Everyone knows we need insurance. But why? How do we put it in simple terms? It’s a 2-word answer; RISK REDUCTION. Insurance is a safety net protecting all you have worked for from a simple fender bender, causing you to lose your home. There are more insurance products than bloomed flowers right now. But which one do you choose? I am not going to recommend any specific company or product. I will give you a list of the types of insurance you need to reduce as much risk as possible.
Homeowners Insurance
Damages to a home from storms, theft, flooding, or other “acts of God” can be devastating. Not only could you lose your ability to live there (such as major flooding or roof damage), but the repairs for these damages could cost tens of thousands of dollars. This type of coverage not only pays for repairs to your home but can also cover the home’s contents. If you have a particularly costly possession, such as a high-value engagement ring, for a meager cost, you can attach a rider to the policy to cover the loss or theft of the ring. A rider is simply an “add-on” to the policy.
Renter’s Insurance
Much like Home insurance but does not cover any of the rented property. It only covers the contents of the rental home – your stuff. If you rent a home, apartment, or room, this insurance is a must! If, for example, the home catches fire and you lose all your belongings to the fire, this insurance will cover those losses. It would be best if you carried this insurance, not your landlord. In fact, it is illegal for your landlord to pay for the renter’s insurance.
Health Insurance
Medical emergencies can happen at any time out of nowhere. Trust me, I’m a nurse and have seen it happen. Even if you are fit and healthy, you need this coverage. Healthcare.gov estimates that fixing a broken leg can cost up to $7,500. The average cost of a 3-day hospital stay is about $30,000. Even though monthly coverage costs can be high, it’s still cheaper than the inevitable illness or injury that will happen.
Auto Insurance
Auto insurance is required by law. But it is crucial to reduce your financial risk. Whether you or someone else causes an accident, the variables are too significant not to have this coverage.
Life Insurance
In the simplest terms, term life insurance replaces your income when you die. The death of a loved one is chaotic and grief-filled. How much do you need? That depends. Are you single, or do you have a family that relies on your revenue? If you are single and no one relies on your income, you only need enough to bury yourself. If you have others who depend on you, you should have approximately 10-12 times your annual income. This amount will help with the chaos and worry of how your loved ones will be cared for after you’re gone. The expectation, if one follows the skills taught in this curriculum, longer-term insurance is all one will need. By the time the insurance term expires, you should be able to self-insure.
Disability Insurance
This insurance covers up to 2/3 of your income if you are hurt or disabled and cannot work. There are two types; short-term and long-term. The short-term starts immediately, and the long-term usually have an elimination period of 6 months. Each has its purpose. Employers frequently provide this insurance, but one can purchase it as an individual. It may or may not be worth it, depending on if you are in a high or low-risk career. You shouldn’t need short-term disability coverage if you have a 3-6 month emergency fund.
Identity Protection
While there are legal protections for identity theft, it can still be time and money-consuming to repair any damage an identity has caused. This insurance can help with the frustration and cost of repairing your identity.
Umbrella Insurance
This insurance covers the “extras” that the other insurances do not. It offers extra protection for people who have a high net worth.