Basic Personal Finance
5 types of Insurance you should have
Having Auto, Health, Homeowners, and Disability Insurance can save you from paying hefty surprise bills
Auto Insurance:
Coverage for your vehicle that is comprised of six different policies related to protecting you, your family, other people, your vehicle, and any property damaged either by you or another person or object. Most states require drivers to have auto liability insurance before
Health Insurance:
Health insurance covers medical costs from doctor visits, emergency room visits, hospital stays, and medications. Programs and eligibility vary from state to state, make sure to check on your state’s website for more information.
Common types of federal medical care you’ve heard of is Medicare and Medicaid.
- Medicare are for people in low-income situations and people with disabilities
- Medicaid is for anyone aged 65 or older and some people under 65 with certain disabilities and conditions.
It is possible to be covered by both Medicare and Medicaid but check your eligibility with the Department of Health and Human Development.
An easy aspect to overlook of health insurance is In-Network care and Out-of-Network care.
- In-Network care is an agreement between the medical care provider and the insurance provider to provide a customer a discounted rate for medical care.
- Out-of-Network care is not discounted, and you will pay more. Most of the times you need to determine whether a physician is in-network for your health insurance plan.
Homeowners Insurance:
Homeowners insurance is a policy that covers damages to property and liability or egal responsibilities for injuries and property damages policyholders or families cause to other people.
The standard policy without any riders — or additional coverage — usually covers the following:
- Structure of the home, including garages, toolsheds, or gazebos, if damaged by natural disasters
- Personal belongings destroyed in natural disasters.
- Liability protection against lawsuits for bodily injury or property damage that policyholders cause to other people.
- Additional living expenses for time spent away from your home if a natural disaster renders your home uninhabitable.
Life Insurance:
Life insurance guarantees the insurance company will pay a sum of money to beneficiaries named in the policy when the policyholder dies. In exchange, the policyholder pays monthly premiums during their lifetime.
Life insurance is typically bought when you have dependents such as young children or parents, but it can be bought before then.
There are different types of life insurance with some having fixed premiums and others having variable premiums; however, it is important to consider the cash value of the policy accumulated from the monthly premium payments, and you can use the money accumulated for many purposes from down payments on homes to medical bill payments.
Depending on the type of the insurance policy, the cash value of the policy will grow at a steady growth rate in non-market correlated investments or at higher growth rates in market correlated investments.
This concept is called Infinite Banking where you use the cash value of your life insurance policy as a bank where you can withdraw money and use for any purpose.
Disability Insurance:
This insurance covers both short-term and long-term disabilities that prevent you from being able to work. The insurance covers the income lost due to the disability.
Short-term disability insurance covers a few months of income if you become temporarily disabled because of a broken limb or similar injury. The benefit are paid quickly and may continue for a few months to 1 year depending upon your policy.
Long-term disability insurance covers your income for as long as the disability lasts. If your long-term disability stops after 14 months, your benefits stop at 14 months. If your disability continues, the benefits end after a few years or at retirement age depending upon your policy.
NOTE: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
This was an excerpt from a book I’m writing on Personal Finance.
Summaries of each of 10 chapters will be posted in this manner. If you’re interested in the e-book, consider pre-ordering by May 23, 2023.
