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What Insurance Do You Need?

You may think you are covered under an insurance policy until an accident happens and you realize you forgot to purchase it, or that you thought you wouldn’t need it. So, how are you supposed to know what insurance do you need to make sure you are covered, but also aren’t stuck with a pricey bill?

There are a few different types of insurance that many people carry:

• Health Insurance
• Auto Insurance
• Renter’s Insurance
• Homeowner’s Insurance
• Specialized Insurance

Types of Insurance Almost Everyone Needs

There are all types of insurances on the market, and it’s all about finding what you actually need. Here are the different types of insurance almost everyone needs – and should have!

Health and Disability Insurance

Health and disability insurance is typically offered through an employer, spouse’s employer, labor organization, or individually from the federal or state level. Having health insurance is important if you plan on seeing a doctor when:

• You are sick
• Need a routine checkup
• Need to purchase prescription medication
• When seeking medical care due to illness or accident

Disability insurance is given by an employer or labor organization in case of injury that leaves you unable to work and offering supplemental income in its place. Health insurance makes sure you can preserve your health, especially when it’s needed in an emergency.

Homeowner’s or Renter’s Insurance

Whether you own a home or are renting, it’s important to have property insurance to protect your belongings in the event of a fire, burglary, weather event, or other man-made disaster.

In most cases, your auto insurance company will bundle you renter’s insurance, usually for no extra charge. While landlords typically have insurance to cover the building in case of an emergency, they do not usually cover your personal belongings.

For homeowner’s insurance, your mortgage company might require you to have insurance coverage to ensure that your home will be rebuilt in case of a catastrophe since the collateral for your lender is your home.

Keep in mind that renter’s insurance and homeowner’s insurance may not include water or flood damage, and you might need to get a separate policy if you live near an area that floods often.

Auto Insurance

If you don’t drive or own a vehicle, this coverage won’t apply to you. Most states require you to have a minimum coverage on your car. If you purchase from a dealership or auto shop, they also may require you to have proof of insurance before they allow you to purchase the vehicle.

Car insurance covers things like damage to your car, damage to other people’s property and their medical bills. When selecting your level of car insurance coverage, you’ll need to make a few different decisions. One major decision is whether you want your insurance to cover the full replacement value of your car or just the current market value. If you’ve got other property, like a house, that you could lose in a lawsuit, you’ll also want a level of car insurance that can cover quite a bit of property damage.

If you’re worried about auto insurance, find out the minimum your state coverage requires, what exactly it covers, and then compare it to your current insurance coverage.

Life Insurance

Just as important as the other insurances, life insurance is often overlooked. Usually, it will be offered through an employer and is used to make the lives of spouses, children, or parents a little easier in case of death. Ideally, it will help cover the cost of a funeral or will supply a short stream of revenue for loved ones until they can get back on their feet.

Even if you are young, you should have at least some sort of life insurance policy. The older you get, the more important a policy will be for you.

Specialized Types of Insurance to Consider

While the insurance policies listed above are the most common insurances to have and ones almost everyone should get, there are some insurance policies out there that you might want to consider. You may not need them, but they are the next common people choose to get.

• Pet Insurance

Pet insurance is simply health insurance for your beloved companion. Depending on the pet and any pre-existing conditions, medications, surgeries, and trips to the vet can add up. Pet insurance keeps the cost down, the medications affordable, and helps find and pay for life-saving treatments.

• GAP Insurance

Guaranteed Auto Protection insurance covers the monetary gap between the amount the vehicle is worth and the amount you owe. This type of insurance is best if you plan on buying new cars or leasing, especially since the value of your car decreases the second you drive it off the lot. You can get GAP insurance with your auto insurance provider.

• Whole Life Insurance

The Whole Life Insurance policy covers – and can pay back out to you – over the course of your life. Upon your death, it will also pay out to your loved one, or it can be used later to cover medical expenses or borrowed against. The only downfall with Whole Life insurance is that the premiums tend to be high, the benefits low, and the coverage can be difficult to understand.

• Travel Insurance

If you travel a lot for work or leisure, travel insurance may come in handy for you. Those who do use travel insurance have hailed it as a positive resource in case of: lost or stolen luggage, medical expenses abroad, re-book plans if flight is cancelled, etc.

The only downside that comes with travel insurance is that it typically duplicates existing coverage. Check with your health insurance because you could have medical coverage for traveling abroad. Your homeowner’s or renter’s policy might also protect your property while you are traveling, too. If you used a credit card or booking agency to book your flight, ask them about cancellation refunds if the airline cancels the flight.

• Supplemental Insurance

Supplemental insurance can be used as a bridge for shortfalls from any of your traditional insurance plans. You can use it to pay bills, rent, mortgage expenses, and even groceries while you wait for your other insurance policy to pay out. Check with your insurance agency before committing because you may not need it. It can be a waste of your money if you pay for supplemental insurance policies when you could be saving money in an account in case of emergency situations where you would need extra cash.

Do I Need Renter’s Insurance?

People think of insurance as a costly, obligatory expense. As such, when they find out they don’t need renter’s insurance they pass on it without a second thought. But is that a smart idea? Do you need renter’s insurance? To answer that question, it’s important to understand:

• What is renter’s insurance?
• What does renter’s insurance cover?
• How much is my stuff worth?

What is renter’s insurance?

At its core, renter’s insurance covers you and your personal possessions as they relate to your living space. It functions like other types of insurance in that you pay a monthly premium and if you make a claim, you have a deductible that you have to meet before the insurance company will cover the cost. For example, let’s say your premium is $15 a month and the deductible is $100. Every month you will pay $15, so $180 per year. During the year, something happens that causes $1000 worth of damage to your property. Your insurance company will pay $1000 – $100 (your deductible) = $900.

What does renter’s insurance cover?

Among other things, it covers the cost of replacing your stuff in the case of things like fire:

• Fire
• Theft
• Vandalism
• Wind Damage

Even if you aren’t likely to experience any of the above, renter’s insurance can protect you from unexpected problems like leaking pipes. For example, while landlords are responsible for making sure plumbing is properly-maintained, problems can still occur. If a pipe bursts and creates a waterfall in your living room, your landlord may not be liable for your possessions, assuming they have been performing the proper maintenance on the building. In this case, renter’s insurance would cover your property. Renter’s insurance also generally covers your possessions while you are not at home. If you are on vacation and your luggage is stolen, renter’s insurance may cover replacement costs for the things you lost.

Another important aspect of renter’s insurance is liability coverage. This pays for damage done by your property to someone else, or their stuff. For example, something of yours falls over and puts a hole in the wall. Your renter’s insurance will pay for the repairs. It will also pay for things like medical bills and legal settlements if someone sues you because your dog bit them, or if they were injured after slipping on your rug.

Renter’s insurance can also cover some of your costs if your residence becomes uninhabitable. If you have to stay at a hotel while the roof of your home is repaired, that is covered by renter’s insurance, your landlord isn’t responsible for those costs. Actually, your landlord’s insurance doesn’t cover any of your property. It normally only covers things directly related to the building.

Do I have enough stuff to make it worth getting renter’s insurance?

The answer to this question is probably yes. When you think about the things you have, you’re probably thinking about larger items, like your new couch, your computer, or your TV. If you are like most people, you aren’t thinking about things like your forks and knives, you clothes, your books, etc. Do you have any idea how much those things cost?

• Flatware: Up to $200
• Clothes: Up to $2,500
• Books: Up to $1,400

That’s about three grand. And those flatware costs? They are only for silverware, no plates or bowls. The books, only paperbacks, not more valuable hardcovers or children’s books. If you add to that the cost of a nice sofa, $2,000, you’re at $5,000 before you’ve even considered things like your TV or your computer. The contents of even a two-bedroom apartment can easily push $40,000 and most people cannot afford to replace that all of a sudden.

When calculating the value of everything you have, there are a few different methods you can use. The method that is usually recommended is to go through your house room by room. In each room, go item by item and determine its value. Record the value. Once you’ve done this for everything in each room, add it all up and that’s the approximate value of the contents of your home. It may seem tedious, but it’s a great way to determine a rough value of your property.

Should you get renter’s insurance?

It’s important to evaluate your individual situation when it comes to whether or not you need renter’s insurance. One of the most onerous parts of paying for other types of insurance is the monthly cost. In contrast, the price of renter’s insurance is often compared to the cost ordering a pizza once a month, $15 to $30 dollars.

Additionally, renters insurance covers a wide range of events. It covers damage to your property from named events, like fires or theft. It protects your property even when something happens to it outside of your residence, if it’s stolen while you are traveling for example. If someone is injured in your home and sues you, renter’s insurance may cover your costs.

Unlike something like car insurance, your renter’s insurance will pay for your property to be replaced, not just pay you the current value, for only a slight premium increase. It’s up to you to decide if you need renter’s insurance, but the monthly cost is so low compared to replacing everything you own. For example, if your renter’s insurance costs $20 a month and you have $40,000 worth of property, it will take almost 167 years for the cost of your insurance to exceed the cost of replacing all your property yourself.

Even if replacement cost isn’t an issue for you, the liability protection can be very valuable. Depending on the situation, litigation, medical bills, and settlements can get extremely expensive. It may make more sense to have the protection afforded by the insurance than hope nothing happens.

Now that you’re a little more familiar with what renter’s insurance does and how much it costs, you can decide for yourself whether or not you need it. It may seem like one wasted pizza per month, but it is a lot cheaper than having to replace everything you own. Imagine not only the financial cost, but the time commitment to do that.

Do You Really Need Life Insurance—Pros and Cons

Life insurance is insurance that protects loved ones in case something happens to a member of their family. This is especially true if the person who passes was the sole—or one of the major—breadwinners of a family. Many Americans may be curious to know if they need life insurance. Nobody really needs to have life insurance—as it isn’t required by law. But it is recommended that most individuals with families do.

Knowing the pros and cons of having life insurance can help a person determine whether they need to purchase life insurance. The pros and cons of life insurance vary, and it is important to weigh out both before choosing to opt in for life insurance and then choosing a policy.

Is Life Insurance Right for You?

There are a few things to consider in order to figure out if life insurance is right for you. The main reason that people get life insurance is to provide financial safety for any of their dependents, in case they unexpectedly pass away. Most people consider life insurance if:

• They are the sole breadwinner in a family.
• Have several dependents—especially younger ones.
• Want to leave loved ones with some type of inheritance.
• In some cases, people get life insurance to pass on or borrow money tax free (depends on the policy).
• They want to make small payments every month to secure a large amount.

What Kinds of Life Insurance Are There

Generally there are two main kinds of life insurance policies out there:

1. Term Life Insurance

Term life insurance is the most common type of life insurance for Americans. It is the more affordable of the two life insurance policies, and the premiums typically stay the same throughout the course of coverage. Term life—like the name suggests—has coverage for a certain amount of years. This range is usually from ten to thirty years.

Term life insurance is best for young families who would want coverage for a certain amount of time. For those looking for the most cost-effective type of life insurance, term life insurance may be the way to go.

2. Whole Life Insurance

Whole life insurance—also known as permanent life insurance—is insurance that provides coverage for the policy holder’s entire life. So as long as the premiums are paid, the insurance will last until the policy holder passes. Whole life insurance is more expensive than its counterpart. The premiums of the policy tend to stay the same, but may change throughout the life of the policy holder.

For those who want coverage for their entire lives—despite the age of their family—and don’t mind the extra cost, whole life insurance may be the way to go.

The Pros and the Cons of Each Type of Life Insurance

There are pros and cons to life insurance. Since there are two major types of life insurance, it may be beneficial to understand the pros and cons of each kind. Here are the pros and cons of both term life insurance and whole life insurance:

Before picking a type of life insurance policy, it is a good idea to review the pros and cons of term and whole life insurance. Although term life is the more common type of policy that Americans have, this does not mean that it is the best fit for everyone.

Life insurance is not necessary for Americans, but it is a good idea to have that type of protection—especially if a person has dependents that rely on them for financial support. Before picking a policy, it is important to understand the two major kinds of life insurance that exist: term life insurance and whole life insurance. If a person is thinking about getting a life insurance policy, they should know and understand the pros and cons of both term and life insurance.