Insurance coverage is an essential part of financial planning, helping people recover financially from unexpected events. The most common types of insurance coverage include auto insurance, life insurance, and homeowners insurance. Each type of insurance has its own advantages and drawbacks, so it's important to understand the different types of coverage and how they can help you protect your assets.Life insurance is a great option for those who want to provide financial security for their family in the event of their death. Term life insurance is a popular choice, as it is becoming more affordable and some policies don't require a medical exam.
With term life insurance, you buy a policy for a specified period, such as 20 years, and the insurer pays a lump sum to your beneficiaries if you die while the policy is in effect. Permanent life insurance lasts a lifetime and pays a benefit when you die. It's more expensive, but it has a savings component, also called cash value, that accumulates over time. Consulting with a financial advisor with experience in insurance can help you determine which type of life insurance is right for you.Long-term care policies are also available to help cover the costs of long-term care services.
Traditional long-term care policies are relatively straightforward; you pay premiums to an insurance company for the life of the contract, just like term life insurance. Hybrid policies are also available and combine long-term care coverage with life insurance or annuities.If you don't have disability insurance or want to increase the benefits you receive through work, you can purchase disability insurance on your own. Most disability policies pay between 40 and 60% of your base salary. If you pay premiums, any benefits paid are tax-free; however, if your employer pays the premium, then your benefit is taxable.Homeowners insurance is not required by law; however, if you financed your home, your lender will normally require coverage to protect their interests in your property.
Even if you don't have a mortgage and have paid for your home directly, it's wise to purchase a home insurance policy to protect yourself from repair or replacement costs if something damages or destroys your home. Keep in mind that standard home insurance policies don't cover damage caused by floods or earthquakes; separate insurance is available for these issues.Renters insurance is also important for those who don't own a home. Renters insurance helps replace your belongings if they are stolen or damaged due to fires, tornados, explosions, and more. Liability coverage is also included in auto, home and renters insurance policies to protect your assets and those of your family from lawsuits brought against you.If someone depends on you financially, it's essential to find the best life insurance for your situation.
Term life insurance allows you to set rates for a certain period of time, such as 10, 15, 20 or 30 years. During this time, your premiums are level; once the tier's term ends, you can usually renew your policy annually at a higher cost. Permanent life insurance can provide lifetime coverage and includes a cash value component that can be accessed through loans or withdrawals.Health insurance plans can be purchased through employers or on the federal health insurance marketplace. Federal market health insurance plans may offer subsidies if you meet income and eligibility requirements.
You can also buy health insurance by contacting health insurance companies directly or by going to a health insurance agent or broker. If monthly premiums seem unaffordable, consider the costs of a high-deductible health plan.You may think that you need disability insurance only if you have a job that involves hazardous activities; however, arthritis, cancer, diabetes and back pain are among the most important causes of disability according to the Disability Awareness Council. That's why it's wise to consider disability insurance as part of your financial plan.If you become ill or disabled and can't work, disability insurance supplements a portion of your income. It usually replaces 40...
