What Types of Insurance Do You Need?

Insurance. It’s not an exciting topic, but it’s a necessary one.

A discussion on personal finance isn’t complete unless you’ve properly addressed the risks to your assets and income. And insurance is typically the last frontier of personal finance. Most people, I would think, have retirement savings and debt under control long before they tackle the subject of insurance as a whole.

You may need life, health, homeowners, car, disability, and business insurance. Having insurance is necessary to protect ourselves and our families when difficult times occur. Insurance provides protection and peace of mind, knowing that your health, your family, your assets, and your business are cared for when you need it the most.

But there are many different forms of insurance. It’s hard to know for sure what to do. You may be asking, “what types of insurance I need to protect myself and my family?” Below I’ll take a high-level view of the various forms of insurance and provide some basic information you should know about each one.

Life Insurance

Probably the most under-purchased (is that a word?) form of insurance is life insurance. This type of insurance protects your family from the potential loss of income from your death. Not fun to think about. But it’s a reality.

The big questions in the life insurance world typically revolve around the differences between term and whole life insurance. If you end up choosing term life insurance as I did, then the questions shift to “how much life insurance do I need?”

Don’t worry – you mainly need to get insurance on the earners in the family, plus anyone who makes an economic impact. For example, a stay-at-home parent may not make a salary, but they’re saving your family money on childcare costs. You should also have coverage to make up that difference in case anything happens to that parent. You can usually do without life insurance on your child.

But the process of actually getting life insurance can take a while–if you go the traditional route. With typical life insurance, the application, physical exam, and underwriting can take what seems like forever.

Thankfully, we now live in the digital age, and even life insurance is getting a 21st-century upgrade.

Get a Free Life Insurance Quote from Bestow

Bestow makes it easy to get insurance literally in minutes, which means you can cross this insurance need off your list right away.

Bestow is a new online life insurance provider that uses proprietary algorithms to provide you with a quote, application, and approval process that takes just a few minutes. You can get a traditional 10 or 20-year life insurance policy, or a 2-year term policy, for a low price and no waiting around.

Bestow is unlike other online life insurance providers because they underwrite the policies they offer in-house with their own technology. That technology is called “accelerated underwriting.”

This process is unlike manual underwriting, which requires in-person interviews, a medical exam, lab tests, and paperwork. Instead, accelerated underwriting asks you basic questions about your lifestyle and health, then uses data and technology to verify that information.

Between your self-reported information and the data verification, Bestow decides if you are super healthy, above average, average, or below average. That will determine whether and for how much Bestow can sell you a policy. And all this takes just a few minutes.

You can get coverage starting at $50,000 up to $1 million for as little as $3 to $8 per month. It’s an excellent option for anyone who needs life insurance coverage right away.

Check out our full review of Bestow here.

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Health Insurance

Health insurance comes in many forms, but it’s generally going to cover your medical expenses for any health-related issues (i.e. you have a heart attack) you experience. There are two main types of health insurance: group and individual.

Group health insurance is typically what you get when you work for a company. The risks and costs are spread out among the group members, so it’s typically better insurance for you. It’s better because it’s usually cheaper and it covers more.

Individual health insurance is something you’ll have to get for you and your family if you don’t have an employer, or you work part-time. Since this type of insurance isn’t purchased by a group, you have to bear the costs and risks to yourself.

For this reason, individual health insurance is usually expensive and doesn’t cover as much. All is not lost, though. There are plenty of ways to save money on health insurance, including using a health savings account and shopping around for health insurance quotes.

Learn how to get a health insurance quote online today.

Recently, health insurance reform has come to the U.S. There are lots of changes going on that are going to affect the way this insurance is provided and purchased in the future. Be on the lookout for how these changes will impact you and your finances.

Healthshare Plans

When it comes to healthcare, another option for people to consider is a healthshare plan. Healthshare plans are not insurance. However, they are an alternative to traditional insurance that many people have turned to in recent years.

Healthshare plans are medical expense sharing programs where members share in each other’s medical expenses. Joining a healthshare program can help save money because you’ll no longer be paying huge monthly health insurance premiums. There’s no need to pay ridiculous amounts of money for unsubsidized health insurance.

My family made the jump from traditional health insurance to a healthshare plan called Medi-Share. We’ve had a wonderful experience so far and have saved money too. We used to pay $1,100 a month for health insurance through Humana. Now we pay under $300 a month for a $10,500 Annual Household Portion, which is like a deductible.

Medi-Share is a non-profit, medical expense sharing program for Christians. People need to meet certain requirements to qualify. That’s one of the reasons that you save money using healthshare plans, like Medi-Share. It works similarly to health insurance in many ways too.

We even received a health incentive deduction by meeting certain health criteria, like blood pressure and BMI. Healthshare plans have disadvantages too. Not all medical expenses are covered and Medi-Share contributions aren’t tax-deductible. It’s important to read through the details of the program to make sure a healthshare plan makes sense for you.

What’s great about Medi-Share is that there’s no open enrollment period. You can join Medi-Share anytime. It’s been a game-changer for my family and has put tons of money back into our pockets.

Here’s our full Medi-Share review.

Homeowners Insurance

When you buy a home, condo, townhome, or even a mobile home, it’s likely a good idea, and maybe a requirement by your lender, to purchase some homeowners insurance. I would estimate that this type of insurance can cost annually as much as a mortgage payment for you. You can now run a home insurance quote online like you can for car insurance.

What you get in return for your annual or monthly payment is a bit of peace of mind that if something were to happen to your home, like a fire, earthquake, flood, storm, etc., you would be repaid for the damage.

Now you can see why a lender is interested in making sure you have this insurance. They don’t want to be stuck with the bill if something happens and you aren’t protected by the homeowners insurance.

Car Insurance

Auto or car insurance is probably the most well-known and commonly owned of all the insurance types. This, I suspect, is because it’s required in most states. In my state, for instance, you need to have car insurance before you can register your vehicle or have it inspected.

Most states will require a minimum level of coverage for your car to protect others in case you have an accident. Deciding which types you need is something you need to research and determine for yourself. In that sense, car insurance is probably the most used, but least understood form of insurance.

Did you know that there are up to seven types of car insurance you could use to help protect you, your asset, and others? Learn more about the different types here.

Although car insurance is usually a requirement if you drive, it doesn’t have to be expensive. And you certainly shouldn’t pay premium prices when you don’t have to. I’ve found that with a little research it’s easy to save money on auto insurance.

Learn more tips for finding affordable auto insurance.

Compare Car Insurance Quotes With Gabi

Gabi can start you off on the right track when car insurance comparison shopping. It’s a completely free service!

Gabi works with over 40 insurance carriers to help narrow down the best choices for you. You can do everything online, with no need for irritating phone calls. It takes just 2 minutes to match your current car insurance to multiple providers, helping you to determine the best price and value for your needs. 

With Gabi, they’ve streamlined a typically tedious process into just minutes. All you need to do is link your current car insurance policy for them to compare it to similar policies from different providers. They’ll compare up to 20 quotes for you simultaneously. 

Finding a good price for auto insurance through Gabi couldn’t be simpler. You can also comparison-shop for policies to insure your home, rental, motorcycle, or RV. They even compare umbrella policies, too. Learn more about Gabi here. show

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Disability Insurance

This type of insurance helps to cover your loss of income from some type of disability which causes you to lose your job or prevents you from earning an income. You’re far more likely to be injured than killed, so it’s probably smart to have some of this insurance.

Like life insurance, most employers have a basic policy on their employees. But that might not be enough for you, and/or you might not have a job with a company. The self-employed should really look into this type of coverage.

It’s something I need to do for sure. There’s lots to know about disability insurance. Mainly, it’s important to understand the distinction between short-term and long-term disability insurance. With short-term disability insurance, the benefit period is typically three to six months. Long-term disability insurance offers a longer benefit period, usually measured in years.

Request a quote for disability insurance here.

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Business Insurance

If you own a business, you’ll want to protect your investment by getting business insurance. It’s not quite as simple as it sounds, though. There are multiple types of business insurance that cover various aspects of your business. Some types of business insurance are legally required, depending on the specific industry. There are also other types of business insurance that are simply good to have in place.

Required business insurance types could include:

  • Workers’ Compensation Insurance
  • Unemployment Insurance
  • Disability Insurance
  • Commercial Auto Insurance
  • Commercial Property Insurance

It’s important to know the insurance requirements for your specific industry. One way to do this is through CoverWallet. They are a concierge service for business owners searching for insurance options. CoverWallet doesn’t offer insurance themselves. Instead, they partner with over 30 trusted insurance companies, Liberty Mutual, Berkshire Hathaway, Progressive, and AmTrust.

CoverWallet provides plenty of resources for business owners to help wade through a sea of information. They have a great insurance guide as well as tips for business owners. CoverWallet will help you understand your coverage needs and assist with insurance quotes from partner companies.

Once you sign up for the required business insurance coverage, you’ll want a safe place to compile all of your policy information and certificates. The good news is that CoverWallet stores all of that information for you within their platform for easy access. If you need more help, CoverWallet offers email, chat, and phone support.

Get a free quote from CoverWallet today!

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Related: Understanding Your Small Business Insurance Needs

Other Types of Insurance

Other forms of insurance include casualty insurance, crime insurance, accidental death insurance, deposit insurance (FDIC), bond insurance, credit card protection insurance, loan protection insurance, workers’ compensation, travel insurance, and many others.

When preparing for the future, make sure insurance is in your plans. Protect yourself and what’s important to you by getting the insurance coverage you need. Use the resources mentioned above to help you get started today.

What Types of Insurance Do You Need

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.

Comments

  1. RosaCanada says

    Actually, I personally don’t need car insurance.  I live in NYC, and like many New Yorkers, I don’t own a car.  Public transit here is excellent, there are a zillion car services if I need a quick ride, and when I really need a car, I rent a Zipcar.  In big cities, often it’s possible to get by without a car.  Even a friend of mine with 4 kids had no car for some time.  Not owning a car is a HUGE savings.  Also, if you don’t own a home, I still think you should have insurance on contents – get renters’ insurance. 
     

  2. RosaCanada says

    Actually, I personally don’t need car insurance.  I live in NYC, and like many New Yorkers, I don’t own a car.  Public transit here is excellent, there are a zillion car services if I need a quick ride, and when I really need a car, I rent a Zipcar.  In big cities, often it’s possible to get by without a car.  Even a friend of mine with 4 kids had no car for some time.  Not owning a car is a HUGE savings.  Also, if you don’t own a home, I still think you should have insurance on contents – get renters’ insurance. 
     

  3. life insurance is underpurchased because of the fear of mortality. I think that one should get over it because death is one of the two certainties of life. In any case getting the insurance means that your loved ones profit from your death, which is not entirely a bad thing

  4. This is a good article. There are lots of insurances that many people don’t think about. I do have two comments:

    1. I have $500k life insurance through work, but $100k with a private company. I feel that I am adequately insured. Many people want their deaths to replace income for 10 years, pay off the mortgage, student loans, and pay for their children’s college education. While that’s a good idea, that’s NOT the route I took. I’m providing enough for my wife to pay down some of the mortgage, pay for my funeral costs, and replace my income for about 1 year. After that, (I hate saying it this way, but…) she’s on her own or she’ll have to find someone else.

    2. Caution! Every person should check individually, but homeowner’s insurance (at least, in my area) does not cover floods. We are hurricane-prone, so there’s good reason for this. Flood insurance is a separate cost.

  5. Craig/FFB says

    Great article! I think we sometimes forget all of the different insurance we may need.