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  • Life Happens, Do You Have Insurance?

    Insurance is one of those things you may think you don't need until the unexpected happens. Unfortunately, from auto accidents to illnesses and disasters, the unexpected is bound to occur at some point in our lives. However, having insurance gives you peace of mind. In addition, it protects you from many financial setbacks that could cost you thousands of dollars.

    Keep reading to learn more about the most common types of insurance coverage that can help protect you, your loved ones, and your property.

    Life Insurance

    Life insurance helps protect those who rely on you financially. If your loved ones depend on your income to cover daily expenses such as your mortgage, outstanding loans, taxes, and child care expenses, then life insurance should be on top of your list of insurance policies to consider. Industry experts suggest a life insurance policy that covers six to ten times your annual income. In addition to helping provide for the ones you leave behind, life insurance benefits can also help pay for funeral expenses.

    The two basic types of life insurance are traditional whole life insurance and term life insurance.

    Whole life insurance.

    Whole life insurance covers the insured person for their entire life as long as the premiums are paid on time. There is no set time when this policy expires. This type of insurance policy also has a savings component called “cash value”. As you pay your premiums, a portion of it goes towards the cash value, and as it grows over time, you could borrow or withdraw funds from the policy. Whole life insurance typically costs more than term life insurance.

    Term life insurance.

    Term life insurance is a policy that covers you for a set amount of time. This type of policy could provide coverage for up to 30 years. If you outlive this period, the policy will expire, and you have to decide whether to renew the policy (if it’s an option) or purchase another policy. With term life insurance, your premium could be based on your health and age.

    For the other differences between these types of insurance, you'll want to seek the advice of a financial expert before you decide on which option is best for you.

    Automobile Insurance

    According to NHTSA, in 2020, Americans drove less due to the pandemic, but there were an estimated 38,680 people who died in motor vehicle traffic accidents. Every state requires you to have auto insurance if you drive a vehicle. The type of insurance you're required to carry will depend on multiple factors, such as where you live and whether or not you have a lien on your vehicle. Even if you're driving an older car that is paid off, automobile insurance is something you shouldn't skip. If you're involved in an accident and someone is injured or their property is damaged, you may be subject to a lawsuit that could cost you a lot of money.

    There are two types of auto insurance, liability and full coverage.

    Liability insurance.

    Liability insurance helps pay for damages and other expenses of the other person or their property if you were at fault in an accident. Liability coverage is a legal requirement in almost every state.


    Full coverage insurance.

    Full coverage insurance simply means there are multiple coverages on this policy to help protect your vehicle. It doesn’t mean that it fully covers everything for your vehicle. A full coverage insurance policy may include coverages such as liability, comprehensive, collision, medical payments/personal injury protection, uninsured/underinsured motorist coverage, and rental reimbursement coverages all in one policy.

    Talk with your insurance company to ensure you have the right type of coverage based on your circumstances.

    Homeowners Insurance

    Replacing your home is expensive, and having the right homeowners insurance can make the process less complicated. When shopping for a policy, look for one that covers the structure's replacement and the contents. Also, look for one that pays for you to live somewhere else if your home has to be repaired due to extensive damage.

    Keep in mind that the cost of rebuilding doesn't need to include the cost of the land your home is on since you already own it. Depending on the age of your home and the amenities it contains, to replace it could be more or less than the price you paid.

    Also, when considering homeowners insurance, be sure the policy covers the cost of any liability for injuries that might occur on your property. Finally, don't forget to factor in the cost of upgrades and unique features that could increase the value of your home, such as kitchen and bathroom renovations, replacing windows, and adding a pool.

    Renters Insurance.

    Renters insurance is a type of property insurance available to people who rent or lease properties. This insurance provides coverage for personal belongings, liability, and additional living expenses for covered losses.

    For rental properties, there may be two types of property coverage for one property: homeowners insurance and renters insurance. If you rent or lease the property where you live, homeowners insurance does not cover your personal property. You’ll need to obtain renters insurance to protect your belongings.

    Health Insurance

    The soaring cost of medical care is reason enough to make health insurance a necessity. Even a simple visit to your family doctor can cost you more than you might expect. Likewise, more severe injuries that result in a hospital stay or require surgery can add up quickly and may amount to more than you're able to pay. Although the cost of health insurance is a financial burden for just about everyone, the potential cost of not having coverage is much higher.

    Low deductible health plans.

    A low deductible health plan helps lower your out-of-pocket costs. Since low-deductible insurance provides more coverage, you will pay more upfront for this type of coverage. Your monthly premiums are typically higher. The good thing is that you will know the cost upfront and you most likely won't have to spend thousands of dollars if you end up needing medical services.


    High deductible health plans.

    A high deductible health plan (HDHPs) is health insurance with a high minimum deductible for medical expenses. As a result, your monthly premiums are much lower compared to a low deductible health plan. With this type of plan, you'll pay a lot more of your own money before the insurance pays the rest. A Health Savings Account could be a good option to help save for and offset the high deductible cost and manage medical expenses. This savings account allows you to save money on a pre-tax basis to cover eligible medical costs.

    If you do not have health insurance through your employer, you can check with trade organizations or associations about possible group health coverage. If neither of these is an option for you, you may want to buy private health insurance.

    Disability Insurance

    It frightens people to think that something could happen that will take away their ability to make a living. Disability insurance is designed to provide partial income in the event of an illness or injury that prevents you from working. The two main types of disability insurance are long term insurance and short term insurance.

    Long-term disability insurance.

    When selecting a disability policy, consider the coverage you will need. Long-term disability insurance provides 50% to 60% of the insured's salary, and it usually begins when short-term disability ends. Typically, to qualify for long-term disability, you must meet the definition of disability for 90-180 days before the insurance kicks in. Make sure you understand the definition of disability you will need to meet and how long your waiting period will be. Benefits may be denied if you do not meet the definition at any time during the waiting period.

    Short-term disability insurance.

    Short-term disability insurance is intended to cover you for a short period, usually three to six months following an illness or injury. It replaces a percentage of your income, and typically it's about 60% percent of your lost wages. This type of insurance covers you for a term between three to six months. Also, there's usually an elimination period before short-term disability insurance kicks in, which could be up to 14 days.

    Regardless of what type of insurance you have, it's a good idea to talk with your insurance company at least once a year to ensure your coverage needs have not changed. As with most things, the cost of insurance can also increase annually. You could start looking around for quotes for your insurance needs before your current policy renews to allow you some time to get quotes and explore options with other insurance companies. Life happens, and the more prepared you are when it does, the better it will be for you and your loved ones.

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