Insurance – in life an unfortunate event can happen anytime, anywhere and to anyone. As humans, we can have limit control on these events, but no one can stop them. An insurance cover/policy is designed to reduce the financial impact of those events. There are a variety of insurance policies available in every market and every type has own benefits, depending on the individual needs. As an individual we choose an insurance policy depending on our situation and future needs. In this blog, we are going to explain 4 Types of Insurance that everyone may need.
Read Also: Types of Life Insurance Policies in the U.S.
4 Types of Insurance in US:
In US market there are numerous companies in insurance industry and they offer a number of policies but we will analyze the most demanded ones here:
- Auto insurance/Car Insurance
- Life insurance
- Health insurance
- Disability insurance
1: Auto Insurance/Car Insurance
In most countries, car insurance is a legal requirement and you need to have a valid car insurance while driving car on the road. And in case, you are driving your car and have not renewed your expired car insurance well on time, you will be required to pay a penalty.
This legal requirement is the minimum amount required by law and further it is up to you, how much insurance cover you want to have. Having an active car insurance policy is legal requirement in USA and enforced in 49 states out of 50.
This minimum insurance cover is always recommended, as it will give you little confidence while driving your car on busy roads.
Auto insurance will give you coverage for:
Property damage: such as car theft or damage to your car
Bodily injury: such as if you have an accident, this will cover the injuries , death or property expenses you have caused
Medial payments: such as cost of treating injuries, and or funeral. This is somehow a supplement to your health insurance and will cover cost of medical treatment caused as a result of car collision.
Car insurance depends on the model and make of your car, as expensive cars have higher insurance premiums, as these cars have high repairing cost when a damage occurs. Usually car insurance is easy to understand and a quick process to avail.
2: Life Insurance
Being an individual, we rarely care about having a life insurance. But when have dependents, who we are responsible to cater their financial needs, then we definitely think about having a life insurance. This will provide financial security to your loved ones, who are dependent on you, in case any mishap to your life occurs anytime.
You can buy a life time insurance policy or term policy, which will cover a certain period, any number of years. In this situation, insurance company will give compensation to your dependents for those number of years.
Lets’ say your kids will complete their studies in meanwhile without any trouble, all house hold expenses will be covered, mortgage payments will be made, and no financial adversity will be face in those years for which you have bought life insurance policy.
There are huge number of life insurance policies and it would be really hard for common person to understand which policy will better suite his requirements. Therefore, it is advised to get services of a professional who will guide you a policy which will not only be cost effective rather will also cover your exact requirements.
3: Health Insurance
In every country, medical care has become very expensive and is in the USA as well. There are treatments, which are not covered in Government expense and employer sponsored plans, for that you will have to pay for yourself.
Mostly health insurance is provided by an employer, i.e. employers buy the health insurance for its employees. But if as part of benefits program, your employer did not buy health insurance for you, then definitely you would need to purchase a policy from open market.
Having a health insurance timely is always recommended, as you don’t know when you or your family face a medical emergency.
If you have already have any medical conditions, the health insurance policy will be expensive compared to a healthy person looking for same policy. But still, it would be highly recommended to arrange health insurance cover for yourself. You should consult a financial advisor to know which type of health insurance policy is right for you.
4: Disability Insurance
This would be helpful if you have permanent or temporary disability, which is not letting you do your work properly or not at all. It may be due to an illness or injury.
Although in USA, state will give you social security disability benefits till the time you reach your retirement age, and afterwards it will be converted into social security retirement benefits. But usually this takes time, or may be won’t meet your expenses if you have dependents too, therefore you may want to have disability insurance in addition to that.
Types of disability insurance policies:
Short term policy: maximum will pay you for one year
Long term policy: may be till the disability ends or minimum for at least few years
In deciding which policy to purchase you will have to consider what they are offering like how they define a disability, whether your condition is covered or not, when the benefit will start from this insurance policy as some may take time to mature, how long is the policy and you will be getting the benefits, and definitely how much you will receive from that policy.
Depends on your need, it is recommended to do your own market research as well as consult an insurance expert who will guide you of all the available options within specific type of insurance policy.