There are lots of different types of insurance out there from wedding insurance to travel insurance, but which do you actually need (and which do you definitely not need)? Below are three of the most essential types of insurance that everyone should have, as well as three types of insurance that are almost never worthwhile.
Three insurance schemes you need
Health insurance
Even if you’re very good at looking after your health, accidents can happen. You may need emergency surgery – which could cost you thousands. Health insurance could help to pay for the bulk of this and save you a lot of money.
There are lots of different health insurance schemes out there ranging from family plans to plans for those chronic illnesses. Some people are lucky enough to work for an employer that can provide health insurance for them. If you’re on a low income, you may be eligible for cheap insurance via Medicaid (retirees and those with disabilities can meanwhile apply for medicare).
Life insurance
If you haven’t set up a funeral pre-payment plan and you haven’t got any money set aside, it could be a good idea to take out life insurance. This insurance scheme can help to pay for your funeral and provide your loved ones with a payment if you die. It’s particularly worthwhile for those with spouses and kids.
There are different types of life insurance including whole life insurance and term life insurance. What is term life insurance? This basically covers you for a period of 10, 20 or 30 years instead of your whole life. It’s worth comparing the two schemes to find the best one for you.
Auto insurance
If you drive a car, having auto insurance in place is compulsory. This insurance scheme can provide compensation in the event that you get in an accident with another vehicle.
There are different levels of auto insurance coverage that you can look into including third-party damage, damage to your own vehicle (including accidents, fire and vandalism), theft cover and breakdown cover. Third-party is the minimum amount of cover you should have, but it can be worth expanding your coverage. You can find tips online on how to reduce your auto insurance rates.
Three insurance schemes you DON’T need
Extended warranties
Many products come with free warranties for a year or two that enable you to seek out free repairs or replacements if they get broken or stolen. After your free warranty ends, you may be given the choice to extend your warranty for a monthly fee. Most people end up paying far more for extended warranties than they ever do in repairs. You could also find that these extended warranties don’t cover all forms of repair.
Flood insurance
If you live in a high-risk flood zone, then flood insurance could be worth considering. However, such insurance is often very expensive in such areas (some insurers may even refuse to insure you), making it rarely worthwhile. You’re better off investing money into flood defenses.
Rental car insurance
If you’ve already got auto insurance, you probably don’t need to take out extra rental car insurance – in many states, minimum coverage will be provided by the car rental company. While usually quite inexpensive, it’s often an unnecessary extra fee.