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solid step towards financial security is protecting yourself from unforeseen circumstances by getting insured. Back in the day, the insurance conversation was discreet, as people didn’t like to admit that bad things could happen to them. But that’s history now. Signing up for insurance can truly serve as a lifesaver. Insurance for families and individuals helps mitigate financial burdens related to well-being, the cost associated with accidents, liability, and even death.
What is insurance?
Insurance is a financial risk management system in which a company or individual transfers a potential financial or property loss to an insurance company that mitigates it at a cost. An insurance policy is a legal contract between a policyholder or insurance holder and the insurance company. These insurance policies are different types, depending on the level of risk involved.
Check out 7 types of insurance for families and also individuals…
#1. Homeowners’ and renters’ insurance
Whether you’re renting or purchasing your dream home, your abode is never insignificant. Securing a place you call home should be one of your top things to do. Homeowners insurance pays out if there is partial damage done to the home or if the house is destroyed. This insurance covers the cost of the structure, the damages or lost content within the space, and also the money used to rent a new home while the one covered is being rebuilt. The three main levels of homeowners insurance coverage include an actual cash value, extended replacement cost or value, and replacement cost.
Renters also need insurance, just like homeowners. This type of insurance covers the tenant’s properties, excluding the house itself. It protects the content of their home in case of theft, or any form of damage, including flooding, fire, or other reason. This often includes liability insurance.
#2. Disability insurance
What happens if a person has an accident and can’t keep up with their normal daily tasks? Now that’s exactly where this type of insurance for family circumvents the outcome of such ugly circumstances. There are mainly two types of disability insurance: short-term disability insurance, and long-term disability insurance.
Long-term disability insurance is often activated at the end of short-term disability insurance if the disability insurance is offered through an insurance company that provides both. But in general, long-term insurance commences after some period following an injury or illness’s onset. Long-term disability can pay an insurance hold between two and 10 years, or even longer as the case may be.
On the other hand, short-term disability insurance replaces part or all of an employee’s income through weekly benefits if a temporary disability occurs. It offers coverage between three to six months, depending on the insurance design. This type of disability insurance pays up to 60% of the base pay and can kick in as early as 14 days after the disability onset. These benefits are deposited to be used at the employee’s discretion. Short-term disability insurance focuses mainly on conditions employees typically recover from, but could presently hinder their workability.
#3. Health insurance
This type of insurance for families is the most popular but isn’t less important. It mitigates the costs of illness, injury, and accidents. Medical expenses from a disastrous event or chronic illness are enough to make families bankrupt. Some individuals can’t afford standard medical costs and doctor visits, and a health emergency will only worsen their predicament. According to recently released statistics, 3 in 5 adults in the USA find it difficult to pay for health care, and 60% claim medical bills are a source of stress.
While private health insurance might be costly, affordable plans and tax breaks are also available through federal and state marketplaces. Sometimes employers offer some form of health insurance to their employees. There are so many areas that health insurance covers, but the common one people know about is medical insurance, dental insurance, and pop vision insurance. The most common medical insurance available includes Preferred Provider Organization (PPO) plans, Health Maintenance Organization (HMO) plans, and High Deductible Health Plans (HDHPs).
#4. Life insurance for family
The awareness that we should have our lives insured never occurs until we hit our 40s or 50s, but in reality, it could be done way earlier. There are many types of life insurance plans available, but term life insurance is the basic and inexpensive option. This life insurance pays out if the person involved dies within the specified time frame outlined in the insurance policy.
For example, if someone purchases a $10,000 20-year term policy and dies within 15 years, the company pays the heirs $10,000 tax-free. But if the participant purchased life insurance, it will pay out at any point the participant dies. Families should appropriately consider purchasing life insurance based on personal specific circumstances. For instance, if you have kids still minors, you might need a higher level of coverage to handle the cost of raising the children if anything happens to you as their parents.
#5. Long-term care insurance
For individuals who need short- or long-term nursing care, this type of insurance for the family may come in handy. However, for those who don’t have assets outside the policy to pay for nursing care, a high level of coverage would be necessary.
Long-term care insurance can be capital intensive; it is advised to purchase it through an employer because this method tends to be the most cost-effective alternative. Several insurance companies, however, don’t cover long-term care insurance. There are also hybrid policies that allow you to share an insurance policy between spouses at a low cost.
#6. Automobile insurance
The law backs this one unapologetically, and if you’ve lived in a big city with horrendous traffic, you’d know the miracle of driving back home without a dent in your car. In this case, protecting your vehicle and your bank account from unnecessary withdrawals isn’t a huge price to pay. For your concern, the National Safety Council reported that over 42,000 people died in motor vehicle accidents in 2020. And about 4.4 million people were involved in an accident severe enough to require medical attention in 2019.
A small accident can set one’s life back by several hundred or thousands of dollars. When your car is insured, it helps limit the costs of repairing the vehicle after an accident. Automobile insurance not only pays out when the participant is involved in an accident but also covers the cost of the other party involved if it is determined that the participant is at full fault. Some automobile insurance also pays for damages due to hail, a rock hitting the windshield, and other types of damages.
#7. Business insurance
A business owner already has a lot to deal with. Paying out of pocket for extra property damages or legal issues shouldn’t be a stress they need to deal with. There are three types of business insurance, namely, General liability insurance, Commercial property insurance, and Business income insurance. This type of insurance protects you and your business assets from natural disasters and/or lawsuits.
Featured image: Prostock-Studio/iStock
The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. It is important to speak with a licensed professional before making a financial/insurance decision.
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