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It might surprise you to know that not everyone needs to have personal insurance. To determine if you need personal insurance requires an in-depth look at your finances, your family and your singular personal situation. Like with many things but especially with insurance: everyone’s different.
Types of Personal Insurance
The different types of personal insurance you may want to look into getting are:
* Life insurance – Can pay debts, final expenses, education, and even provide future income for your spouse.
* Disability insurance – Can pay for care and special equipment that you need during your disability.
* Critical illness insurance – Can pay for cancer care and other serious illnesses that your health insurance won’t cover.
* Income protection insurance – Do you work for yourself in your own business? If so, you can’t get unemployment insurance through the work place so you might need to buy insurance to cover your income if something happened to you short of death.
* Long-term care insurance – Can pay for the cost of care after 90 days in a nursing home or home care, usually between 150 and 200 dollars a day for up to three years or so depending on the policy.
These types of insurance can help you mitigate a financial crisis caused by one of these situations. It can be difficult to assess risk, but it’s something that needs to be done with your family and with the help of a financial planning expert if possible.
Important Considerations
It’s important to look at the reality of your situation in order to help you choose which types of insurance you need to buy, if any. The things to look at to help you make the right choices are:
* Budget – How much money do you have in your budget to pay for insurance? If you are already on a super-tight budget, some types of insurance such as long-term care insurance may be out of your ability to pay.
* Savings – Are you able to save cash money? You need about eight months of living expenses in savings regardless of if you have insurance or not to help keep your head above water in a crisis.
* Health – Are you generally in good health? If so, what about your older family members? Are there any diseases that you could inherit? Looking at that risk is important.
* Family responsibilities – Do you have other people dependent upon you? If so, it’s imperative to figure out how to make the loss of your income, whether temporary or permanent, less traumatic.
Looking at each of these things realistically can help you determine what type of insurance you need, if any. Be sure to also talk things over with your family, especially your partner - or if you’re a senior citizen, your older children or other trusted financial advisor - to ensure that you are making the right choice.
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