Insurance is a necessary evil.  Sometimes you feel like you just pay and pay and get nothing in return, until the day comes when something unexpected happens.  And when the unexpected happens, if you don’t have insurance you could end up in a big financial mess.  People that are financially savvy understand the importance of insurance in their financial armor.  In this article we will help you understand the critical types of insurance you need to have, what coverage you should have, and what you should avoid.

When you evaluate your choices for what insurance to purchase your should keep one thing in mind:

Insurance should only be used to protect you against the risk of an event that would result in a significant financial setback.

We will illustrate this principle as we look at different types of insurance:

Car Insurance

Car insurance is an excellent example of the principle discussed above.  What would happen if you had a small damage to your car that cost $400 to repair.  Would that result in a significant financial setback?  If you can afford driving a car you probably can afford paying the $400 to repair it.  Therefore, when purchasing car insurance you should opt for high deductibles, with a minimum of $500.  What if the accident was much more serious and the car was completely destroyed?  Could you afford losing the value of your car?  The answer may depend on how much your car is worth.  Paying hundreds of dollars in collision insurance every year to protect a car that is only worth about $1,000 does not make much sense.  What if the accident resulted in damages to the property of others and injuries?  Your liability in this case could be hundreds of thousands of dollars.  Now we are talking about an event that could result in a significant financial setback, and therefore you should not get behind the wheel without the protection of an adequate amount of liability insurance.

Medical Insurance

If I had to choose one, and only one type of insurance to carry, it would be medical insurance.  Too many people in American still don’t have the healthcare coverage necessary to protect them against expensive medical treatment, and the healthcare crisis in America has been the topic of much political debate.  Medical insurance is very expensive.  Even when your employer subsidizes a portion of the cost, most people still pay over $3,000 per year for a typical PPO plan to cover a family of four.

However, your health is at stake here and you do not want to be caught without proper health insurance.  When choosing the right health plan, keep the principle above in mind.  Your purpose in deciding how much insurance to buy should not be to try to avoid the $100 doctor visit co-pay.  Your purpose should be to have coverage for major events such as surgical procedures.

Life Insurance

Life insurance can be very confusing because some life insurance plans are not really insurance instruments.  They are low return savings plans.  Life insurance should be used only to protect your family and loved ones in case the primary source of income is suddenly interrupted as in the case of the death of the income provider.  A term policy that replaces the income of the working spouse or what it would cost to replace the service provided by a spouse that does not work outside the home is all that you need.

Long-Term Disability Insurance

Similarly to life insurance, long-term disability insurance protects you if you become ill or disabled and you are no longer able to generate your current income.  This is an important coverage to have.  The last thing you need is to deal with financial difficulties in addition to the other hardships of a long-tem disability.

Home Insurance

For most people your home is your most valuable asset.  Therefore, it goes without saying that it should be protected.  Even if you are a renter, you should have renter’s insurance to protect your belongings in the home.  In addition to protecting your most valuable asset, most home insurance plans also protect you against liabilities associated with your home.  For instance if a repairman comes to your home and gets injured somehow while performing services in your home you could be facing a lawsuit.  Most home insurance plans would protect you to a certain extent in this case.

Personal Liability Insurance

Although most home insurance plans protect you against certain personal liabilities, they usually have limitations.  If you have significant assets or if you are concerned about how much coverage you currently have for personal liability, you may want to consider an umbrella policy.  For as little as $200 per year you should be able to get an umbrella policy from your home insurance company that would provide you with $1 million in personal liability coverage.  Unfortunately we live in a very litigious society, and having enough protection from claims against your assets is a wise financial decision.

Purchase Protection Insurance

Purchase protection insurance, also known as extended warranties or service contracts protect you against defects that are not covered by the manufacturers warranty when you purchase certain items such as appliances or electronic equipment.  Most of these types of insurance were designed to increase revenues for the sellers and are financially unfavorable to the consumer.  Therefore, they should be skipped.  Again, remember the principle discussed in the beginning of the article.  Insurance should be used to protect you against significant financial setbacks.  If your electronic equipment goes bad after the manufacturers warranty expires it may make you upset, but if it has any significant financial implication to you, you probably could not have afforded it in the first place.

 

Independent Thought:

Before selecting an insurance lead, make sure you have performed a good analysis and made comparisons. You can fill an online insurance form and get details of the lead you selected. Details will include a list of features plus latest home and auto insurance quotes related to the lead. Then you can even purchase it online by paying through your credit cards or e-check. However there are some limitations like you might not find enough of boat insurance leads online to come to a decision besides having difficulties in finding an insurance company closer to your location.