When your finances get a little tight, it can be tempting to skimp on one or more of your insurance policies in order to save money. While it's true these policies are there "just in case" you have a problem, going without coverage can lead to disaster for your finances later on. There are some policies that should take priority, but there are others that you can put on hold or reduce your coverage in order to save money. Here's the scoop on which policies are a necessity, and which aren't.
Sadly, one of the most expensive types of insurance is also the one you should never be without. Health insurance varies in cost around the country, and is surprisingly high in some places while remaining fairly reasonable in others. The introduction of Obamacare has caused some confusion among those people looking for health insurance plans, especially as it requires many who did not previously have health insurance to obtain a policy, or face tax penalties. Fortunately, there are many low-cost policies and financial assistance plans in place under the Affordable Care program that can help with the cost of a health insurance plan.
Why is health insurance so important? Medical bills can be very high, and they can add up quickly if you become seriously ill or injured. A stay in the hospital can cost thousands of dollars, but if you have health insurance, you could pay significantly less. Without health insurance, you could be just a major illness or accident away from financial ruin, so don't skip this insurance.
Apart from the fact that it's illegal to drive without auto insurance in most places, a single automobile accident could wipe out your savings and cost you for years to come. Could you afford to pay for a new car or medical bills for yourself or the other person involved in the accident? Probably not, but an automobile insurance policy can protect you and take care of the costs associated with an automobile accident.
If you have a mortgage, your lender will most likely require you to have homeowners insurance, so dropping this policy won't even be an option. If you don't have a mortgage, you still need the coverage in case something happens to your home or someone visiting your home. Homeowners insurance covers more than just your house and its contents; it also protects you from lawsuits should someone be injured on your property. It's not worth saving money if you are taking a chance that something will happen to your greatest asset, especially if you can't afford to rebuild on your own.
Contrary to what many people think, not everyone needs a large life insurance policy. If you have a family to support, you should have life insurance in place to protect them after your death. However, if you are young, with no one to support, or elderly, with no family depending on you for their financial needs, you can skip the life insurance, or go with a smaller policy which covers any funeral costs should you die.
The idea behind this type of insurance is that it will cover the minimum payment on your bills if you become unemployed. Instead of shelling out monthly premiums for this type of policy, you are better off sticking those premiums in a savings account to build up an emergency fund in case you lose your job. Three to six months worth of income in a savings account can keep you on your feet long enough to find a new job, without the hassle of dealing with an unemployment insurance claim.
Talk to a qualified insurance agent about your individual insurance needs, and you could find that you can save money and still retain the protection you need.
When you start thinking about getting insurance, it can be overwhelming to hear the advice from family and friends. While some people might encourage you to stockpile money and insure yourself, others might warn about the expense of paying for car repairs or a stay in the hospital. However, even the most conservative financial experts talk about the importance of having sound insurance. Because it can be difficult to find the right policies, I decided to create a website completely dedicated to providing free information about insurance. Every situation is different, but if you are like most people, you will need a decent homeowners, medical, auto, and life insurance policy to protect you from unforeseen circumstances.