1) Health Insurance
Everyone needs health insurance. The American Journal of Public Health found that the number one reason families file for bankruptcy was due to medical issues; a staggering 66.5 percent. Unaffordable mortgages or foreclosure came at far second with 45.0 percent. Hundreds of thousands of families are turning to bankruptcy because they can’t afford to pay their medical bills.
The most common way to get healthcare coverage is through your job. Although most of you’ll need to pay a portion of the annual cost, the amount is much less than what you would have to pay if you were to purchase insurance on your own. If you happen to be under 26 years old, you could be covered by your parent’s plan until you can find a coverage on your own.
The bottom line is prioritize healthcare insurance! If you or your family member becomes very sick and you don’t have adequate coverage, you may be forced to file bankruptcy in order to pay the medical bills.
2) Auto Insurance
In California where I live, if a motorist can’t provide proper proof of insurance during a routine traffic check, the driver may face charges including the suspension or loss of their drivers license.
Even a seemingly minor car accident can leave an uninsured driver in significant debt when a car insurance policy could have helped. The uninsured driver may be accountable for thousands in repair bills, expenses, medical bills, and liability costs. Even worse the driver found responsible for an accident may be sued for their assets if they don’t have adequate coverage.
3) Disability Insurance
Do you know what you would do if you had a serious accident that affected your ability to work and bring in an income? You would be unable to produce an income and yet still need to be cared for. You might be thinking, what are the chances of me being disabled? I am healthy! According to the Council for Disability Awareness, higher than many of us think.
“Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. Ironically accidents are NOT usually the culprit – back injuries, cancer, heart disease and other illnesses cause the majority of long-term absences.”
You can’t afford to not have this type of insurance and you can usually get it the cheapest through your workplace. If you don’t work for a company that offers disability insurance, consider buying an individual disability policy. Ideally you want coverage that pays 60% to 70% of your income following an accident.
4) Home / Renters Insurance
You should never own or rent property without having yourself covered in the case of a fire, flood, burglary or some other disaster. Renter’s insurance is relatively cheap to get, so make sure to have some!
Most homeowners insurance covers the cost of rebuilding or repairing your home as well as the contents of your home. It can also protect you if you are held responsible for injuring people or damaging someone else’s property. Make sure you have adequate coverage to protect the roof over your head.
5) Life Insurance
If you haven’t been approached regarding purchasing life insurance, count yourself lucky. It is one of the most aggressively sold financial products in the market. You might have heard of terms such as variable or whole life insurance. My advice. If someone tries to sell you any of these products, run away!
The purpose of life insurance is very simple. If you or your spouse were to pass away, it protects your family members who rely on you and your spouse’s income. My recommendation is to purchase simple term life insurance policy 8-10 times your annual income. The term life insurance protects you for a fixed period of time. If you die during the term, the insurance company pays out a specified amount to your beneficiaries.
The premium on these types of insurance are relatively low and fixed. For example, I currently hold a 20 year term policy for $1,000,000 that costs me $31.65 a month. I want to protect my wife and children until the kids are old enough to be on their own.
Do you have adequate insurance coverage? Do you see any insurance gaps?