8 Types of Insurance Policies & Reasons Why You Need Them

8 Types of Insurance Policies & Reasons Why You Need Them Since there is always some degree of uncertainty in life, one must be ready for any unexpected events. While some unexpected events in life are bearable, others—like health issues, auto mishaps, or fire hazards—are emotionally and financially taxing. a cause for the wide variety of insurance options available to help following unplanned life occurrences.

An effective insurance plan acts as a safety net against unforeseen expenses. While the majority of people are aware of the value of insurance, others do not fully comprehend the many types of insurance or their purposes.

Choosing the appropriate type and amount of insurance is influenced by a number of variables, including age, way of life, children, and employment perks. Here are the 8 different sorts of insurance coverage you should look into today to help you narrow down your selections.

1. Health Insurance

With the high cost of medical bills health insurance is one of the most important insurance policies that you should opt for. Failure to do so, you’re leaving yourself wide open to a money disaster.

You can obtain health insurance through your employer, the federal health insurance marketplace, or private insurance. Or you can buy health insurance for yourself and your family by contacting health insurance companies directly or going through a health insurance agent or broker.

2. Life Insurance

Anyone can die at any time. However, if you have anyone depending on you financially, then you need to obtain life insurance. Imagine if you were to die unexpectedly, how would your dependents pay for monthly expenses without your income?

There are two main types of life insurance policies: term life insurance and permanent life insurance.

3. Homeowners/Renters Insurance

Whether you are a homeowner or are renting, it’s best you have a homeowners or renters insurance policy to cover you. This type of insurance helps protect your home in case of damage or destruction.

Home insurance policies include several types of coverage such as dwelling coverage, personal property coverage, other structures on the property, liability coverage, and additional living expenses.

4. Auto Insurance

As a car owner or driver, auto insurance is one of the most important insurance policies that you should opt for. As a matter of fact, driving without auto insurance is against the law in almost every state in the United States. Not only is it illegal, but it could also cost you a significant amount in an accident, especially if you’re at fault.

Fortunately, there are several types of auto insurance coverage that can pay for vehicle damage and injuries after an accident. Some of them include liability coverage, uninsured/underinsured motorist (UM) coverage, personal injury protection (PIP), medical payment coverage, and comprehensive and collision coverage.

5. Umbrella Insurance

Umbrella insurance provides adds an extra layer of liability insurance that protects your and your assets when you need coverage. In fact, it is recommended that every high-net-worth individual should have umbrella insurance coverage.

6. Disability Insurance

Disability insurance protects you from losing your income if you’re unable to work for a long stretch of time because of an illness or injury. If as a result of a disability you’re unable to work, the disability insurance supplements a portion of your income. It typically replaces 40% to 70% of your base income and usually has a waiting period before coverage kicks in and a cap on how much it pays out monthly.

7. Long-Term Care Insurance

Long-term care insurance covers a whole lot of services including nursing home care and in-home help with basic personal tasks. As the name implies, it means those who have a chronic illness or disability need ongoing help. Also, the best time to obtain long-term care insurance is when you’re in your 50s or 60s.

8. Travel insurance

Travel insurance covers trip cancellation, travel health insurance, and more. If you’re a frequent traveler or intend to go on a vacation anytime soon, then you should opt for travel insurance.