After working hard to create personal wealth, you need to protect it. Insurance products can help you with that protection in case of loss.
Insurance is simply a promise of reimbursement in case of loss in return for a premium paid.
In this lesson, you'll learn the basics of:
The first type of insurance most people need is auto insurance.
State laws require all motor vehicles to have liability insurance to cover injury to other people or their property.
Your lender will also require physical damage coverage.
You may select a higher deductible and receive a more affordable rate on the premium.
Homeowners insurance protects your home and possessions from risks such as fire and theft.
Personal liability coverage in a homeowner policy protects you from loss resulting from injuries that may occur on your property. Your mortgage lender will require insurance coverage.
You may require special insurance for flood, earthquake or other risks specific to your area.
A home warranty is a service contract that protects you from unexpected costs due to repair and/or replacement of major systems.
Coverage might include heating and air-conditioning, plumbing, electrical systems or a water heater.
Sellers will sometimes provide a 1-year home warranty to give potential buyers added confidence. As a homeowner you have the option of renewing the warranty annually.
If you are renting your home or apartment, you should purchase this insurance to cover your possessions from fire or theft.
Your landlord's insurance will cover only damage to the building, not its contents.
Liability insurance may also be included in a renters policy to cover injuries to another person. If someone is hurt in your rented home, that liability is yours, not the landlord's.
Health insurance protects you against loss in case of illness or bodily injury. It provides coverage for doctor, hospital and emergency room visits and other medical expenses.
Two different types of health insurance are medical insurance and disability insurance.
Medical insurance pays for some, but not all of your doctor, hospital, and presciption drug costs. Many people have significant levels of debt because they don't have medical insurance.
Different types of medical insurance are:
A Flexible spending account (FSA) is an employee-sponsored account that allows employees to save pre tax dollars for health expenses not covered by insurance.
If your employer doesn't offer an FSA, make sure you have an emergency savings account.
A Health savings account (HSA) is another insurance option that provides medical coverage and a tax-free opportunity to save for future medical needs.
Every state provides free or low-cost health insurance for children in low- to moderate-income households.
For more information about state programs, contact the U.S. Department of Health and Human Services at 877.Kids.Now (877.543.7669) or go to www.insurekidsnow.gov.
Disability insurance helps you pay living expenses if you are sick or injured and unable to work for a long time.
It's a good idea to buy this protection, even if you have to pay for part of the premium. Your employer might even offer this insurance in its package.
In the event of your death, life insurance pays money to the person you choose (your beneficiary). Life insurance helps give financial protection to your children, spouse, parents or even your business, but is no substitute for a savings or investment plan.
This type of insurance pays for such health related items as nursing home, assisted living or in-home care. Generally, the need for long-term care comes late in life, but insurance premiums are much less expensive if the policy is purchased when you are younger.
There are many types of property, health and life insurance, so do your research and seek good advice.