Why You Need Insurance – And What Kinds You’ll Need
When most people think of insurance, they think of how much it will cost, focusing on the premiums. By focusing on the wrong thing, they deprive themselves of the value of insurance with sufficient coverage. More discerning individuals, however, recognize the value of the compensation they will receive if an unforeseen accident occurs. Consequently, they shop for good insurers and ask them for the best plans.
The purpose of insurance is simple: to reduce your financial burden should you have a catastrophe, an event that causes injury or property damage. So, what kind of insurance should you get? It depends, of course, on your circumstances and potential risks. But, commonly, the two types you will need if you drive a car and have a family are auto insurance and life insurance.
Car Insurance
Although every state requires drivers? insurance, most only ask for minimum coverage. It will not be enough to protect your assets since it will not carry enough liability coverage to protect your assets if you have an accident. Wondering where to find the best auto insurance? Do a search online so you can compare policies. A good site to start with is Money Expert.
Because driving a car is risky, you can?t afford cheap auto insurance. That?s why insurance experts recommend that you get a minimum of $100,000 per person and $300,000 an accident. Remember, this is only the recommended minimum. You can always pay more for even better coverage.
But what if you can?t get good insurance because of a DUI, a negligent driving conviction, multiple driving offenses, driving without insurance, or because you only recently reinstated your license? In that case, you will need SR22, and you can get SR22 insurance quotes online.
Despite the name, SR22 is not insurance but a certificate of financial responsibility sent to the DMV or BMV by your insurer on your behalf to say that you have the necessary coverage mandated by your court order after your violation.
Life Insurance
Once you sign up for life insurance with an insurance company, they consider you a policyholder. As a policyholder, you must pay a premium, a monthly cost, to keep your policy active. If you get whole life insurance, it will stay active for as long as you keep paying your premiums. If you get term life insurance, it will expire after a predetermined number of years. Because it has an expiration date, it is only temporary life insurance.
How much you pay in premiums, depends on many factors, such as your age, your state of health, the length of the term, and the financial amount you?ll get.
What is Life Insurance?, an article by Colin Lalley, gives an example of the low monthly cost of term life insurance: A 35-year-old man in reasonably good health will only pay about $26 a month for a 20-year policy that buys $500,000 worth of insurance. Whole life insurance costs about six to ten times more but will cover your family after you die. Which option is better for you is something you will have to discuss with a life insurance agent because everybody has a different set of circumstances.
One unexpected advantage of life insurance is that it can minimize the impact of unhealthy stress on your life. As the breadwinner, you won?t have to worry about the financial struggles of your family should anything happen to you.
Balancing Cost and Risk
These two examples, auto insurance and life insurance, illustrate the value of protection. There are many other types of insurance you may need depending on your properties. For instance, if you own a home, you?ll need homeowner’s insurance or if you own a business, you?ll need business insurance.
Conclusion
While frugality is often a virtue, this fiscal rule of thumb doesn?t hold true for insurance. Consider the simple fact that the financial balance is in your favor?for hundreds or thousands of dollars spent on insurance premiums, you?ll receive tens of thousands or hundreds of thousands of dollars in compensation, a huge sum of money that you could not otherwise get in an emergency.
