We all need insurance, no matter how old we are, what state of health we are in or how financially sound we are. When it comes to life, health and home owner insurance, there are some simple factors that we can take into consideration to arrive at the right amount of coverage that we would require.
It is a non-contestable fact that all of us need life insurance. But the needs of each individual are different and so it is important to figure out how much coverage you actually need when you research any kind of insurance. Let’s take a look at some of the key points we need to look at to arrive at the insurance coverage we require in the most popular types of insurance.
The first factor that you must keep in mind here is very basic; the very purpose of life insurance is to act as a replacement for your income and support to your family in the event of your death. A typical figure can be arrived at by calculating how much your salary would accumulate to over a period of five to seven years. This figure will rise significantly if you happen to have a young child/children or if you are reeling under a significant amount of debt.
Just because you get a whole life policy does not mean you are completely insured; whole life policies come with an investment component, making the premium payments on them much more expensive than on a term insurance policy. At the other end of the spectrum, getting yourself the least possible insurance cover completely defeats the purpose of insurance – to cover your dependents.
You also need to figure out for how long you are going to need insurance. You can do this by estimating how long your children are going to need your support or for how long you would want to cover your spouse for your lost income in case of your untimely death. The older you get, the more insurance is going to cost you – keep that in mind. The maximum age you are advised to insure yourself up to is around 65. Insurance in your seventies might be next to impossible. Insurance is not substitute to your retirement plan; it should be an added benefit.
Also remember that the cheapest insurance rates go to those who enjoy good health. If you smoke, take heart medication, are involved in a risky job or are obese, be prepared to pay higher rates. The best you could do in such a situation is to shop around and choose what works out most economical for you.
It does not matter how healthy you are, choosing health insurance is a smart option. If you do not feel the need for a full blown health insurance cover, go for a limited benefit plan to cover your family. Though, take care not to go for a very bare bones plan; you at least need a plan that will cover emergency room visits and hospitalization for all members of your family. Temporary insurance such as those offered by an employer is also highly advisable. The COBRA law entitles you to stay in your former employer’s health insurance plan for up to 18 months.
Home owner Insurance
Your home is your most valuable asset so it needs to be protected with a sufficient cover. A standard home owner’s policy will do fine in this regard. But, make sure it includes flood insurance. And if you live in a rented home, you can go for renter’s insurance which will cover your belongings that you keep in the rented home.