Many types of insurance exist, but not all are required by law. In fact, most exist just to give you the peace of mind that goes hand-in-hand with knowing you won’t face financial ruin if disaster strikes. You pay a monthly fee and then recoup that money — and often more money as well — if you need to file an insurance claim. However, you’ll often still need to pay a certain amount of money toward the claim even if your insurance company steps in too.
With somewhat confusing terms like “co-pay” and “deductible,” varying levels of coverage, and circumstances exempt from coverage altogether, insurance is not really a fun topic for most people to think about.
However, there are some mandatory insurances — like automotive liability insurance — that you’ll need to purchase even if you dislike the idea of insurance in general.
In addition, you technically don’t have to have health insurance, but you may pay a penalty on your taxes if you don’t sign up for a plan. “Health insurance” also may not cover dental or eye care, which would require a separate plan. You also can’t really opt out of having home insurance bundled into your mortgage payment. Prepare to also pay mortgage insurance if you don’t put at least 20% down at closing, and to pay flood insurance if you buy a home in a designated flood zone.
But other types of insurance allow you to relax and worry less about all of life’s “what if” moments.
For example, you can take out a life insurance policy to provide financial assistance to your family in the event of your death. Travel insurance can help you avoid losing money on cancelled flights or lost luggage. Pet insurance helps you pay for your critter’s medical expenses. Identity theft insurance helps you regain stolen funds.
The list of insurance types goes on if you plan to open any type of business. In fact, for the home services industry in particular, customers specifically look for businesses or contractors with liability insurance. As an employer, you’ll become familiar with paying unemployment insurance, and as an employee, disability insurance could be a smart move.
In short, there’s a type of insurance for virtually anything that could go wrong in your life. Discover what’s necessary and what you’d rather cover with your own personal savings by reading our comprehensive guides.