Most of us don’t doubt our need for health insurance, and since we don’t have access to universal healthcare, we do what we can to get insured. In lieu of a shift in sentiment that recognizes healthcare as a human right, we rely on health insurance to protect us from having to absorb the full cost of medical care that most people cannot afford on an individual basis. We opt to share the risk by pooling assets, or in other words, becoming part of a group and buying into a policy. If we can get it through our jobs, we do, and if not, we seek out plans through the marketplace. Though the costs can be high, if we can afford it we get it and consider it a non-negotiable.
Health insurance isn’t the only area where we need to focus on managing risks, and decisions about the other types of insurance that we need can feel much more daunting. Just like we want to protect ourselves from illness or injuries, we also want to protect ourselves against the loss of or damage to our homes, or the possibility of interruptions in our salaries if we cannot work for health reasons. Likewise, we want to protect those that love and depend on us from the financial impact of other types of catastrophes, including — eventually — our deaths.
This is where the complicated decisions come in: what other risks do we need to protect ourselves from, how much insurance is enough, and where do we go to find the insurance that we need? These can be tough questions, and there are some important things to consider when you are investing in these safety nets. It can also be important to be discerning about where you get the information from, because often the most accessible sources are anything but impartial. Insurance sales agents have a vested interest in selling you whichever policy will be most lucrative for them or their organization, so it’s critical that you do your due diligence and enroll in whichever policies are most beneficial to you and your loved ones – not a salesperson’s bottom line.
Here are 3 other important types of insurance to consider and some tips for where to look to find a policy that works for you.
If you are a homeowner and have a mortgage, this one usually doesn’t even fall into the negotiable vs non-negotiable category; it’s a requirement. If you read carefully before you sign that dotted line (which you should anyhow) on your home loan, you’ll probably notice that obtaining a homeowners insurance policy is a prerequisite for approval. Even if you would prefer to roll the dice, your lender wants to ensure that you (and their investment in you) is insured against unforeseen events.
Homeowners insurance often covers your domicile against calamity such as fire, natural disasters, and the loss of your possessions. How much homeowners insurance you need depends on a large number of factors, including your ability to withstand events like these without an insurance policy. Using a site like Insurify can help you to find quotes based on your needs and compare competitors.
Disability insurance comes in 2 forms: short term and long term. It is often offered as an ancillary benefit through the workplace, in which case it can be relatively inexpensive, but if not, can also be purchased as a private and portable policy that you can take with you regardless of where you work. Short term disability insurance is intended to cover a portion of your salary in the event that you are temporarily disabled due to illness or injury, and what proportion of your salary and the length of time will vary with the policy that you have. Short term disability insurance can also be utilized as part of or in conjunction with maternity leave after childbirth.
Long term disability insurance is similar: it covers a portion of your salary if you become disabled. The amount of your salary it covers depends on the policy, as does the duration of time that is covered. Like its short term counterpart, it can often be an affordable workplace benefit.
When these types of insurance are inexpensive and covered by an employer plan, we almost always recommend that you purchase them. However, it is an important aspect of your risk management plan regardless and should be seriously considered, particularly if your household depends on your income to survive. It can be even more important if your occupation depends heavily on your physical capabilities and if changes to your physical condition would jeopardize your ability to function in the workplace. Disability insurance can vary widely by policy, and it is important to compare prices and coverage on a site like Policy Genius.
Life insurance can be a tough thing to think about because it requires us to confront one of life’s most difficult questions: what happens when we die? Existential dilemmas aside, there are some concrete questions to ask yourself when considering what you need to have in order in the event that something happens to you. If you died, would you have enough saved to cover your end of life needs? If you know that you have assets to cover your funeral and final wishes, you may not need life insurance. However, if you don’t, and if your family would have difficulty covering these costs themselves, you should consider an inexpensive term policy that could cover the basics.
If you have a family, these issues become more complex. If you don’t have enough saved to cover the costs associated with your death, you need to have life insurance. On top of that, if your family would suffer from the loss of your income, a life insurance policy can help to ensure your family’s needs will be met in your absence. This protects them from having to deal with hardships beyond the trauma of your loss.
If you have access to a life insurance policy through your employer, this is likely the most inexpensive route to take. However, if you change jobs or retire, you’ll no longer have that policy. In that case you will want to have a private and portable policy that follows you regardless of your employer. In this case, we typically recommend purchasing a term policy, which will cover you for a specified period, during which you will pay for a fixed period and which will provide a predetermined death benefit. For example, many people choose a 30 year term. These can vary greatly in price and what will eventually be paid out, and will likely be cheaper the younger and healthier you are when you take out the policy. You can find out more about policies and prices by comparing rates.
While these topics can be hard to talk about, they are important parts of comprehensive financial plans, and something that our trainers take into consideration whenever creating your financial roadmap. Health insurance policies help to bring us peace of mind, knowing that we will be taken care of in times of sickness. Home, disability, and life insurance help us rest a little easier, knowing that we and our families will be taken care of in a future that we cannot predict.