What is the Purpose of Insurance?

Insurance provides individuals with financial reimbursement for a loss. Life is full of uncertainties, and even when we’re certain about something, the unexpected can still happen. Because of this reality, it’s important to make sure that the people you care about the most are taken care of if something unfortunate happens. Here are five types of insurance to make sure that you have for the benefit and well-being of your family.

#1: Health Insurance

Health insurance is one of the most important types of insurance for American families. A serious illness or injury can easily bankrupt a family since medical procedures are extremely costly. However, health insurance also covers doctor’s visits and prescription medications in addition to medical procedures. Most people receive health insurance through their employer, although those in need can also purchase it.

Disability Insurance

While many health insurance policies may cover different things, not all policies will cover supplemental pay if you become injured and can no longer work. Around 25% of those who enter the workforce will sustain injuries from a job that can keep them out of work for weeks, months, or longer. While standard health insurance is necessary for every family member, disability insurance is for those who can work.

#2: Homeowners/Renters Insurance

This is another important type of insurance to have, no matter what type of home you live in. Homeowners know the importance of having a good homeowners policy if something tragic happens to your home. However, keep in mind that your policy may not cover every type of event, with flooding being a prime example. Flood insurance is almost always sold separately, so if you live in an area that’s prone to floods, you should make sure that this is included somewhere in your home coverage.

If you’re renting a home, insurance is still necessary for you and your family too. Fires, floods, earthquakes, hurricanes, and other disasters can’t tell whether you’re an owner or a renter, so renters will need some type of coverage to protect their belongings as well. A good landlord will require renters insurance before you rent a home or apartment.

#3: Life Insurance

Fortunately, many people know just how important it is to have a life insurance policy. There are different life insurance policies, so you’ll have to determine which type is the best for you. After all, this will determine how your family will be taken care of financially if you pass away unexpectedly. A good policy will cover wages lost after death and cover funeral and burial expenses— which many people don’t realize can be incredibly expensive.

Life insurance is also necessary for single individuals who don’t have any children but have debt. A small life insurance policy will cover whatever debt you have to claim and burial costs.

#4: Pet Insurance

Well over half of all American families have some type of pet, and although they’re not human, most would agree that they’re still a huge part of the family. Pets are also expensive: you have to buy food, toys, accessories, and sometimes medicine. Even taking your pet to the vet can be expensive, and luckily there’s pet insurance for that.

Pet insurance is just like health insurance for your pet, as it typically covers the cost of treatment if your pet suffers an injury, illness, or disease. It can also cover the amount you paid for your pet if your pet dies due to an accidental injury.

#5: Vehicle Insurance

Last but not least, you’re going to need auto insurance for your car. This will protect you financially if you’re involved in a car accident. Only two states in the U.S. do not require care insurance, but all other states and several other countries require it. Drivers without insurance are subject to fines, suspension of license, and in some cases, much worse punishments.

So make sure that your family vehicle is protected with a good car insurance policy. In the U.S., rates vary due to a variety of factors such as:

• Age
• Driving Record
• Gender
• Location

Fortunately, some companies allow you to combine your auto and home insurance at a reduced rate than if you were paying for them separately.

Depending on your family/life situation, you may not need all five of these types of insurance. You may also need more than what is listed here. Either way, it’s important to make sure that you and your family won’t suffer a dramatic financial loss due to an unfortunate life event.

Featured Photo by Juliane Liebermann on Unsplash