Insurance is very simple to understand. You pay your insurance premiums to protect you in case something happens that you don’t want to happen. There are many different kinds of insurance. We will cover the major different kinds here.
Health Insurance
This protects you when you have health issues. Health issues can range from a severe cold to injuries to serious medical conditions such as cancer. Health insurance is usually worth the price you pay because without it you could be ruined financially by one serious medical issue.
Homeowners Insurance
This protects you when something happens to your home that needs to be fixed such as a tree falling on the house. It does not necessarily protect against everything. If you live in a flood zone, you will also need flood insurance to be protected.
Homeowners insurance also projects you if someone has an accident on your property such as slipping on ice on your sidewalk or driveway.
If you own a home and have a mortgage, the mortgage company will require you to have the proper insurance.
It also projects your personal property within the house and some policies also protect you against loss if, for instance, you lose a camera or someone steals it when you have it away from your home.
Homeowners insurance is worth the price because, as with health insurance, you could be financially ruined by one incident.
Renters Insurance
This insurance is different from homeowners insurance in one very important way. It only covers your personal property within the rental unit. It does not cover any damage to the rental unit itself. The landlord will or should maintain insurance on the building itself.
Life Insurance
This insurance pays if the insured person dies. It can be very valuable for young families to have in case the primary or secondary wage earner dies. Obviously, money can’t replace the person, but it can help ease the strain on the family if a major part of the family income is suddenly gone.
Young families should have life insurance on the major wage earners while the children are growing up. Usually once the children are grown and through college and on their own, life insurance becomes less necessary. Some people maintain some life insurance to cover their funeral expenses which can be substantial.
Automobile Insurance
If you own a car, I think most states require you to have insurance that at least protects you if you have an accident that is your fault and other people are injured. What this means is that you need insurance that covers other people’s medical costs that result from an accident you caused.
Another part of automobile insurance covers damage to your vehicle. If you have a newer car, you probably want to have this collision insurance. If you have an older car, it may not be necessary if you can absorb the cost of repairing or replacing the car.