Insurance is an integral part of financial planning, and depending on what state you live in, there are a few different forms of insurance that are a legal requirement. Aside from that, though, they offer those with coverage peace of mind, and they protect you against the unexpected. There are several different forms of insurance and policies out there, but the question is, which ones do you need? 

Read on for your insurance checklist.

Auto Insurance

Auto or car insurance is vital if you drive. It is, in fact, a legal requirement in most states but not only that, car accidents are expensive. There are costs from damage to either or both vehicles and medical expenses for injuries, loss of wages, and more, which is why auto insurance is so important. The minimum requirement in most cases is basic auto liability insurance which covers legal fees, injury, death, and property damage. Some states do also require drivers to have personal injury protection too. There are many different car insurance providers that suit all manner of people. For example, The Hartford has policies geared towards over-fifties and AARP members, or there are providers out there with policies suited to working professionals or new drivers. Do your research to find a provider who best suits your needs. 

Home Insurance

For most people, their home will be their most significant asset, so home insurance is another must-have. It provides homeowners with a financial safety net should damage occur. If you have a mortgage or you are looking to purchase a house, then the chances are that your lender will require that you take a policy out. Some lenders will buy it on your behalf, but this often costs more while providing less coverage. Even if you have paid off your mortgage, it is still a good idea to have a home insurance policy; it can cover damage and injury, which would be costly if you try to foot the bill yourself. If you rent your property, then renters’ insurance is just as important. While your landlord’s policy will cover the structure, it won’t cover any damage to your personal items. On the other hand, if your home is burglarized or there is an accident, fire, or disaster, your policy should cover most if not all of the costs. 

Health Insurance

This is perhaps one of the most important policies you can hold in America today. Your health allows you to work, which then earns you money so that you can have a social life and pay for your standard of living. If you were to develop an illness or have an accident without the proper health insurance in place, you could be left with huge bills or even be unable to secure treatment. In the extreme, medical expenses have been known to contribute to bankruptcy. Some healthcare plans can even cover preventative services such as check-ups, vaccines, or screenings, meaning that you are more likely to recover fully because your illness is caught as soon as possible. In addition, if you are self-employed or working on a freelance basis, then your health plan premium is often deductible when you file your tax return; you can deduct expenses that exceed 7.5% of your adjusted gross income. 

Life Insurance

Many experts agree that life insurance should be a central part of your financial planning. However, this may depend on you. The actual need for life insurance can vary, and it will change over time. For young, single people who have few assets, the need for life insurance is a lot less than those who are supporting a family. Life insurance for families can replace the lost income, pay any debts, or go towards paying for your children’s college tuition. If you are single, a smaller policy could pay for your burial costs and any debts that you leave behind. The cost of your policy will depend on your age and your health. Taking out a policy while you are young and healthy will be a lot cheaper. Some providers require a medical exam, but there are providers out there who will insure you without one. If you do not already have a life insurance policy, you should consider taking one out. Think about the financial duress your family would encounter in funeral costs, debts, and loss of income. How many dependents do you have, and how long would they need financial support for? The considerations can inform your decision about when the right time to take out life insurance is.

Disability Insurance

This form of insurance is not as vital as the forms mentioned above, but it is worth considering. This is similar to health insurance in that it is all about protecting your ability to earn and provide for your family. Accidents sometimes result in disability, and disability insurance is the only form of insurance that will continue payout if you cannot do your job for one reason or another. If you were to find yourself disabled, you might qualify for disability benefits through the government or through your work if your injuries happened while on the job. However, these are rarely as comprehensive as taking out a personal policy would be. Disability insurance does not have to be expensive; there is a range of options to suit most budgets, so the cost should not be a concern. 

In Conclusion

Having insurance is essential for most Americans today; it helps offset economic losses in an accident or a catastrophe. Each of the forms of insurance mentioned above is essential for protecting yourself and your assets. However, you may want to do some more thinking about your individual needs and whether or not you need to consider any additional policies. The internet has a wealth of resources that you can use to improve your financial planning abilities and, in turn, improve your financial future.

Published on Holr Magazine