The insurance that you need
Insurance is one of those topics that no one’s usually all that thrilled to talk about. But I want to mention it here because I think that insurance is important. Here are the types that I feel are necessary (and that I either have or will be getting):
Car insurance. Obviously if you have a car, at least a minimal amount and type of car insurance is required in most locations. Some of the options for car insurance include: bodily injury liability, medical payments, property damage liability, uninsured & underinsured bodily injury liability, comprehensive, glass, collision, and towing & labor.
Homeowner’s or rental insurance. If you own a home or rent, you’ll want homeowner’s or rental insurance. (And it’s probably required by your mortgage company if you have a mortgage.) The price of homeowner’s insurance varies GREATLY depending on where you live, your coverage, etc. Rental insurance is usually relatively cheap.
Term life insurance. With term life insurance, you pay a flat fee each month for a set period of time, and it pays your beneficiary or beneficiaries if you die within that time period in a non-excluded manner. Term life insurance is often used to provide for a dependent in the event of your death or to leave an inheritance if you wouldn’t otherwise have money to leave. I have a 20 year term policy. I figure by the time the 20 years are up, I won’t need the policy any longer. (Or at least I hope I won’t.)
Health insurance. If you live in the United States and can in any way, shape, or form squeeze it into your budget, you should really get health insurance, even if it’s only a high-deductible policy. Places often charge you more for the same services without insurance, and you’re likely to find it very difficult to get any kind of normal or non-you’re-about-to-die care without having cash in your hot little hands if you don’t have insurance.
Disability insurance. Sadly, the likelihood of becoming disabled and unable to earn an income during a person’s work lifetime is pretty high. Disability insurance helps with this. If you’re in the U.S., Social Security MIGHT pay if you become partially or completely disabled, but as a person who has filled out the forms to apply for Social Security disability insurance I can tell you that it’s not something you want to count on in any way, shape or form. I feel that it’s better to be prepared with an individual policy.
Long term care insurance. Long term care insurance pays (depending on the policy and coverage selected) if you need to go into a nursing home or if you need to have at-home health care. I don’t know how many readers have experience with the costs of nursing home care or at-home health care, but I do and it’s horrifically expensive. I think it was in the neighborhood of $1000 a day, and that was several years ago. I’ve heard somewhere that the recommended age for getting long term care insurance is around 60 (check with your agent to be sure) but I’ll be getting it at a much younger age due to my family history.
I’m sure there are other types of insurance that are good to have, and then there are some types that are likely to pretty much be a waste of money. For example, I’m not going to buy a policy that insures against me dying in a tornado. For one thing, there are almost never tornadoes where I live. For another, I already have life insurance that does not exclude death-by-tornado. So that type of policy would be a waste…
Of the types I listed, I suspect that disability and long term care insurance are the most overlooked. What do you think? Have you ever had to use either of those?
May 25th, 2009 at 10:26 pm
The disability thing is very true. I got through quickly, by which I mean it took “only” 18 months. I applied, was denied, got a lawyer who helped appeal, was denied and then requested a hearing. That was decided in my favor. But after the appeal was denied, I was told it would probably be 18-24 months before we’d even GET a hearing.
So if you can get disability insurance through work, I highly recommend it.
May 26th, 2009 at 9:27 am
A lot of different insurance that can add up quickly on a flat monthly basis. When do you recommend starting life insurance?
May 26th, 2009 at 9:43 am
Abigail, I hope things go through for you.
Craig, for me I got a separate term life insurance policy when I realized my son would need to be provided for if I died without enough of an estate to do so.
May 26th, 2009 at 12:40 pm
Long term care insurance is nice, but if you happen to be diagnosed with a chronic, incurable (but manageable) disease like me at age 28, you’d never qualify for that insurance. The best time to apply for disability isnurance is when you’re healthy.
May 27th, 2009 at 1:36 pm
Where did you find your term life insurance?
Been meaning to get some.
Also agree with the disability insurance…nice if you can get it…but no go for me….and when people are healthy–well they think they will never need it.
May 27th, 2009 at 1:42 pm
Fern & Liz, isn’t that always the way it is? You can pretty much only get insurance if you don’t need it…
And Liz, my term insurance is through USAA. I think Guardian is also a common issuer.
May 31st, 2009 at 1:16 am
For some reason I don’t like paying for insurance, but you are right that you need some insurance. I have all of the ones you list except for long term care insurance. Maybe I feel too young to get it now, but I suppose the sooner you get it the better. I should take this post as an incentive to look into it.