid of any risk. It’s up to you if the risk is too small to pay for, but there’s nothing wrong with paying a little more for that peace of mind.
This post was originally published in 2013 and was updated on November 2, 2020 to add more relevant information and update links, and align with current Lifehacker style guidelines.