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How to Find the Right Type of Insurance

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You know insurance is something you need. It can protect your home, your finances, and your family when the unexpected strikes. But what kind of insurance do you need? And how do you find the right type of insurance for your budget and lifestyle?

This short guide will help you understand which types of insurance to prioritize and how to get the right coverage for your needs.

Compulsory Insurance

Compulsory insurance is insurance that you must have. Some types are required by law, such as auto insurance. Other types may be necessary depending on your job or mortgage. Here are the most common types of compulsory insurance.

  • Auto: In most countries and states, you need auto insurance to drive legally, even if you have a driver’s license.
  • Health: Health insurance coverage is required in most places, but it’s no longer required in the US.
  • Home (depends): Home insurance is not compulsory in general—but it is if you want to get a mortgage. Banks will require proper coverage before allowing you to purchase a home.

If you’re a small business owner, the following types of insurance are also compulsory:

  • Workers’ compensation: This insurance protects you and your employees in the case that someone is injured on the job.
  • Unemployment: This covers the costs of people who’ve lost their jobs.

If you lack a type of compulsory insurance that you should be covered by, make it your priority to get covered as soon as possible. Not doing so might land you in legal trouble.

Insurance You Need (But isn’t Compulsory)

The following types of insurance are not required, but they are highly recommended. Many people avoid these types of insurance to save money in the short term—only to be saddled by devastating debt that could have been avoided with a small monthly payment.

  • Life: Life insurance protects your loved ones in the case of your death. It’s recommended for anyone with a family or dependents.
  • Home: If you don’t have a mortgage, you should still get homeowner’s insurance. Remember, your home isn’t just where you live—it’s also an asset.
  • Long-term disability: About 1 in 4 people will become disabled before they retire. If it happens to you, this insurance will provide you with the income you need to live comfortably.
  • Long-term Care: Someday when you’re old and gray, you may need to move into a nursing facility. Long-term care insurance can help cover those costs and save your family thousands.
  • Identity Theft: Identity theft is becoming more common every year, with millions affected. Besides being a pain, it can lead to major financial insecurity if you’re uninsured.

Other Types of Insurance You May Want

There are thousands of types of insurance that cover specific needs based on your hobbies, location, and more. Here are a few to consider.

  • Travel: When going overseas or crossing borders, travel insurance covers the costs of your trip. It also covers your health while you’re outside your health insurance coverage area.
  • Renter’s: Not a homeowner? Renter’s insurance is just as important. It covers damage to your property, theft, and legal issues with landlords.
  • Natural Disaster: If you live in an area prone to flooding, wildfires, or other disasters, you’ll need to purchase separate insurance for each disaster (apart from homeowner’s insurance).
  • Personal Property: Insuring something valuable, such as art or a musical instrument, is a smart way to protect your investment. Hobbyists also commonly insure their gear. For example, hunters often purchase shotgun insurance. This type of insurance is usually very affordable.

Choosing the Right Insurance

Generally, the best way to get good insurance coverage at a fair price is to bundle multiple policies into one package. This can save you up to 25% on insurance premiums, and it enables you to keep track of and pay your insurance bills easily.

Common insurance bundles include home, auto, life, and long-term disability insurance. Though, you can also add more to your bundle by purchasing add-ons. Personal property insurance often comes in the form of add-ons.

A good way to find information on insurance you can trust is to speak with someone at your local bank. There are also free services like Insurance Hotline that help you compare rates and provide educational resources on your coverage needs.

 

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