Insurance is protection against risks and uncertainties and pays for your losses in the case of damage. The insured (or policyholder) pays a premium (or specified dollar amount) to the insurer (policy issuer). Many types of insurance carry a deductible, which means the policyholder pays a certain amount and the insurance company covers the rest. There are a wide variety of insurance available that cover many types of potential losses and risks.
💡 Fun Facts…
| 1) The first known insurance contract dates back to 1347 in Genoa. |
| 2) The first insurance company in the US was formed in 1735 in South Carolina |
| 3)In 2022, the average premium of health insurance for a family of 4 was $1400/month |
Health Insurance
Health insurance covers medical expenses and prescription drugs. These can range from doctor’s fees, testing, hospitalizations, maternity care, emergency care and more. The policyholder is issued an insurance card which gets presented anytime medical care or services are utilized. The medical provider will typically submit the claim to the insurance company and get reimbursed directly. Most medical services require the policyholder to pay a “co-pay” which is a fee paid directly to the provider.
Auto Insurance
Car insurance covers damage to a policyholder’s vehicles, medical expenses due to accidents and other losses. This can include theft, acts of nature or damages from an accident involving an uninsured motorist. Auto insurance also covers damages caused by the policyholder to other vehicles, people and property. Each state has their own regulations about what types of insurance are required in order to register a vehicle, but there is always a minimum coverage requirement. As of April 2023, that national average for car insurance (full coverage) is $2,014 per year and for minimum coverage, it’s $622 per year, but that can vary greatly from state to state. There are several “discount” auto insurance providers, such as The General.
Home Insurance
Home insurance covers damage to the insured property as well as personal property and other contents of the house. It covers natural disasters like fire or earthquake, although extra flood insurance is usually required in high risk flood zones. In addition to covering the cost to repair or replace the property, home insurance covers losses of personal property and furniture in the case of theft or natural disaster.
Life Insurance
Life insurance protects the policyholder’s family in case of death and loss of income. It typically pays a specified sum to the specified beneficiary upon death. It is typically utilized by those with a family, especially children, and where there would be a significant loss of income if the policyholder passes away.
Disability Insurance
Disability covers financial losses where the insured can not work due to some type of disability. The policyholder will get paid a part of their income, either short-term or long-term. Typically disability insurance is an expense that is paid out of the insured’s paycheck, and is often managed by states.
Other Insurance
There are a wide variety of other types of insurance, such as Pet Insurance, which covers medical expenses for a pet. Dental and vision insurance help pay the costs of dental and vision care. Jewelry insurance is used to cover loss of expensive jewelry. Rental insurance is a good idea when renting a house or apartment and covers your personal belongings. Travel insurance is used in case you have to cancel a trip and some or all of the fees paid are non-refundable. Workers Compensation covers your medical expenses if you get hurt while working; most employers are required to carry this type of insurance.
Shopping Around
Make sure to shop around for the best prices on insurance. It doesn’t cost anything to get a quote from insurance providers and many have websites where you can get an instant quote by answering a few questions. There are also sites that will search multiple insurers to find you the best rates. Some popular sites include QuoteWizard, TheZebra and PolicyGenius. You can also go to each individual insurer for quotes. For life insurance, SelectQuote is a great site.
OPINION
Insurance is an important service that is unavoidable. It’s important that you have the key types of insurance at a minimum: health, auto and home (or renter’s). Other types of insurance are optional. While it may seem like a big expense, it’s worth it in case something does happen. You will actually save money on health costs with health insurance, and some types of insurance are required by law, like auto. If you have a home, insurance is required by your mortgage provider, and its crucial to protect your valuable investment. Don’t skip insurance!
