When it comes to getting insurance, you have so many different options that it can quickly become a headache deciding what you need. You can find almost any type of coverage on the market, so before you make a final decision, know what's available and what you need. Start with a primer of seven basic options available and go from there.
1. Travel Insurance
If you are taking a trip for the first time to another country, travel insurance can be a good idea. It may cover flight or hotel reservation cancellations; lost, stolen, or delayed, baggage; medical expenses; and other losses that you might incur while traveling. In particular, the cost of medical services can quickly add up in another country, especially for a medical emergency or evacuation; therefore, travel insurance could easily be worth the premiums paid. Opting for a policy that focuses on medical coverage may be smart when traveling to high-risk areas. Just make sure you choose a policy that financially safeguards you against the appropriate risks.
2. Burial Insurance
Burial insurance is a whole life insurance policy that features a death benefit typically ranging from $5,000 to $30,000. Due to the relatively low death benefit, it is a low-cost option suitable for those worried about burdening their family with the future costs of their funeral and the burial service. This policy covers various funeral and merchandise expenses, such as the casket, cemetery plot, gravestone, casket, and other similar costs.
3. Life Insurance
In short, with life insurance, you pay premiums over a given period so that your beneficiaries can receive a lump sum payment upon your passing. There are many types available, so let's just focus on three common ones. First, term life insurance covers you for a specified period of years, and it suits those looking to cover lost potential income during their working years so that their family can meet certain financial goals, such as paying off a mortgage and college expenses for the kids. On the other hand, whole and universal life insurance, which are both types of permanent life insurance, offer lifetime coverage and a savings component that can accumulate wealth over time. Both can help policyholders preserve the wealth that they want to leave their beneficiaries and serve as a long-term income replacement tool.
4. Disability Insurance
A type of income protection, disability insurance provides replacement income when you suffer an injury and become disabled or unable to work. Depending on your specific policy, you may receive tax-free benefits of up to 65 percent of your gross income. This type of insurance is especially important for a working professional with a family, as disabling workplace injuries are not statistically uncommon. In fact, about 25 percent of all U.S. workers will become temporarily disabled at some point before retirement. Given this, it may also be a worthwhile consideration even if you do not have dependents.
5. Payment Protection Insurance
Also known as credit insurance or loan repayment insurance, payment protection insurance (PPI) insures the repayment of loans in case you become unable to pay due to death, disability, job loss, or other circumstances that prevent you from earning income to pay. Typically, it covers the minimum payment to any sort of loan for a specified period of time. The issue, however, is figuring out whether it is right for you, which is rather difficult to assess. It may be worth considering in case you have several loans and can afford the peace of mind it can offer.
The more you know about the different types of insurance and how they can apply to you, the better equipped you are to identify and buy coverage that suits your situation. Make sure you deal with a trustworthy broker or insurance company and understand all the details of a policy before you sign.