Insurance can be a valuable part of your financial strategy. It can protect your wealth and ensure you have the coverage you need in case of disaster. But what specific types of insurance do you need to protect your assets? What if there is a disaster or family crisis? Will you have the right insurance to protect your assets? Will you have sufficient coverage?
It pays to be proactive when considering the insurance you need to protect your assets and your family based on your lifestyle. Some think they have enough money that they are self-insured and don’t need additional insurance coverage. But if you rely on self-insurance, the potential cost of the loss of your home or your health could wipe out your savings.
For example, the Insurance Information Institute reports that between 2014 and 2018, homeowner insurance claims ranged from a weighted average of $3,700 for medical claims to nearly $80,000 for fire and lightning claims. Liability claims for personal injury and property damage averaged $26,872. Without insurance, individuals have to pay for such expenses out of pocket.
Of Americans who do have insurance, some don’t have enough. For example, two-thirds of Americans who file for bankruptcy cite medical costs as the reason for their financial woes. Most of those people had medical insurance, but it wasn’t enough to cover medical bills.
When assessing your insurance needs, you need to choose the right types of insurance and know what to look for in terms of coverage. In this article, we cover five of the most common types of insurance policies to consider to protect yourself and your family, as well as some things to think about when you consider a policy.
1. Homeowners Insurance
If you own a home, then you have some form of homeowners insurance. When you take out a home loan, the lender wants to be sure the property is protected. which is why homeowners insurance is required. More importantly, you want to have liability insurance in case of an injury on your property.
When shopping for homeowners insurance, determine what specifically is covered. A policy should cover damage to the home property, personal property inside the home, living expenses, liability against injury and property damage, and medical coverage if someone else is injured on your property. Also, determine how much coverage you need. Most homeowner policies cover the cost to repair or rebuild your home, not its market value, so you want to be sure the coverage is adequate for reconstruction.
Some things won’t be covered by your homeowners policy. For example, a trampoline may require additional liability coverage. Insurance may cover losses from fire and theft, but it won’t cover out-of-the-ordinary items such as collectibles or expensive jewelry.
Certain types of disasters, such as earthquakes and floods, are usually not covered. Check your policy for gaps in coverage and consider whether you need additional insurance.
2. Renters Insurance
If you rent, then renters insurance is a good idea. Some landlords require renters insurance to cover liability and personal losses, but whether it’s required or not, renters insurance is usually very affordable because it only covers your belongings and not the actual building.
When shopping for renters insurance, be sure you have enough coverage to replace your property. Also, be sure to carry liability coverage in case someone is hurt or their property is damaged in your home. Bear in mind that some things, such as loss due to flood or earthquake, may not be covered.
3. Auto Insurance
If you own a car, then you are required to have auto insurance. There are minimum insurance requirements for Washington and Oregon, but it’s a good idea to increase your insurance beyond the minimum.
There are a variety of factors that can affect your insurance premiums, such as your driving record, the distance you drive each year, and where you live. Don’t scrimp on liability coverage; any automobile accident can be disastrously expensive. However, you may be able to save on collision coverage for damage to your car. You can lower your premiums if you opt for a higher deductible on collision, which may make sense if you drive an older car.
You also might be able to save on comprehensive insurance, which covers your car from vandalism, theft, and natural disaster, but not accidents. Consider carrying more insurance for a newer car and then adjusting your coverage as the car ages and its Blue Book value drops.
4. Life Insurance
There are different types of life insurance for different needs.
Term life insurance is popular because it is affordable and is designed to take care of your loved ones if you should die. The term is usually 10, 20, or 30 years, and if your premiums are paid, your beneficiaries benefit. If you are looking for a term life policy, be sure it offers immediate payout without a waiting period after purchase.
Whole life insurance is another option, but the premiums are much higher. Whole life is designed to provide you coverage for your lifetime, and the premiums remain the same. It also offers a rate of return in cash value, unlike term insurance, which has no cash value. It might be worth considering whole life as part of a long-term financial strategy.
Universal life insurance is a third option. Although similar to whole life insurance, universal life insurance allows you to adjust the premium when it matures, and you can increase the death benefits.
Buying the right life insurance for your needs is complex, so be sure to talk to a qualified insurance professional.
5. Health Insurance
Everyone should have health insurance. Most people have health insurance coverage through their employer, but too often, that coverage is limited. Supplemental health insurance can provide added coverage for deductible costs and expenses not covered by your employer’s health insurance, such as vision and dental or critical illness. If you are eligible for Medicare, consider Medigap insurance for additional coverage.
Disability insurance also can be worthwhile. There are 56.7 million Americans with disabilities, which is about 18.7 percent of the population. If you become disabled and are unable to work, disability insurance can help pay your living expenses.
How iQ Can Help
There are other types of insurance to consider as well, such as an umbrella policy; specialized insurance, such as for a motorcycle, RV, or snowmobile; and even pet insurance. The types of insurance that best suit your needs are up to you.
Working with a qualified insurance broker can help you make intelligent decisions regarding your insurance needs. That’s why we created insureQ as part of iQ Credit Union. Through insureQ, an independent agency owned by the credit union, we can help our members find the best insurance to suit their needs.