Simply put, Insurance is the transfer of risk from you to a corporation. Each transfer of risk is looked at as a type of insurance. The following types of insurance are below:
In return for that transfer of risk, you pay a monthly premium to maintain a policy with your company of choice.
Insurance is important because no one can predict the future. Events occur that cause people to lose precious things including their home, automobile, business and in some unfortunate events, their life. While insurance companies cannot predict the future either, they are pretty sure that the events described above will happen to most people throughout their lives.
The theory of insurance is fairly simple, you are betting that you will(have an unfortunate event occur) and they are betting that you won't.
Being aware of and covered in the areas above enables you to worry less about the things you could lose and think more about what you could gain.
Insurance is designed to protect one from catastrophic disasters. An insurance rule of thumb: If you can pay for the loss or damage without a financial hardship then pay it, otherwise expect your insurance premium to eventually increase. Also, buying every type of insurance just isn't necessary. Sometimes the risk is worth taking rather than paying a premium.
Life insurance is designed to take care of one's dependants after the caregiver's death. If you have no dependants, then you probably don't need life insurance. This includes children and retired persons... usually they don't have people that depend on their income so life insurance for these groups can, in rare instances, be beneficial but is usually unnecessary.
Have you seen the cost of childcare lately? Add that along with housekeeping, food preparation, home accountant, and school transportation. From that list alone one can see how much a spouse really contributes to the household budget. It is estimated that a non-working spouse contributes at least, but usually more, the equivalent of a full time job. For this reason it is important to buy life insurance for everyone in the household if the absence of their income would cause a financial hardship.
Term life insurance is probably the best choice for most. Term life is set for a specific term, like 10-30 years, with a much lower premium than whole and universal life. The best bet is to buy term life and invest the premium difference in a retirement account.
Everyone who lives in a National Flood Insurance Program area is eligible and can buy flood insurance. These areas are not always prone to floods so even if you think your area is low risk you may be eligible.
If your vehicle is used for anything but personal use, then you will probably need to extend your personal auto policy to cover business use of your vehicle. Don't think just because you were unaware of your coverage this will get your accident paid for. Your insurance policy is a contract that you agreed to adhere to. If you don't understand all the coverage in your contract you should contact your agent about the questions you have.
Don't count on Social Security to take care of all your needs if you become disabled. If you are able to get Social Security for your disability (not all get approved to receive disability benefits) then you will still have to wait months before you receive benefits and your disability needs to be long-term to qualify. Even if you qualify for benefits, it probably will not match your current salary.
Again, don't count on Medicare or Medicare Supplemental Insurance to pick up the bill. If you can qualify, Medicaid may pay up to half of the cost. Choosing long term care insurance can help you pay for the costs of a nursing facility or home care if the need arises. Also, do you really want your family to have to pick up the bill if you acquire a long term illness or disability? Long Term Care Insurance is a great option and if started early in life the premiums can be very reasonable.
Umbrella insurance is not just for the wealthy. With the common occurrence of lawsuits, umbrella insurance is a must for every home, auto, and watercraft owner. Umbrella insurance is designed to give one added liability protection above and beyond the limits on homeowners, auto, and watercraft personal insurance policies. With an umbrella policy, depending on the insurance company, one can add an additional 1-5 million in liability protection
People who choose not to purchase health insurance eventually affect the lives of others. There are many reasons why some Americans are uninsured. Regardless of the reasons, having so many uninsured individuals drives up the cost of goods when people get sick and cannot do their job. In addition, when many people in a company choose not to purchase health insurance, it sends a message to the employer that health insurance may not be an important benefit which in-turn could cost other workers a loss of their health insurance benefit.
Also, when healthy people choose not to be a part of their company's health insurance pool, it raises the costs for everyone else because the risk is spread through less people. When people make lower wages they cannot afford health insurance and the number of people eligible for Medicaid rises (which is paid by your tax dollars). For these reasons, many have encouraged the government to switch to a Universal Health Care System where the government would help manage health care.
