Most personal finances topics are anything but sexy, but insurance is the geeky, pimple-faced guy who – if approached by a supermodel at a party – would talk about actuarial tables all night. (No offense to my friends in the insurance industry!)
Nobody likes to think about insurance. You have to carry some kinds of insurance and you should have most other kinds, but it sucks to spend money on insurance. You hope you’ll never need it, so when you buy insurance it feels like you’re throwing thousands of hard-earned dollars down the drain. But if you ever do need insurance, you’ll either be glad you bought it or wishing you had bought it.
There are two kinds of insurance everybody should have: Auto insurance and health insurance. Car insurance is required in most states. And going without health insurance is a huge risk. Because even if you’re young and healthy, a freak accident could leave you with tens of thousands of dollars in medical bills that could totally derail your financial future.
If you own a home, you’ll have to carry home owners insurance. But if you’re a renter, you might want to consider renter’s insurance – a fairly cheap way to protect your belongings from theft or fire.
In most cases you don’t need life insurance before you start a family, but as soon as you have dependents, you’ll want to get a term life insurance policy that can replace your income for your family if you die during your working years.
The questions about when to buy insurance, how to buy it, and how much you need differ dramatically by the kind of insurance (home, renter’s, car, life, or health), and where you are in life (your age, how much you have in assets, where you live), but some pointers apply to all kinds of insurance:
Always shop around for insurance. Don’t let a smooth-talking salesperson talk you into one policy before comparing your options. Premiums and coverage levels vary dramatically among insurers, and you don’t want to overpay.
Understand your coverage. Different policies cover different things. Learn to ask questions when you shop for insurance, like “if my car is totaled how do you calculate the replacement value?” Or “Are there any circumstances in which this life insurance policy would not pay out a death benefit?” Health insurance is especially convoluted. Take a minute to brush up on how factors like your premium, deductible, and coinsurance will impact your policy.
Be wary of insurance you don’t need. Some examples include policies that will pay off your credit card balance or mortgage if you die or cash-value life insurance policies. Other kinds of insurance should be purchased with caution on a case by case basis. Examples include supplemental disability insurance and GAP insurance that will cover the difference between a car insurance payout and any remaining balance on your auto loan.
Get insurance quotes now:
Latest Posts on Insurance
Last fall, an errant driver broadsided my Ford Escape, trapping me inside until firefighters cut the car apart with the jaws of life. This is what I learned about the hassles and — even though I had car insurance — the significant costs of being in an accident.
Car insurance rates vary widely, especially for young drivers. A look at the best car insurance for young adults and the pros and cons of top auto insurance companies.
What is an HSA? How do health savings accounts work? Who’s eligible? Eliminate your confusion about using HSAs with your health insurance plan.
Last December, my wife and I welcomed our second child, Elliot, into the world. As parents, we are ecstatic but weary. As a no-longer only child, big sister Molly remains skeptical. They say that having two children is more than twice the work of one, but I think that having the first – going from […]
The Affordable Care Act (aka Obamacare) is already changing much about how we buy health insurance and the coverage it provides. But whether you currently have insurance or not, what does Obamacare mean for you?
Beginning October 1, 2013, every American can buy health insurance through the new health insurance marketplace. Even today, it’s easier than you think to buy health insurance online or by working with a local agent. Here’s how.
You swerved for a skunk and wrecked your ride; now your car insurance is going to double, right? Not necessarily. With the right insurer — or some clever maneuvering — you can still save money on car insurance after an accident.
You might love your insurance agent, but that doesn’t mean she has your best interests at heart. Understand that some agents can only sell you the life insurance their company offers.
Considering striking out on your own? If you’re thinking of starting a small business, or have just started one, then you need to know three things, each of which break down roughly into the global, the social and the financial. The global: Job sectors everywhere are going entrepreneurial. In journalism, for example, the massive disruption […]
By the end of June, we’ll reach the middle of the so-called “gap year” — meaning that roughly six months will remain before the Affordable Care Act kicks in and America begins an unprecedented experiment with universal health care coverage. Maybe that’s not such a big deal if you have great health insurance thanks to […]