A Guide to the Different Types of Personal Insurance


Do you have the personal insurance coverage you need?

Should the unexpected happen, having the right insurance offers peace of mind. There's usually a policy for anything you can think of, but some policies are more of a priority than others. It'll depend on what you need, though if you're new to insurance policies it can be overwhelming.

Don't worry, we're here to help! Read on for this guide to the must-have personal insurance policies so you don't get caught out.

Health Insurance

Health insurance is one of the most important types of insurance you can get. Staying in good health lets you go to work and earn the money to enjoy your life. If you're asking "Which types of insurance do I need" then this is right at the top of the list.

What if you get sick or you're in an accident and don't have insurance? You might find yourself locked out of treatment, or you could face huge medical bills. 62.1% of US bankruptcies are due to medical expenses.

Having health insurance is vital if you want to protect your personal finances. Otherwise, you're risking financial devastation. You want to look for policies that cover things like preventive services including:

  • screenings
  • vaccines
  • checkups

This will mean you can stay on top of your health and track any changes as they happen. If you're a freelancer or self-employed, you can also deduct it from your tax premiums.

Life Insurance

Most experts will tell you that life insurance should be a key part of your financial management. The real-life importance of it though will depend on your situation and that need changes over time.

If you're young and single, you won't have much need for life insurance. If you're responsible with a family to support, then life insurance is critical.

If you're married and you or your partner die, life insurance can take off the financial burden. Depending on policy it can:

  • replace income
  • pay debts
  • pay for your children to go to college

Even if you're single, it can still cover your funeral expenses and tie up any debts you might leave behind. To work out if life insurance is right for you, ask these questions:

  1. What immediate expenses will there be for your family if you die?
  2. If you died, how long would your dependents need financial support?
  3. Do you want to leave money for college educations or inheritance?

The cost of life insurance will depend on your age and health. The healthier and younger you are, the less you'll have to pay.
Some insurers will ask you to complete a medical exam though some don't need you to do this. If the policy doesn't ask for an exam, it may be more expensive though.

Disability Insurance

Of the different types of insurance, disability insurance isn't often thought about. But, your home or your car isn't your most important asset, it's your ability to bring in an income. Yet most people don't cover disability.

Gaining a disability happens more often than you may think. For 20-year-olds, 1 in 4 will become disabled before they reach retirement age. Disability insurance is the only type that pays a benefit if you're injured or fall ill and can't do your job.

For injuries that occur due to work, you do have disability benefits through workers' comp. But workers' comp won't cover you for illnesses and injuries that happen off the job like:

  • diabetes
  • cancer
  • multiple sclerosis
  • COVID-19

The best this is disability insurance isn't likely to be a huge cost out of your budget. You can usually find a good plan to suit most budgets and needs. You're looking at around 2 cents for each dollar you make and they're usually based on age, job, health, and salary.

Vehicle Insurance

If you drive, auto insurance is one of the best types of insurance and a must-have. It's required in most states but it also protects you against the costly expense of accidents.

You could be looking at upwards of $10,000 without any injuries. If there is a fatality, the costs spiral up to more than $1.5 million. These costs are from vehicle damage, medical bills, wage losses, and more.

Basic auto liability insurance covers things like death, injury, legal fees, and damage. This is the level of coverage required by most states. Some need you to carry PIP (Personal Injury Protection) and uninsured driver cover.

These types of insurance cover your medical expenses from an accident no matter who was at fault. They also help with hit-and-run incidents and accidents involving uninsured drivers.

Another thing to note is you may need comprehensive and collision coverage if you're buying a car with a loan. This will cover damages to the car through vandalism, theft, accidents, and more. These are vital to have if you'd be hard up to repair or replace your car.

Home Insurance

Most homeowners consider their property to be their biggest asset. It's only right then that you protect it. Home insurance gives you a financial life raft should damage or disaster strike your home.

It's required by most mortgage lenders to have, but if you don't want to buy your own, your mortgage lender can do it for you. Then they send you the bill. While more convenient, this could come at a higher cost than you'd get elsewhere and have less cover.

Even if you've paid off your mortgage it's still a good idea to have home insurance. It'll protect you from big expenses from unexpected damage. It'll also give cover again liability for injuries that happen on your property to guests.

If you're renting your home, then you should have a renters policy. Your landlord's insurance will cover the home's structure but not your personal items. The loss of those can stack up to thousands of dollars to replace everything.
Renters insurance will cover most costs in the event of disasters like:

  • fire
  • flood
  • burglary
  • natural disaster

Both renters and home insurance will help cover the costs of relocating if you can't return to your home.

Types of Personal Insurance You Won't Want to Miss

So, there you have it! Now you know these essential types of personal insurance you can protect yourself.

The role of insurance is important but simple: It covers financial losses in the event of a disaster. We've given you the most important types of insurance, but you should think about what you need. Talking with a licensed agent can help you tailor an insurance package that's right for you.

If you'd like to know more about what insurance you could use, contact us today. At Econosurance, we've got the experience to suit all your insurance needs.

Related Article: Health Insurance Through an Employer vs Personal

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