With so many insurance products, it can be difficult to know what products you need and which ones are unnecessary. Though the answer ultimately depends on your personal situation, check out a few insurance products it makes sense for practicallyevery individual to have.
1. Life Insurance
You may believe that if you don't have children or a spouse , you don't need life insurance. However, take a few moments to consider what expenses you will leave after your death. In 2014, the median cost for a funeral that includes a burial and viewing session hit $7,181. Even if you opt for cremation, the median cost is still over $6,000.
If you leave behind few assets and don't have life insurance, your family members and friends will be left scrambling trying to come up with the funds for your burial. Your loved ones may also incur travel expenses and lost wages from time missed at work; life insurance can help your heirs defray these expenses.
For individuals who have children, life insurance is essential to ensure that your surviving spouse and children do not struggle financially after your death.
Many individuals have life insurance policies through their employer. However, if you leave your job, you'll likely lose your policy. The policy may also be too small for your needs. Check with an insurance professional to make sure that your insurance coverage is adequate for your family's needs.
2. Umbrella Insurance
Umbrella insurance is a product that provides additional liability insurance for situations excluded by your other insurance policies. For example, if your homeowner's insurance excludes lawsuits covered by dog bites, umbrella insurance gives you the protection that you need if your dog bites someone.
It also covers damages that exceed the limits of your present policy. If your homeowner's insurance limits lawsuit damages to $500,000 and someone injured on your property receives a settlement that exceeds this figure, you may be forced to liquidate your assets to cover the difference. With umbrella insurance, you can make a claim against your policy to pay the lawsuit and protect your wealth.
3. Short and Long-Term Disability Insurance
Though similar in name, short and long-term disability insurance have different functions. Short-term disability insurance replaces all or a portion of your income if you suffer a temporary illness or disability, while long-term insurance is intended to replace your income for longer periods of time.
Ideally, you should hold both policies to protect your income against multiple situations. If you have both products, you will exhaust your short-term disability benefits before drawing on your long-term benefits.
When my card was declined at the grocery store a few months ago, I realized my financial situation had hit rock bottom. Instead of ignoring the problem, I decided to meet with a financial counselor to see what I could do to make things better. I talked with him about how to handle unplanned expenses and how to budget for my day-to-day life. It was incredible to learn more about money, and now I can proudly say I am living within my means. I decided to make this blog for anyone that struggles with financial planning so that you can turn things around.