Auto insurance will cover you against the financial exposure of an automobile accident. You purchase a contract between you and the insurance company. The contract is an agreement for you to pay the premium and the insurance company will pay your losses that you specify in the policy. Auto Insurance will provide you with property, liability, and medical coverage if you:
- Have damage or theft to your car
- Inflict bodily injury or property damage to others
- Need medical care, rehibilitation, lost wages, or even funeral expenses
A normal auto insurance policy will be comprised of six types of coverage. Depending on the state you live in, you may not be required to have all of them. But sometimes if you are getting a loan to pay for the car, the bank will require that you have coverage to protect their asset. You can learn more about what types of coverage you need and are available with;
Most people shop around for the best price on a regular basis and also because their coverage situation changes so rapidly. Most policies are from six months to a year, but you can pay monthly on these policies as well.
Disability Insurance - Protecting Your Income
Most people have insurance on their car, home, or boat. But what if you became disabled and became unable to work and make an income? How would you pay for your car, home, or boat - let alone the insurance to cover them if they were damaged? The average 35 to 45 year old has life insurance but not disability insurance although they have only a 14% chance of dying before the age of 65 and a 21% chance of being disabled for 3 months or more. Most people just haven't looked into disability insurance because it isn't a popular insurance. The most common ways of setting up a disability insurance policy are through an employer paid disability income insurance policy, social security benefits, or individual disability plans. Some states require employers to provide some sort of disability income protection, usually short term. Some large groups will even provide a long-term policy.
Getting Your Own Individual Policy
Even if you have a disability benefit provided to you by the company you work for, unless they provide you with a long term policy with 55% to 60% of your salary, you should consider getting your own individual disability income policy to make sure you have enough protection. Learn what to shop for using our page on:To be securely protected, you should try to find an individual disability policy that will replace from 50% to 70% of your current income. By getting your own policy, you'll be able to ensure your current lifestyle because you will be able to get a policy that will get you an equivalent to your after tax income at the current time. The benefits on individual policy are not taxed, so having a policy with 60% - 70% of your current income will be similar to what you make now, minus the taxes you pay. On the other hand, a policy you will get through an employer will have the benefits taxed, so even an employer providing a long term policy at 70% replacement will fall short of meeting your needs once that benefit is taxed.
Health Insurance - Finding the Right Plan
Finding the right health insurance plan can seem overwheming. In any given state, there are a variety of health insurance companies like Blue Cross Blue Shield or United HealthCare. Add the number of options like copay plans, high deductible HSA qualified plans, business group of one plans, and HIPAA qualified plans and it can drive you crazy. This is where having the right health insurance agent or broker can be a valuable asset. In most states, individual plans don't cover pre-existing conditions. So if you even have a minor condition like asthma or allergies, you'll need a knowledgeable guide through the underwriting maze. Choosing the right agent that knows the underwriting standards of all the different companies in your state can mean the difference to having an exclusion vs. no exclusion or even being declined vs. just getting an exclusion.
Picking the Right Health Insurance Agent
The health insurance industry has a quick turnover time and there are many new agents out there trying to make a living. You'll want to compare the brokers you talk to by asking them questions and getting a feel for how comfortable they are with the details of the health insurance industry. A good health insurance broker will help you do the math to determine whether you need a plan with copays or an HSA qualified plan, which deductible best suits your needs, and making sure your doctors and hospitals are covered by the insurance policy. You can also see:Once you get aquainted with finding an appropriate health insurance policy for your needs, we've provided a list of insurance professionals below. You can use this list to shop for the most qualified broker based on location, knowledge, and products offered. Some agents will only offer one or two plans, while others will offer all of the options available in your state from Blue Cross to Humana.
Life Insurance - Reasons to Get It
A life insurance policy is the foundation of your financial plan. The main reason people purchase life insurance is to replace the income of a breadwinner if they die. A typical situation is parents with dependents who will need the money to survive on and to pay for college expenses. Or, this can benefit a homemaker spouse who relies on their partners income. A sudden death is hard enough to deal with, let alone trying to find a source of income to make a living. Some people will get a small life insurance policy to pay final expenses like a funeral, burial costs, probate, debts, or medical and care expenses. These type of policies are typically sold as whole life insurance on an easy issue basis to older people. A life insurance policy can also create an inheritance for your heirs. By having a life insurance policy on yourself and naming them as your beneficiaries, you can leave your children or grandchildren with more than you might be able to give them otherwise.
Charity and Savings
People don't think of these types of uses as in "insurance" product. But many people will make a charity the beneficiary of their life insurance policy because by doing this they are able to make much more of a donation than donating the same amount they pay in premiums for the life insurance overall. Some types of life insurance will build a cash value. Read more about these here:The types of policies that build a cash value can either be paid out as a death benefit, or the insured can borrow against it or even take withdrawals as they need to. Because life insurance premiums don't seem like a voluntary savings type of situation, most people can create more of a savings with this type of a setup. Also, the interest made on the savings in the policy is tax deferred or tax exempt if it is paid as a death benefit.
Annuities - Why Do You Need to Get One?
Annuities serve a wide range of purposes. Depending on what stage of life you are in, an annuity can fit a variety of strategies. If you are in a time when you can save for the future, an annuity can help you meet retirement income goals. There are other vehicles for saving, like a 401(k), IRA, 403(b), or Keogh, but these types of investments can be limited. They also may not be enough for the retirement income you need if you haven't been able to invest the amounts required. An annuity can also help to diversify your portfolio of investments because fixed annuities are in a unique asset class. Because they are guaranteed not to decrease and may even increase more than the interest rate, the only risk is the financial solvency of the insurer.
What if I Need Income Now?
If you are in a later stage in life where income is needed either soon or right away for retirement, an annuity has many benefits in this situation as well. The main benefit is that an annuity will protect you from outliving your assets. Social security and defined-benefit pension plans may also offer an indefinite income, but inflation tends to erode their value. If you have debts that need paid back and are being harassed by your creditors, an annuity will also provide protection in this case. You can get more detailed annuity information here:How Much Should You Invest in an Annuity?
An enormous benefit to annuities is that there are no limits on the amount that you can invest. After you read our page to learn more about the details of annuities and decide whether you need an immediate or deferred annuity, you can decide the amount to put into the annuity based upon:- Your expected financial needs based on when you need the annuity
- Your current savings situation
- Your long term retirement goals
- Other alternatives available to you
Of course, you will be limited by your immediate financial needs and ability to invest. If you max out your potential investment abilities and need more money in the future for a medical emergency or an unexpected situation, you are usually able to withdraw a small amount without penalty. Just try to make sure a few years pass because you are likely to pay a penalty if you take a withdrawal in the first few years after you buy the annuity. If you're buying an immediate annuity, you won't be able to get any more than the regular payments.