8 Must-Have Insurance Policies to Protect Your Financial Future

A financial plan makes meeting current obligations easier and strategizing for the future easier. While most people include details about their income, expenses, taxes, investments, and retirement, only a few remember to include insurance as part of their financial plan.

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Having the right insurance plan ensures you’re prepared for unexpected life events and protects you, your family, and any assets you have. Insurance also offers you peace of mind if you lose your job or property.

If you’re considering insurance policies and have no idea where to start, here are eight must-have policies that will protect your financial future.

1. Health Insurance

The U.S. has one of the highest healthcare costs, with the average person spending $13,493 on medical care annually. Healthcare costs have continued to increase over the last five years, making it unaffordable for most Americans. Health insurance can help cover part of these costs.

Some employers provide health insurance as part of their benefits. However, if your employer doesn’t, you can consider government-subsidized programs like Medicaid and Medicare. Alternatively, you can opt for private insurance, which most insurance companies provide through an agent or directly.

Evaluating factors like the hospitals in the plan, medical services offered, and the cost of premiums/deductibles will help you find the right insurance coverage.

2. Auto Insurance

Car insurance is mandatory in most states in the U.S. It can help pay for car repairs, medical bills, property damage, car theft, and legal fees if you’re taken to court over an accident. While there are different types of auto insurance depending on your needs, the most common are liability coverage, comprehensive coverage, and collision coverage.

Liability coverage covers any property damage or injuries to the other party. It also covers legal fees. Comprehensive coverage handles any damages to your that are not related to wrecks like flooding, theft, fire, or glass breakage. Collision coverage handles any damages to your car. Choose the right coverage depending on your needs and how much premium you can afford.

3. Homeowner’s/Renters Insurance

Homeowner’s insurance protects your house against theft and damage. Renter’s insurance applies to rental property where you don’t own a home. Both policies cover any damage related to theft, fire, or floods. Comprehensive homeowners insurance will cover damage to your property, replace personal items, pay to rebuild your home, and cover any living expenses you may need after losing your home.

4. Life Insurance

Life insurance is mandatory if you have a family or other dependents. The policy covers any loss of income in the family and cushions your family against any financial strain in case of your demise. Life insurance is categorized into two types: whole life insurance and term life insurance.

Whole life insurance is more expensive and can have a cash value, where you grow your savings at a slow rate. Term life insurance is set for a specific period, which is mostly 10-20 years. The coverage provides a payout if you die while the policy is still active. On the downside, if you outlive the term and the coverage expires, your beneficiaries won’t get any money.

5. Long-Term Disability Insurance

Life can be unpredictable, and you may lose your job if you get into an accident and can no longer continue working. That’s why you need to sign up for long-term disability insurance. The policy offers a monetary benefit equal to a certain percentage of your salary.

Unlike workers’ compensation, long-term disability insurance covers a lot more than injuries or disabilities that you may incur while working.

6. Umbrella Insurance

You must get umbrella insurance if your assets are above the maximum liability coverage on your homeowners’ or auto insurance. This type of insurance covers some lawsuits, property damage, injuries, etc. The sole purpose of umbrella insurance is to cover any extra cost beyond your current limit.

7. Long-Term Care Insurance

Long-term care insurance is ideal for anyone over the age of 50. Research shows that the average cost of a senior needing long-term care is about $120,900, which can diminish your personal or retirement savings.

8. Pet Insurance

Pet costs can quickly add up. You may need to account for injuries, vaccinations, vet visits, food, and other expenses. Pet insurance covers prescriptions, medical treatments, and certain preventative measures. A few insurance providers reimburse up to 90% of your vet bills, while other plans cover routine vaccinations and vet visits.

These must-have insurance policies can safeguard you from any unexpected losses or damage. Always shop around and compare policies from different providers to get the best coverage and rates. Read the limitations of each policy and regularly review your insurance coverage as your life changes.

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