How many of these types of insurance coverage do you have?
- Complying with the law is not the only reason to buy insurance.
- Ramsey has provided advice on the critical types of insurance that consumers need.
- Having a home, car and many other types of coverage, such as long-term care, can help prevent financial disaster.
Most people know that they need some type of insurance protection, such as home insurance and car insurance. This type of coverage may be required by law or by mortgage and car loan lenders, so few are left without it.
The reality, however, is that there are actually many different types of insurance that could be important in providing adequate asset protection.
In fact, economics expert Dave Ramsey has identified eight critical types of insurance that consumers should not be left without. Here is what it is.
1. Term life insurance
Ramsey has suggested that this type of insurance may be the most essential of all. “If there is only one type of insurance that you sign up for after reading this, define it as life insurance,” says his blog.
Life insurance pays death benefit after the death of the policyholder. Without it, loved ones could end up in dire financial straits without the income or services previously provided by the deceased. Ramsey recommends buying a contract that replaces 10 to 12 times your annual income to make sure survivors can make ends meet.
2. Car insurance
As Ramsey points out, complying with the law is not the only reason to buy car insurance. Even minor wing accidents can cost thousands of dollars and no one wants to be unable to repay a car loan or repair or replace a car after something goes wrong.
On his blog, Ramsey recommends that you consider buying liability coverage to pay for damages caused to others, as well as conflict coverage and total coverage that will be repaid if something goes wrong with your contractor’s vehicle.
3. Insurance of landlords or tenants
Home and tenant insurance pays for the physical structure of a property (for homeowners), as well as for what is inside it (for both homeowners and tenants). This type of contract also pays if someone is injured on the property and the contractor is held liable. Ramsey has suggested that these protections are vital to protecting assets and preventing financial disaster if something happens at home.
On his blog, the finance guru also suggests looking at flood, hurricane and earthquake insurance, as sometimes the losses from these losses are not covered by a standard contract.
4. Health insurance
Ramsey has described health insurance as “another extremely important type of insurance that you can not go without” and for obvious reasons. An individual medical emergency could lead to huge medical bills that are difficult or impossible to pay. No one wants to be forced to choose between their physical and financial health and the right coverage can help ensure that this does not happen.
5. Long-term disability insurance
Long-term disability insurance starts and replaces income if a disability situation makes it impossible to work. As Ramsey explains, one in four of today’s 20-year-olds will become disabled before the age of 67. Long-term disability insurance could be a critical source of income if this happens.
6. Long-term care insurance
Long-term care insurance pays for nursing homes and home care if necessary. Ramsey recommends enforcing this protection at age 60 to ensure that huge health care bills do not lead to financial disaster in retirement.
7. Identity theft protection
Identity theft insurance is another type of cover that Ramsey says should be purchased. This type of policy helps consumers clear up fraudulent situations if needed. There is, however, more controversy over whether this contract is really worth buying, so make sure that any contract you buy actually justifies the premiums.
8. Political umbrella
Finally, an umbrella contract complements other coverages and pays for additional losses after the expiration of a home or car contract. Purchasing this type of protection is important for those who have significant assets to protect.
Consumers should research each of these eight types of coverage and carefully consider whether it is wise to follow Ramsey’s advice and apply each of them.
Providing peace of mind for moments of life
Insurance is not something we often think about until we need it and it usually means that you do not spend much time researching what is best for you and your personal situation. Taking the time to educate yourself on the basics of insurance, whether it’s how to get discounts on your homeowners insurance policy or the best way to get a car insurance quote, will help you save money and to ensure that you have the right insurance coverage for your needs.