Most people only think about insurance when they need it. But the truth is, life doesn’t always go as planned. You may not be able to control all of the risks in your life.
You can do something to protect yourself financially when an unexpected event occurs.
To help get you started on your journey of understanding what type of coverage is best for you, here is a list of four insurance policies every person should have (plus a bonus one if you own a business).
Table of Contents
#1 Health Insurance
The first type of insurance every person should have is health insurance. This will help you pay for the necessary medical care if something unexpected happens. Dental insurance is also essential.
You want to know which coverage best suits your unique situation and lifestyle. For example, some people might prefer traditional low-cost plans that offer more flexibility regarding which doctors they see (HMO).
In contrast, others may choose high-premium cost plans where their primary doctor must be covered by the plan (PPO).
#2 Life Insurance And Disability Insurance
The next type of insurance you’ll need is life insurance. Life insurance policies are designed to provide your loved ones with an income if you pass on unexpectedly.
For example, suppose the sole breadwinner in a family passes away. In that case, it’s not only emotionally devastating for those left behind but also financially crippling.
This is especially true when there are young children involved. Disability insurance covers you if you become ill and can’t work anymore.
When Is The Best Time To Take Out Life Insurance?
The sooner you take out a life insurance plan, the better. This is because you will gain access to the best deals and discounts the sooner you make this purchase in your lifetime.
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The younger you are the more you need life insurance. That is because you are still accumulating wealth to leave behind. It’s also less expensive because the odds are lower that there will need to be a payout.
As you get older life insurance is needed less and less presuming you have saved money and built up your asset base.
Many people get this backwards because its harder to sell life insurance to younger people because they aren’t thinking of their legacy yet.
#3 Car Insurance
The third type of insurance you need is car insurance. Auto insurance will help cover the costs involved with a vehicle if it gets in an accident.
Depending on your policy, auto insurance can also protect you if your car is vandalized or stolen. Again, there are many different types of coverage available. Examples include comprehensive, collision, liability, rental reimbursement and medical payments, to name just a few.
Every driver must understand all their options before purchasing any policy. Each plan varies significantly depending on how you want to be protected.
#4 Home Owner’s Insurance or Renter’s Insurance
If you own a home, you’ll want homeowner’s insurance to protect you for an emergency. No one expects a fire, hail, tornado, etc to happen to them. But it does happen. It happens all the time.
Home owner’s insurance protects you from these unexpected surprises.
Likewise, if you rent, then renter’s insurance protects you if something happens to your personal property.
#5 Business Insurance (if you own a business)
The fifth and final type of insurance you need is business insurance. If you own a business, this policy will help cover the costs involved with your company if something unexpected happens.
Examples include fires, theft, and injuries, and they provide financial protection for people who work in your office regularly.
Business owners have many different types of coverage available. This included property, liability, commercial auto, and workers’ compensation, to name a few.
Entrepreneurs must understand all their options before purchasing any plan. Each one varies significantly.
Bottom-line: Types of Insurance
There are many types of insurance. This is just a very high-level overview of a few.
By having these insurance policies in place, you’ll be able to prepare for almost anything that comes your way, financially speaking.
Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.