Five Insurance Types to Help You Protect Your Wealth And Your Family

Insurance can help you achieve and maintain financial wellbeing. It provides protection against the uncertainties that might catch people off guard at any point of their lives.

Whether you’re worried about paying your mortgage, covering unexpected medical expenditures, or providing for loved ones if you die or become incapacitated, insurance can help. It promotes wealth protection, minimizes risk, and may even provide tax benefits.1

Here’s an explanation of some of the most prevalent types of insurance, as well as crucial points to be aware of before purchasing.

1. Health Insurance

Given that a simple trip to the ER can cost thousands of dollars, health insurance is a vital tool for promoting your own wellbeing and avoiding catastrophic expenses. Many people have health insurance provided by their employment. The major types of health insurance include:

• Health maintenance organization (HMO)

• Preferred provider organization (PPO)

• Point-of-service (POS)

• Exclusive provider organization (EPO)

Furthermore, persons 65 and older are eligible for Medicare, and people with disabilities or low incomes may be eligible for Medicaid.

2. Life Insurance

When you die, life insurance can provide for your spouse, children, or other loved ones.2 When deciding how much life insurance to buy, consider your annual salary and the number of years you want to work, as well as future needs such as college tuition and funeral costs.

There are two major types of life insurance:

  • Term insurance: A term policy provides coverage for a set number of years (the term) and includes options to purchase with or without a health screening. If you’re healthy and depending on your age, you may pay a lower premium if you have a health screening.

  • Whole-life or permanent insurance: This type of life insurance offers a death benefit, but it is also an investment vehicle through which the insured can receive payments during their lifetime. Whole-life premiums are usually more costly than term life insurance.

3. Homeowner’s/renter’s Insurance

For most people, buying a home will be their biggest investment over their lifetime. So it’s extremely vital to carry appropriate homeowner’s insurance in case of fire, storm damage, burglary or vandalism. Typically, coverage will include the replacement cost to rebuild a home and replace its contents, compensation for the cost of living elsewhere if you get displaced and liability protections should someone get injured in your home.

4. Long-term Disability/Long-term Care Insurance

Could you pay for living expenses if you were permanently unable to work? For most people, the answer is probably no. Long-term disability coverage can give replacement income set at a fixed proportion of your salary or wages should you become permanently disabled. Similarly, long-term care insurance provides a financial benefit for those who are no longer able to care for themselves on a regular basis and can be used for services at home or in a nursing home or other senior institution.6 Typically, disability and long-term care payments are not subject to federal taxes

5.  Auto Insurance

Almost every state requires a car owner to acquire auto insurance coverage. The minimum necessary policy often covers liability for any property damage or personal injury caused by an accident in which you are at fault. Policies also often include protection if you’re in a collision with an underinsured or uninsured motorist, personal injury protection and some kind of medical coverage if you’re in an accident. Collision (which pays for repairing or replacing your damaged vehicle) and comprehensive (which covers theft) are optional in most states, unless you lease or loan your vehicle, in which case they’re generally needed.

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