What is Insurance?

Insurance is protection that takes care of the financial aspects of a loss that may or may not happen. These losses include an illness, injury, death, or even damage to a property. Many individuals believe that they may not experience any of these losses— at least not suddenly or unexpectedly. When unexpected losses do occur, they can take a financial toll on families and individuals, so that’s why it’s important to have insurance.

Insurance that Everyone Needs

Health Insurance

Everyone needs health insurance because health insurance covers both expected and unexpected medical expenses. You probably already have health insurance if you visit your primary care physician regularly, and if you need to take any prescription medications. However, health insurance is also necessary in the event of a serious illness or injury that requires hospitalization. Depending on the type of health insurance coverage you have, it can cover the majority of your medical expenses, or just a small portion of them.

Life Insurance

Some people think that they only need life insurance if they have dependents, such as children or a spouse, but single individuals without children or other dependents can also benefit from having life insurance. For single people, life insurance is useful to pay off any debts (e.g., student loans, cars, home, etc.) that you may have in the event that you pass away. Life insurance (for all individuals) also covers funeral and burial costs, which can also be very expensive.

The four most common types of life insurance include:

1. Term Life

2. Whole Life

3. Universal Life

4. Return of Premium (ROP)

Insurance for Certain Situations

Everyone needs a way to pay for their health and medical expenses, as well as money for a funeral, burial, and for their family to be taken care of and/or have their debts paid off if they pass away— expectedly or unexpectedly. However, there are several other types of insurance that many people may need, but these types depend on whether or not they have a tangible item to protect in the event of a tragic event.  

Auto Insurance

In the United States, there are only two states (Virginia and New Hampshire) that don’t require car insurance, but it’s still important to have it if you own a vehicle. Most car insurance policies cover all types of motor vehicles, including motorcycles, but you should check different car insurance companies to make sure that any motor vehicle you own will be covered. Auto insurance covers the cost of repairing physical damage to a vehicle and the medical costs of bodily injury to an individual in an accident. Most policies also provide protection for damage resulting from natural disasters, vandalism, and theft.

Business Insurance

If you own a business or if you’re thinking about starting a business, then you’re going to need several types of business insurance. The most common type of business insurance is called General Liability Insurance (GLI), and it protects a business financially from personal injury, bodily injury, and damage to another person’s belongings.

Other types of business insurance include:

• Errors and Omissions (E&O) Insurance covers lawsuits over a mistake in a service
  provided.

• Commercial Property Insurance covers property damage to a business.

• Commercial Auto Insurance is car insurance for a vehicle that is used for business
  purposes.

• Business Income Insurance covers income lost if a business has to shut down due
  to property damage or other reasons.

• Workers’ Compensation Insurance covers employee benefits and wages if they get
  hurt or sick while on the job. It also covers ongoing care and funeral expenses if the
  work injury causes death.

Homeowners/Renters Insurance

If you’re the owner of a residential property, then you’re going to need homeowners insurance to cover you financially in the event of damage to your home. This means that landlords who are renting a residential property to tenants need to have homeowners insurance too. However, if you’re renting a property, you’re going to need renters insurance— and many landlords require that you have it. Renters insurance covers things like theft, while homeowners insurance covers house fires and storm damage.

Pet Insurance

Pet insurance is like health insurance for your pet. It covers many of the same things that normal health insurance covers, like regular doctor’s visits and emergency doctor’s visits. Medical care for a pet can be just as expensive as it is for people, so pet owners will greatly benefit from having pet insurance for their pets.

Travel Insurance

If you travel a lot— especially to foreign countries— you’ll need traveler’s insurance. This type of insurance will cover any medical costs, accidents, lost or stolen items, and trip cancellation/interruption fees/losses that may occur on a trip.

Overall, the majority of people are going to need health insurance and life insurance. Homeowners/renters insurance is also very common, and so is car insurance. Basically, if you have anything that can cost you a lot of money if something unfortunate happens, you’ll need an insurance policy for it.

This article appears in Jan 1 – Dec 31, 2022.