Life is a beautiful thing, but it’s also full of risks. Every day when we get out of bed, we face a world full of dangers.
We can weather a lot of bad things in life, but not every bad outcome is something that we can handle on our own. A broken bone can be painful and expensive, but a serious illness can put even the most financially cautious people in debt. When some things in our home break down, we can reach into our pocket and pony up the dough it takes to fix them; but a house fire would leave most people destitute if they were forced to bear the brunt of it alone.
That’s why we have insurance. Insurance pools risks and allows regular people to better afford massive personal, medical, and financial disasters.
There are many different types of insurance, and some different sorts of insurance policies work in different ways. Let’s examine a few that you’ll want to be sure to invest in over the course of your adult life.
Health insurance is arguably the single most important type of insurance that there is. The purpose of health insurance is to keep healthcare costs from bankrupting the policyholder. That’s a very important thing because healthcare in the United States is extremely expensive. In fact, it is by some measures the leading cause of bankruptcies in the US.
Health insurance policies have a few key aspects. Generally, you’ll find that some forms of healthcare are covered more completely than others. Some things may have to come out of your pocket until you hit a deductible amount. Other times, you may be required to pay a copay. Health insurance will generally make it affordable for you to head to your primary care provider and take other proactive health steps. This is a win-win for you and your insurer since you’ll get financial help in staying healthy while reducing the odds that you’ll ever need a major settlement.
The United States has employer-based healthcare, which means that healthcare coverage is typically included in employee benefits and paid for by employers. But there are other possibilities. Older Americans are covered by Medicare, a government-run healthcare system. Lower-income individuals and families are eligible for Medicaid, another government program that works similarly to Medicare. And individuals can buy health insurance online using government-run exchanges and other websites.
It’s easy to buy health insurance online. Just make sure to do your research. This is important even if you’re going to be on Medicare because there are different plans and supplement plans to consider. Make sure that you secure your plan during the open enrollment period unless you have special eligibility that allows you to get coverage when there’s no open enrollment.
Homeowner’s Insurance and Renter’s Insurance
What would you do if a fire tore through your home? Many of us would find that rebuilding after a disaster is more than we could afford. Luckily, there are insurance policies that have the power to bail us out. Invest in a homeowner’s or renter’s insurance policy, and you’ll find that rebuilding after a disaster can be within your financial reach.
While not everything that we treasure is replaceable, having a financial safety net to rely on in an emergency can make a massive difference for you, your family, and your future. You can’t prevent an earthquake, flood, fire, hurricane, or other extreme weather disasters, nor can you be completely sure that you’ll never be the victim of vandalism or a robbery. But you can at least ensure that extreme weather and crimes don’t destroy your finances and your future, and homeowner’s insurance (or, if you’re not a homeowner, renter’s insurance) is the best way to do that.
Car insurance is a no-brainer: Without it, you can’t own and drive your car! Although, the most basic car insurance might not cover collision damage to your car. Technically, it covers other people: The idea is that wrecking someone’s fancy car won’t cost you personally. Investing in fancier policies will help you protect your own car and expand your coverage past things like liability insurance.
Life insurance is an interesting form of insurance. It pays out in the event of your death, which means that long-term policies are pretty much certain to end up being paid (some policies are term policies, which you can outlive—and, hopefully, will!). Life insurance makes financial sense for insurance companies because premiums are paid until you pass away; live long enough, and you may put in more than you get out. And if you fail to keep up with your policy and pay premiums, it will expire, and the company will be off the hook.
Living long enough can make life insurance less valuable, but that’s a pretty good problem to have. And when you’re young and the future is uncertain, a life insurance policy can provide a much-needed safety net for your loved ones. Life insurance payouts can cover things like loss of income, funeral expenses, and more. That can make a big difference to each family member and to others who depend upon you.