Planning for the unplanned: 5 types of insurance that bring financial peace of mind

Are you covered if something goes wrong? Here are five types of insurance that bring financial peace of mind in case the worst happens. 

Like it or not, we're all invincible until we are not, and the unexpected happens in our lives. We get it, most of us have a love-hate relationship with insurance because paying every month can be annoying. Yet, the peace of mind you get from knowing that you have planned for the unplanned can be worth it. 

That's exactly why we all need insurance: to get peace of mind that in case something terrible happens, we are financially covered. In fact, if you think about it, statistically, we are all one bad event, such as one medical emergency, away from financial ruin. 

Sure, today, you may think that you are invincible, and nothing can go wrong, right? But, unfortunately, bad things happen when we expect them the least. 

Now, you don't need every type of insurance out there. Some of them are really weird, and you may never need them, even though they can be great conversation starters. For example, some people get paranormal insurance to insure against a ghost or other supernatural creature. Others insure for a death-by-laughter (no joke). And some people buy wedding insurance to insure their partner's decision to break off the engagement. At the same time, some people fear alien abduction and get insurance for it. 

Still, we all need a few types of insurance because they insure for very bad, yet common events that can happen when we expect them the least. Here are the five types of insurance that will bring you financial peace of mind: 

  1. Health insurance

Data from a study shows that all of us are one serious illness away from bankruptcy. This makes a lot of sense because medical emergencies can imply a number of costs that you were not ready to pay for, such as medical bills. Plus, medical emergencies can lead to income loss due to illness, which puts even more financial pressure on you and your family.  

Now, you may have health insurance from your employer. Yet, those types of policies rarely cover all the expenses linked to one serious injury or medical emergency. Or, if you are taking a break between jobs, you won't be covered in case of a medical emergency. 

Unfortunately, such an event can make you find yourself gravely injured or facing a life-threatening illness with no way to pay for the treatment you need to recover. 

Keep in mind that even if you are feeling great right now, accidents can happen at any time, to any of us. So, be prepared with health insurance coverage. 

  1. Disability insurance 

While most people have some form of health insurance, very few also have disability coverage. And, some don't even understand the difference between the two. 

So, let us make sure that you do know the difference and why it's important to have both these types of coverage. 

Health insurance covers the health care costs in case you are facing a medical emergency. Yet, disability insurance, on the other hand, covers your income in case you suffer a disability that makes you unable to work. 

Disability is actually more probable than any of us wants to admit. According to data from the Social Security Administration, one in four workers who are entering the workforce will suffer a disability and become unable to work before they reach the typical age of retirement. Unfortunately, this can happen to either of us. 

So, disability insurance is the best way to protect your financial future in case of an accident or illness that makes you unable to work. 

  1. Life insurance

It's definitely something that neither of us wants to consider, but life insurance is essential in planning for your family's financial future if the unplanned happens. 

Despite the name, life insurance actually means planning for the moment when you pass away. It aims to protect your loved ones if you leave this world financially. 

In fact, this is the main reason why people buy life insurance: to financially protect their families in case they die. For example, if you are the only breadwinner in your household, and you pass away, your family can face hardship. For your family members, who are dependent on your salary, paying bills, funeral expenses, but also daily living expenses can be really difficult if you die. 

There are two types of life insurance: traditional whole life insurance and level term life insurance. As the names suggest, when you buy term life insurance, you insure against death for a certain amount of time. On the other hand, when you buy whole life insurance, you also create a savings component, which represents the amount of money your family will receive upon your death. Now, you may be wondering “how much life insurance should i buy?” The answer depends on your budget and personal preferences. But also do consider the difference of the two types of life insurance mentioned above.

  1. Homeowner's insurance 

If you have a mortgage, you most likely have homeowners' insurance, as it was probably required by your loan terms. 

If you are still on the fence about whether you really need homeowners insurance or not, let us tell you that you absolutely need it. Your home is most likely your life's biggest investment. So, you wouldn't want it to be damaged and have no money to fix it. 

Household fire, storms, natural disasters, or even breaking entering can damage your home. 

  1. Auto insurance 

Unlike most other types of insurance, which are optional, auto insurance is mandatory to have. When you buy a car, you are forced by law to purchase auto insurance

Even if you are a great driver, you can still be involved in a car accident that will wreak your vehicle. Road accidents happen every day. So, if you are a driver, you are as much at risk of getting in a car accident as all the other drivers. 

Auto insurance will protect you financially if your car gets destroyed in a road accident. You can also choose to supplement your basic auto insurance with collision coverage and protect your car in case of a crash. 

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