Paying monthly insurance premiums can feel like a pain. However, the purchase of insurance is an important part of your finances. The right insurance policies can protect your assets, and prevent you from becoming overwhelmed with financial difficulties.
Purchasing insurance policies for your most important assets is a smart move. That way, you can replace your assets in the event that they are damaged or lost. Here are 4 insurance policies that you should have:
1. Homeowners/Renters Insurance
Your home is a huge asset. If it is damaged or destroyed, replacing it can be a huge expenses -- one that you probably can’t afford. Homeowners insurance can help you out in these cases. You pay your premium, and when certain events cause damage or destruction, the insurance company pays the costs, negating the need for you to come up with a large amount of capital.
Even if you rent, it makes sense to purchase a policy. Renters insurance protects the valuables inside your unit. Think about the cost of replacing your computer, TV, furniture, and other possessions in the event of a calamity. Renters insurance is inexpensive, and can save you a great deal later.
2. Auto Insurance
You need auto insurance in part because all 50 states require it if you drive a car. But beyond the legal requirement, the reality is that your car is often your main mode of transportation. If it is ruined in a crash, how will you get to work? To the store? Do you have enough money to replace your car? Auto insurance can help you pay for repairs (and perhaps cover a rental car while you wait), or provide you with cash to buy a new car. You’ll be back on the road faster with the help of adequate insurance.
3. Health Insurance
Your health is a huge asset. Your health influences your ability to provide for your family. Plus, one major sickness or accident can wipe out your finances, since hospitals are expensive. Health insurance can help you manage these costs. A good policy can help you get the care you need before the situation gets worse, and it can help you bear the cost. Even with health insurance, some medical costs can be daunting; without it, medical costs are devastating.
4. Life Insurance
This is insurance designed to protect your family if you pass on prematurely. It is especially important for you to have life insurance if you are the primary breadwinner. That way, if you die, your family is provided for. You don’t want your family left with money struggles if your income disappears. Life insurance gives you peace of mind.
Don’t forget to evaluate your situation to see if it makes sense to get other types of insurance. Disability insurance can be appropriate in helping you receive income if you are injured and can’t work. If you have extremely valuable items, your homeowners/renters insurance might not be enough, and special insurance coverage might be needed. Those with high net worths should consider umbrella insurance. Finally, if you own a business, different types of insurance might be appropriate.