Insurance coverage helps protect individuals and their families in the event of expenses or losses incurred due to health issues, accidents or natural disasters. Insurance can cover your life, your car, or even your prized autograph collection. Six basic types of insurance are readily available to protect most consumers in everyday scenarios.
Life Insurance
Life insurance is essential for any major money earner in a family, regardless of where one works. It helps protect the lifestyle and home of the insured's family in the event of his untimely death. Term life insurance is the least expensive, but it has limitations on its duration, which can be specified by the insured. Whole life is more expensive, but it remains in effect for the life of the insured as long as premiums are paid on time.
Health Insurance
Health insurance, which offers protection from increasingly high medical costs, is offered in a variety of policy types and terms. Health insurance is not designed to pay long-term health care expenses. It is instead meant to cover the cost of hospital or physician care for illness, injury and surgery, as well as the cost of prescription medications. It can be used partially for the care of chronic illness, but policies often cap out on payouts between $1 million and $5 million in lifetime-allowed expenses.
Auto Insurance
Auto insurance is required in the U.S. Full coverage is required for new cars or those under financing, although regulations vary by state. Auto insurance is designed to help pay for repairs or replacement in the event of an accident. It may also cover medical costs for a driver or passengers, or even those for individuals in another vehicle if the insured is deemed to be at fault. Auto insurance also covers a vehicle in the event of theft or other forms of damage depending on the chosen policy.
Disability Insurance
Disability insurance may protect you from financial ruin if you are injured or disabled and can no longer work. This type of insurance is meant to help with monthly living expenses and health care expenses not covered by a health insurance policy. Disability insurance is available in short-term and long-term policies. Short-term insurance pays for approximately 6 months. Long-term insurance starts at the end of 6 months and may last until a person reaches age 65. If you are covered through your employer, coverage may average between 60% and 70% of your current income.
Homeowner's Insurance
Homeowner's insurance helps cover losses of a home or property due to fire, natural disaster, faulty electrical work, bad plumbing and more. If you have a mortgage, you will most likely be required to carry some form of homeowner's insurance.
Long-Term Care Insurance
Long-term care protection is designed for those diagnosed with chronic illnesses and the elderly. It may help provide for nursing home or at-home health care. Long-term care policies may also help pay for adult day care services and assisted living facilities. Consumer Reports warns that you should carefully weigh the advantages and disadvantages of purchasing long-term care to determine whether benefits will be available when you need them.
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