The Basics of Insurance: What Type is Right for You?

You never want to think it'll happen to you, whatever "it" is. However, reality shows us time and time again that our environments are ever evolving and very temporary. When we invest in protecting our lives, homes, and families, we are granted the upper hand.

In 2019, car crashes in the United States totaled a whopping 33,244 fatalities. It is estimated that 20-50 million people suffered injuries from non-fatal accidents. Of course, these accidents may leave those victims with disabilities that could change the course of their lives forever.

When you're considering what type of insurance policies will best suit you and your family, it's important to understand the basics of insurance.

You often hear the classic trope of insurance sales, but what you don't hear is the gratitude those folks have six months down the road.

Getting insurance can feel like an overwhelming task. With so many options available to you, it's near impossible to determine what's necessary. The truth of the matter is you that can't put a price on safety. The safety of your family, yourself, and the protection of your assets remains paramount.

The Basics of Insurance

We're living in the era of the hypothesis. Our "if, then" conversations postulate that we can see an accident coming from a mile away. Because we have access to data in the information age, we feel empowered to make decisions that benefit our safety. And there is some truth behind this.

What we can't account for is the unknown. And if the last year and a half has taught us anything, it's that our false sense of control can be tested.

Personal insurance can offer you a safety net that protects your financial assets from extreme loss. These losses can come from unfortunate circumstances like natural disasters or accidents.

When you take stock of your investments, you get a clear vision of the weight your finances hold. You may find that your monthly or annual insurance cost pales in comparison to the risk of loss. When you purchase an insurance policy, you will have a premium that you are required to pay. In exchange for this premium, your insurance carrier will be able to compensate for losses accrued. If your home burned down, your premium would pay toward the insurance support you'd receive in such a disastrous situation.

As the insurance policyholder, you have options when it comes to the package that best suits your situation. The monthly premium will vary per person. If you have more to lose, consider investing more into your monthly premium. The lower grade policy you purchase, the more you'll end up forking up to cover your losses.

Auto Insurance

There's nothing like kicking back to your favorite playlist on a long road trip. Long drives with nothing to think about are some of the most poignant, memorable moments of our lives. A soundtrack set to cascading mountains and lush forests sets you up for a serene drive. Yet as we know, nature cannot be predicted. And in the worst-case scenario, if a giant tree falls on the hood of your car, you want to have support at that moment and know that your assets and physical body are protected.

Certain insurance policies are required by law. Take auto insurance, for example. As mentioned early on, statistical data shows us just how much risk and loss are associated with owning and driving a vehicle. No one feels this more than parents of newly certified drivers. As a parent, when your teenager gets their license, you mull over all the worst-case scenario situations in your head. Their lack of experience married with careless drivers on the road is the perfect topper for that anxiety sandwich.

A solid auto insurance policy can protect the offensive, the defensive, and all the little pieces in between. You want to be able to send your kiddo off with the same confidence you have, knowing that your insurance policy has your family protected. That confidence can lead to safer driving overall. And many auto insurance policies offer incentives for good students, safe drivers, and plenty of resources in between.

Home Insurance

Your home is what you make it. It's where you retire every evening, where you feel safe and sound. It's where the kids grow and fly from the nest. It's where grandma shows up with snacks and laughs. And most likely, it is your most valuable investment. Your homeowner's insurance protects you, your family, and everyone associated under that roof.

If you're working with a lender, there's a good chance you already have homeowner’s insurance. Most mortgages require it. Before refinancing your home, you will probably be asked about your homeowner's insurance. Your lender will inspect your policy to make sure it is adequate and provides the support necessary in case of an accident. Lenders usually require this so that they know that your home is receiving the protection it needs in the long term.

There are plenty of things that are out of our control when it comes to homeownership. If your home is on a landscape prone to natural disaster damage, you may be required to carry supplemental insurances. This type of insurance could look like flood insurance or landslide insurance. These situations are analyzed ahead of time to ensure homeowners have as much protection as possible for the covered assets. If you don't opt for homeowner’s insurance independently, your lender may be subject to purchase a policy and charge you monthly for those costs.

Your homeowner's insurance offers protection beyond your existing home.

In the event of a hurricane or tornado, your personal belongings may be subject to damage. Your insurance policy can offer financial solace to reimburse you for those losses. Your policy may even extend to medical bills to support you and your loved ones.

Life Insurance

The conversation around life insurance is never one we opt to have.

We sit with friends and family processing our ability to be present. We strive to connect and to be together. But we never want to consider what happens when we are gone. If the primary income earner in your family is subject to illness or death, life can put the remainder of your family in a position where you must make difficult decisions.

Often, these decisions are very time-sensitive, putting more pressure on the family unit. This type of pressure mixed with immeasurable grief can often leave family members in a state of shock and helplessness. This earth-shattering, sensitive experience exacerbates anyone, including the person in charge of finances.

Financial support can be made available to them through your insurance policy upon you or your family member's untimely death. There are varying degrees of financial aid depending on the policy that best suits your situation.

Access to financial support upon death may be an immediate option depending on the policy. And most folks in that situation would need to reap the benefits of the policy as soon as possible to plan. Who wouldn't?

Life insurance allows you to make a game plan and unlock options most don't know are available. Because of these benefits, family members can continue a meaningful life without the stress of even more loss.

When getting your affairs and estate in order, pull your immediate family members in on the conversation. Though a topic with a grim undertone, it's a level of maintenance that will serve your loved ones- or maybe even yourself, after a loved one has passed.

Disability Insurance

We hear about freak accidents all the time, from a slip in the grocery store to a construction worker falling off a roof. There is little awareness about these stories, as many people like to remove themselves from the equation. Reality shows us repeatedly that we are very much subject to human error and natural consequences. And for those moments, personal insurance can make or break the bank (and bones).

By now, you have probably experienced some accident in your lifetime. Ideally, an accident that inflicted as little damage as possible. Some folks, however, are not always that lucky.

If you find yourself disabled, temporarily or otherwise, disability insurance can step in to help support your financial losses. With rent to pay, food to put on the table, and kids to support, being unable to work is a non-option for so many.

In 2019, 723,858 people became disabled worker beneficiaries. These employees experienced an accident that left them unable to perform basic duties at their workplace. Disability insurance goes beyond you or a family member that operates heavy machinery daily. There is a risk associated with plenty of jobs that many folks don't think about twice. Having insurance is a low-cost, preventative measure that can provide the protective layer on the delicate nature of human life.

The Cost of Risk

Calculating risk can be tricky. When it's our small business or local community center at risk, it feels much closer than the stories you hear about from hundreds of miles away. We want our communities to thrive, and to do so, the individual must be able to live safely. This preparation isn't about living in fear. It's about practicing reality checks and offering preventative care to ourselves.

We learn at a young age that putting our hands on the hot stove will burn them. We also know that broken things cost money, and money is necessary to find stability later. We know that with every action, an equal and opposite reaction will occur. When you're weighing the action and reaction of having insurance, it's essential to consider your assets. And not just the ones that are sitting in investment accounts throughout the globe.

Your office rental space is where you invest time and energy into your business. Knowing that an electrical fire is going to burn down your unit is impossible. We cannot mitigate accidents. Your family is an asset. Your kid's college scholarship is an asset. The future of your home and your business are assets, too.

We invest in so many things because the reward is always high enough to improve our quality of living. In a happy, healthy, safe environment, you can offer all those things to your friends and family. Protection of the intangible and the physical can help everyone shut their eyes at night.

It's Time

If you've made it this far, there's a great chance that you're acknowledging the importance of knowing the basics of insurance. We're living in the most accessible period. If we have a need, we know where to look to get that need met. Personal insurance is one of the many solutions to meeting the essential needs of our lifetime.

If you're interested in learning more about what insurance best suits your financial situation, make an appointment through our website. We're ready to help you get a better night's sleep.