The financial world we live in is just as wild, if not more, than the mountains and woods we walk through. We are told that the fundamentals of our economy are strong, but we can feel that something is wrong. My unique financial background and survival passion make Financial Survivalist and excellent place to learn and share.

Monday, April 2, 2012

Do I Need Insurance? Insurance Amounts and Types

Money Monday
Types of Insurance

Types of Insurance

Home Owners Insurance (HOI) - insures a property against fire, wind, theft, vandalism etc.
Flood/Hurricane Insurance - insurance home and property agains flood/hurricane damage.
Health Insurance - insures against health care cost
Renters Insurance - insures renter's belongings against fire, theft, damage etc.
Accidental Death and Dismemberment - life insurance if death is unnatural
Disability Insurance - insures against lost income due to disability
Long Term Care Insurance - insures against assisted living and nursing home costs
Auto Insurance - insures you against auto damage or theft and liability for property and injury
Life Insurance - insures you against death
Dental - insures agains dental care costs.
Optical - insures against optical care costs.

Do I Need It?

HOI - if you own a home. I recommend a high deductible to save money on insurance.
Flood/Hurricane Insurance - if you need it then it is probably prohibitively expensive. You would be better off storing your equity in a different place than your home. See "To Pay Extra or Not..." Another option is moving.
Health Insurance - If you are alive. I have a friend who was diagnosed with Lymphoma at 24. If your employer doesn't provide it then get a high deductible plan and supplement it with an accidental policy. See How to Save Money on Insurance.
Renters Insurance - If you rent. It's super cheap and many policies cover accidental damage and loss of electronics (ie phone, iPad, laptop, camera etc). I would probably get a small deductible on this one. Make sure to document all your valuables properly or they will not be covered.
Accidental Death and Dismemberment - Worthless. The conditions upon which you must die for this to pay out are ridiculous. If you really want this coverage, add it to your normal Life Insurance Policy.
Disability Insurance - If you are an income provider and your income is dependent upon you working. According to DisabilityCanHappen.org, just over 1/4 of people will experience a long-term (> 3 months) disability before they retire. Make sure you get Long-Term insurance. Short-Term should be covered by your emergency fund.
Long Term Care Insurance - If you are 55 or older. The sad part is many of us are no longer insurable by that age. You can get it a early as 45, but that's pushing it considering most of these costs would be covered by proper health and disability insurance.
Auto Insurance - If you have or drive a car.
Life Insurance - If you have a spouse, I recommend you have life insurance. If you have children, your children demand you have life insurance. It is your responsibility.
Dental - if it's provided by your employer. It usually doesn't cover more than good price comparisons can save.
Optical - Same as dental.

How Much Do I Need?

Home Owners Insurance (HOI) - enough to rebuild your home.
Flood/Hurricane Insurance - none
Health Insurance - $2 million or unlimited life maximum.
Renters Insurance - enough to repurchase all your stuff.
Accidental Death and Dismemberment - none
Disability Insurance - up to 75% of current monthly income
Long Term Care Insurance - get a policy that covers an acceptable amount of services
Auto Insurance - at least liability coverage of 250/500/250. Glass and comprehensive depends. See "How to Save Money on Insurance."
Life Insurance - 10-15 times annual income or total assets.
Dental - minimal. Two cleanings per year should be covered. Good hygiene prevents most tooth decay.
Optical - minimal. Glasses and contacts prices vary greatly. Just shop around. Your check ups should be covered though.

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17 comments:

  1. Nice overview which reveals the types of insurance which are of the most demand in the market. However, it's difficult to predict the insurance needs of individuals, since the insurance requirements of a person are neither predictable nor does it remain constant.

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