This article is the fourth in our five-part series about taking charge of your finances in 2010. Today’s post is about insurance—which types to have and how much coverage is necessary to keep you protected.
Click here to sign up for the free Money Girl Newsletter!
Why You Need Insurance
Without adequate insurance, everything that we’ve talked about in the prior three posts—setting goals, saving, and investing—could all be destroyed.
I really hate to sound like a doomsayer, but a catastrophic event like a health problem, a car accident, or a death in your family could wipe out everything you’ve worked so hard to earn.
It’s not pleasant to think about what bad things could happen, and maybe that’s why so many people are underinsured. But managing different types of risk is easy, in a financial sense, because most of them can be passed on to a third party, like a health or life insurance company.
Having enough of the right kinds of insurance allows you to protect yourself and those you love from something unexpected jeopardizing your financial security and happiness.
- See more at: http://www.quickanddirtytips.com/money-finance/insurance/what-kind-of-insurance-do-you-need#sthash.wdDWghdh.dpuf
Long-Term Disability InsuranceThe
prospect of long-term disability is so frightening that some people
simply choose to ignore it. While we all hope that, "nothing will happen
to me," relying on hope to protect your future earning power is simply
not a good idea. Instead, choose a
disability policy that provides enough coverage to enable you to continue your current lifestyle, even if you can no longer continue working. (
Protecting Your Income Source provides a closer look at this important topic.)
Life InsuranceLife insurance protects the people that are financially
dependent
on you. If your parents, spouse, children or other loved ones would
face financial hardship if you died, life insurance should be high on
your list of required insurance policies. Think about how much you earn
each year (and the number of years you plan to remain employed), and
purchase a policy that will replace that income in the event of your
untimely demise. Factor in the cost of burial, too, as the unexpected
cost is a burden for many families. (For a more detailed look at the
types of coverage available and factors involved in choosing the right
coverage for your situation, read
Buying Life Insurance: Term Versus Permanent and
How Much Life Insurance Should You Carry?)
Health InsuranceThe soaring cost of medical care is reason enough to make
health insurance
a necessity. Even a simple visit to the family doctor can result in a
hefty bill. More serious injuries, that result in a hospital stay, can
generate a bill that tops the price of a one-week stay at a luxury
resort. Injuries that require surgery can quickly rack up five-figure
costs. Although the ever-increasing cost of health insurance is a
financial burden, for just about everyone, the potential cost of not
having coverage is much higher. (For more insight, see
Fighting The High Costs Of Healthcare.)
Homeowners InsuranceReplacing your home is an expensive proposition. Having the right
homeowners insurance
can make the process less difficult. When shopping for a policy, look
for one that covers replacement of the structure and the contents in
addition to the cost of living somewhere else while your home is
repaired. (To keep reading on this subject, see
Insurance Tips For Homeowners.)
Keep in mind that the cost of rebuilding doesn't need to include the
cost of the land, since you already own it. Depending on the age of your
home, and the amenities that it contains, the cost to replace it could
be more or less than the price you paid for it. To get an accurate
estimate, find out how much local builders charge per square foot and
multiply that number by the amount of space you will need to replace.
Don't forget to factor in the cost of upgrades and special features.
Also, be sure the policy provides adequate coverage for the cost of any
liability for injuries that might occur on your property.
Automobile InsuranceSome level of
automobile insurance
is required by law in most places. Even if you are not required to have
it, and you are driving an old clunker that has been paid off for
years, automobile insurance is something you shouldn't skip. If you are
involved in an accident, and someone is injured or their property is
damaged, you could be subject to a lawsuit that could possibly cost you
everything you own. Accidents happen quickly and the results are often
tragic. Having no automobile insurance or purchasing only the minimum
required coverage saves you only a tiny amount of money, and puts
everything else that you own at risk. (To learn more, see
Shopping For Car Insurance.)
*Bonus Tip For Business Owners: In addition to the policies listed above, business owners need
business insurance.
Liability coverage in a litigation-happy society could be the
difference between a long, prosperous endeavor and a trip to bankruptcy
court.
Shop CarefullyInsurance policies come in a wide
variety of shapes and sizes and boast many different features, benefits
and prices. Shop carefully, read the policies and talk to the agent to
be certain that you understand the coverage and the cost. Make sure the
policies that you purchase are adequate for your needs, and don't sign
on the dotted line until you are happy with the purchase.
To find out more about this topic, see
Fifteen Insurance Policies You Don't Need and Exploring Advanced Insurance Contract Fundamentals.
Let Insurance Be Your Peace of Mind
Do you know the
4 Types of Insurance Everyone Needs?
Investopedia’s FREE Personal Finance newsletter provides the knowledge
and information you need to make the best financial decisions.
Click here to get this weekly guide and start learning how to prepare for life’s unexpected surprises.
This article is the fourth in our five-part series about
taking charge of your finances in 2010. Today’s post is about insurance—which types to have and how much coverage is necessary to keep you protected.
Click here to sign up for the free Money Girl Newsletter!
Why You Need Insurance
Without adequate insurance, everything that we’ve talked about in the prior three posts—
setting goals,
saving, and
investing—could all be destroyed.
I really hate to sound like a doomsayer, but a catastrophic event
like a health problem, a car accident, or a death in your family could
wipe out everything you’ve worked so hard to earn.
It’s not pleasant to think about what bad things could happen, and
maybe that’s why so many people are underinsured. But managing different
types of risk is easy, in a financial sense, because most of them can
be passed on to a third party, like a health or life insurance company.
Having enough of the right kinds of insurance allows you to protect
yourself and those you love from something unexpected jeopardizing your
financial security and happiness.
- See more at: http://www.quickanddirtytips.com/money-finance/insurance/what-kind-of-insurance-do-you-need#sthash.wdDWghdh.dpuf
This article is the fourth in our five-part series about
taking charge of your finances in 2010. Today’s post is about insurance—which types to have and how much coverage is necessary to keep you protected.
Click here to sign up for the free Money Girl Newsletter!
Why You Need Insurance
Without adequate insurance, everything that we’ve talked about in the prior three posts—
setting goals,
saving, and
investing—could all be destroyed.
I really hate to sound like a doomsayer, but a catastrophic event
like a health problem, a car accident, or a death in your family could
wipe out everything you’ve worked so hard to earn.
It’s not pleasant to think about what bad things could happen, and
maybe that’s why so many people are underinsured. But managing different
types of risk is easy, in a financial sense, because most of them can
be passed on to a third party, like a health or life insurance company.
Having enough of the right kinds of insurance allows you to protect
yourself and those you love from something unexpected jeopardizing your
financial security and happiness.
- See more at: http://www.quickanddirtytips.com/money-finance/insurance/what-kind-of-insurance-do-you-need#sthash.wdDWghdh.dpuf
