Types of personal insurance

Types of personal insurance

by Lic. ESTRADA

​Getting Started

​There’s no single insurance policy that will cover all aspects of your life. So, if you want to prevent major financial hardships, you’ll need various kinds of coverage.

​Here are the seven most common types of insurance that every individual needs — or, at the very least, needs to consider. 

• ​1. Health Insurance.

• 2. Life Insurance.

• ​3. Disability Insurance.

• ​4. Long-Term Care Insurance.

• ​5. Homeowners And Renters Insurance.

• ​6. Liability Insurance.

• ​7. Automobile Insurance.

​​1. Health Insurance

​

In recent years, health insurance has become more confusing than ever. Nevertheless, it’s essential.

A major medical event could cause severe financial hardships.

Sometimes, the costs are so great that people have to declare bankruptcy because they don’t have any foreseeable paths to covering their total bills. 

​2. Life Insurance

There are a wide variety of life insurance policies. The most basic — and least expensive— is term life insurance, which pays a specific amount if you die within the time frame of the policy.

​3. Disability Insurance

Most major corporations offer some form of disability insurance to their employees, but many smaller businesses do not. This type of coverage is intended to replace your salary if you were to become temporarily or permanently disabled.

​

Be aware that disability coverage, like all insurance, has a lot of significant nuances. For example, are you disabled and unable to perform any work, or are you just unable to work at your normal occupation? These definitions have a major impact on when you can receive coverage. ​

​​4. Long-Term Care Insurance

​This insurance helps cover costs in the event you need to be in nursing care, either on a short- or a long-term basis. You should also consider whether you have assets outside the policy that could pay for your care. If not, strong coverage may be more necessary for your family. ​

Unfortunately, long-term care insurance can be very expensive, but you can look into hybrid policies that cover the same events. For example, you could share a policy between spouses or find a policy attached to an annuity. 

​​5. Homeowners And Renters Insurance

Homeowners insurance pays for partial damage or the complete destruction of your home. Often, it also covers the damaged contents of your home, as well as the funds necessary to rent accommodations while your home is being repaired. 

​

Your home is likely the biggest purchase you will ever make, so this is a very important type of insurance to have. Be sure to look at the details, though. Will the policy cover what you paid for the home or the price of what it would take to rebuild it? These could be very different numbers. 

​​6. Liability Insurance

 Liability insurance is often attached to your homeowners policy, and it covers accidents that may happen at your home. For example, if a house guest slipped on your stairs, you might be responsible for their medical expenses if you were found liable for the accident. Liability coverage would mitigate those costs. 

​

It frequently also extends to accidents involving the homeowner that take place outside the home. For example, if your dog escaped from the yard and, in a state of fear, bit one of your neighbors, liability insurance could cover the damages. 

7. Automobile Insurance ​

​If you own a car, you are already intimately familiar with automobile insurance. That’s because it’s one of the most important kinds of coverage you can have. In 2019, around 4.4 million people were involved in car crashes serious enough to require medical attention. Even less-critical accidents like fender-benders and stationary collisions can set you back a lot for repairs. Automobile insurance pays in the event that you experience a car wreck, and it will also pay for the other party’s damages if you are at fault. 

​Protect Yourself.

• It’s important to protect yourself from any financial setbacks that could jeopardize your future. Death, disability, damage and accidents are already difficult enough to bear without the added burden of financial worries. 

• If you need to cut costs, don’t opt out of insurance altogether. Instead, purchase the level of coverage that’s right for your family and not more than you need.