Wednesday, October 27, 2021

Four Best Types of Insurance Policies you Need to Know

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Life is full of unexpected events. A crisis can strike at any given time during our day-to-day life. These unexpected tragedies could change our lives, especially in terms of financials. Having Insurance will help you and your loved ones to use it as a fail-safe in an unexpected crisis. These shocking incidents can impact your life or an asset owned by you. So ready, guys, to know what are the four best types of Insurance policies. 

Four Best Types of Insurance Policies you Need to Know

As we grow old, we seek financial independence. However, savings alone are not enough to achieve the financial freedom we seek. When considering the practical perspective of life, Savings accounts alone might not be sufficient to cover an unexpected expense. Insurance policy can compensate for losses of lives, assets, health & properties, etc. Insurances act as a financial product that allows the bearer or the dependents to ease the cost of the loss or an impact of loss caused by different incidents. 

Before Buying an Insurance Policy

Ask your Boss

As you know how important having an insurance product is, always be mindful of options available out there. Before going out there & buy an insurance policy, check with your employer if they have any insurance benefits for you already.  Most corporate entities sign up for group insurance plans. Group insurance plans are relatively cheaper than individual insurance plans. You may find many companies that provide you with dental Insurance or Eye insurance. Some companies would go ahead and offer you with comprehensive health insurance based on the above said corporate-level insurance plans. You can ask your superior or HR about applicable insurance coverage for you.

Ask your Credit Card Company

Check if your credit card company has insurance-related benefits such as Free Auto Rental Insurance when you pay with your credit card for Car rentals. This might come in handy if you rent cars regularly.

Price Shopping for better Rates

Being a wise customer is being mindful & vigilant! You should always conduct market price & benefit research before going ahead & buying an insurance policy. Do a price shopping. Find out what each insurance company provides against the value you pay. Keep in mind the importance of Price-Shopping! Even when you renew your Insurance for the new year, try approaching new insurance companies or ask for better rates from the existing insurance company! Go for deductible Insurance since it has a relatively low insurance fee.

Decide where & what is the best type of Insurance policy you need to buy

The buying decision is vital as it determines the value you get against your investment. Purchase various kinds of insurances from one place might save you a lot of money. There are four main insurance policy types which one must buy. 

  1. Life or Disability Insurance
  2. Auto Insurance
  3. Home& Property Insurance
  4. Health Insurance

Let’s take a look at these best types of insurance policies in detail below.

1. Life or Disability Insurance

What is a Life Insurance?

A life insurance policy is an agreement with an insurance provider and a policyholder. The policyholder pays periodic premiums and, in exchange for the insurer paying the policy’s dependents, a death benefit when the insured dies. It would be best to buy life insurance while you are young as premiums are much lower for young policyholders. Therefore, it is essential to know how much you need life insurance. However, the following calculation can be used to calculate the approximate life insurance requirement. (Liquidated assets – Value of your House) + Retirement Savings – Taxes = Your Life insurance coverage

Life Insurance Policy

Once you have selected the desired life insurance company, it’s time to call them & start price shopping. Always ask your insurance agent about the policy. Ask what you get & when you get it. Clarify the timelines of which dependents will receive their compensations.  It is your right to get the most vital details from your insurance company. Ask them to re-explain the insurance policy if you missed or did not understand something, as these policies are complex.

Deferred Annuity

The term “deferred payment annuity” refers to an insurance contract that pays the buyer in the later stage of the policy rather than providing an immediate benefit. There are 2 Types of Differed annuities.

Fixed Annuity 

You will receive the same amount of money annually that grows tax differed.

Index annuity  

In this, you get the benefits based on the performance of a specific market index. These are also known as equity-index annuities.  

Four Best Types of Insurance Policies you Need to Know

2. Auto Insurance

What is an Auto Insurance?

In case of an accident or theft, auto insurance is a contract that covers you financially between you and the insurance company. The insurance provider promises to pay your losses as outlined in your policy in return for you paying a premium.

Most countries or states have made auto insurance a mandatory requirement. It is advised to have auto insurance since one accident could make you bankrupt if the asset’s loss or damage is high, even if it was not your fault.

As mentioned above, see if your credit card offers free rental car insurance since it will benefit you. If you already have auto insurance, this tip is for you. If you have security features or components installed in your car, you are eligible to reduce the insurance premium. As usual, always shop for better price options. Ask at least five different auto insurance providers. Cross-check their offerings against your value & select the best out of that.

Auto Insurance Policy

It is crucial to understand how much you will have to bear to have a car & auto insurance. The value of the vehicle determines the insurance rate. Some card has high Insurance while other cars have relatively more minor insurance amount applicable to them. There is some great online car insurances calculator at Kelly Blue Book (www.kbb.com), True Car (www.truecar.com) & Edmunds (www.edmunds.com). 

Tips to Lower your Auto Insurance Amount

Sometimes you can lower your Auto Insurance prices by taking a “Safe Auto Drivers Course.” This allows some Auto insurance companies to manage their risks better while shifting that advantage to you as a payment reduction for insurance value. As mentioned earlier, install security features or buy a car with security features installed on them by default. This makes you eligible for low insurance rates. But, again, it’s best to talk to your Auto insurance agents.

3. Home & Property Insurance      

Home or property insurance, known as “Home Owner’s Insurance,” is a type of Insurance that protects your housing in terms of financials in natural disasters, fires, or theft. In addition, this type of Insurance covers an individual’s loss of a house, property & its assets.

Home & Property Insurance Policy

The typical home owner’s Insurance covers three main things. 

  1. Stuff in your home & you
  2. The structure of the house
  3. Liabilities

Usually, a home owner’s Insurance covers the content inside your home and you (if you were in the house when the disaster struck). In some cases, the Home owner’s Insurance covers the policyholder even if they are on vacation. This depends on each person’s policy & benefits. 

The structure of the house refers to the components which disasters can quickly impact. If your system is not covered in the home owner’s Insurance, you should clarify it with your insurance provider & see if it is offered with a separate insurance policy.

Liabilities are referred to components or people who might be the reason for disasters or damage to the property. This could be dangerous structures, kids, or elders who might unintentionally or intentionally harm the assets. If you have a mortgage, many mortgage companies require you to have house insurance. It is a vital requirement to have such Insurance to reduce the potential loss in a disaster.  It would be better to own a “Deductible Based Home Owner’s Insurance.” This means that you have to pay the initial payment when you have to compensate for a loss or repair damage determined by the value of your house from your own money. However, the upside is that deductible Insurance has low rates on monthly installments. 

Tips to Lower your home Insurance Amount

Engineering plays a significant role in insurance rates. For example, did you know that houses with brick walls have a lower insurance rate than houses built with wood? This is because brick houses generally have lower chances of being damaged or destroyed than a wooden house in the event of a natural or any distaste.

Location is another crucial aspect to consider when lowering your insurance payments. For example, if your home is located in an area known for natural disasters, you might end up with higher insurance rates than identical valued houses in other areas. Additionally, the content in your home is also considered in evaluating your insurance amount.  Ask your insurance provider if you are eligible for a reduction in insurance rates if you have installed security equipment such as Smoke detectors, Fire extinguishers, Burglar alarms, etc.

4. Health Insurance

An agreement allowing an insurer to pay some or all of a person’s healthcare costs in exchange for a premium is defined as health insurance. Even if your country or company offers such health insurance, some aspects might not be included. Sometimes, dental is not covered in general health insurance & you might have to go for a separate policy specifically for that.

Health Insurance Policy

It is essential to have a policy that covers the whole family if you are married & have kids when it comes to health insurance. Most of the time, companies with which we work offers health insurance in the form of group insurance.

As I have mentioned earlier in this article, corporates acquire bulk type insurance policies, which allows them to provide for the employees for led costs. It is essential to know if your current workplace health insurance policy covers your dependents as well. This can be cleared out by asking your immediate supervisor & HR. As usual, price shopping is the best possible way to compare the market prices for health insurance to select the most affordable insurance policy for you.        

Bonus Read – Types of Health Insurances in the USA

Tips to Lower your Health Insurance Amount

Ask your company if they provide discounted health insurance for aspects such as dental or vision insurances. Some companies have these types of packages for employees, which they transfer the cost-benefit received from corporate packages directly to employees. Also, look for family packages for health insurance when doing price shopping. Sometimes, a family insurance policy might be more cost-effective than an individual insurance policy if the insurance company allows it.  

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Janet V. Wallace
I am an America-based experienced financial blogger with extensive writing skills and financial background. I will help people to invest their money in the stock market, be financially free, and live a fulfilled life. I will write a blog about the various aspects of personal finance and share my knowledge about How to find the perfect bank for your background and how to make your money work for you, how to save your money, and also help you take control of your money, I'm confident that my financial knowledge will help your needs.

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