Insurance in USA is one of the necessary things the citizens need to undertake. We cannot always prevent the unexpected from happening, sometimes we can get some protection. This is why insurance is meant to safeguard us, at least financially, should certain things happen. But there are numerous insurance options, and many financial experts will say you need to have them all. It can be difficult to determine what insurance you really need.
Insurance in USA
Getting the right type and amount of insurance is always determined by your specific situation. And other factors including children, age, lifestyle, and employment benefits play a role when you’re building your insurance portfolio. However there are four types of insurance that most financial experts recommend that every USA resident should have and they are; life, health, auto, and long-term disability.
Types of Insurance in the USA
There are primarily two types of life insurance and they are traditional Whole life and term life insurance. Simply put, whole life insurance can be used as an income tool as well as an insurance instrument. As long as you keep to the monthly payment of the Premiums, the whole life covers you until death.
On the other hand, Term life is a policy that covers you for a set amount of time. There are other considerable differences between the two types of insurance. So you may want to seek the advice of a financial expert before you consider which of them is suitable for you. Factors to consider include your age, occupation, and number of dependent children.
The major benefits of life insurance include the ability to cover your funeral expenses and provide for those you leave behind. This is especially important if you have a family that is dependent on your salary to pay the bills. Industry experts suggest a life insurance policy that covers far more than your yearly income.
When estimating the amount of Life insurance coverage you need. You need to consider other factors and not only funeral expenses, but also daily living expenses. These may include mortgage payments, outstanding loans, credit card debt, taxes, child care, and future college costs.
According to a 2018 study by LIMRA, here, LIMRA is formerly known as the Life Insurance and Market Research Association, one in three families might not be able to meet their day-to-day expenses within a month of the primary breadwinner’s death.
Statistically, you and your family are just one serious illness away from bankruptcy. According to a study published by the American Journal of Public Health in 2019, here. In the Journal’s survey of more than 900 Americans who filed for personal bankruptcy between 2013 and 2016, medical problems, from bills, income loss due to illness, or both contributed to two out of three bankruptcies
Those numbers alone should incentivize you to obtain health insurance or review and possibly increase your current coverage. But with rising Co-payments, increased deductibles, and dropped coverages, health insurance has become a luxury fewer and fewer people can afford. When you consider that the national average cost for one day in the hospital was $2,517 in 2018,4 even a minimal policy is better than none.
The best and least expensive option may be participating in your employer’s insurance program. But many smaller businesses do not offer this benefit. The average annual premium cost to the employee in an employer-sponsored health care program was $7,188 for single coverage. And $20,576 for a family plan in 2019, according to research published by the Kaiser Family Foundation.
If you don’t have health insurance through an employer, check with trade organizations or associations about possible group health coverage. If that’s not an option, you’ll need to buy private health insurance.
Long-Term Disability Coverage
Long-term disability insurance is the one type of insurance most of us think we will never need. Yet, according to statistics from the social security Administration. One in four workers entering the workforce will become disabled and will be unable to work before they reach the age of retirement.
Often, even those workers who have great health insurance, a nice nest egg, and a good life insurance policy don’t prepare for the day when they might not be able to work for weeks, months, or ever again. While health insurance pays for hospitalization and medical bills, you’re still left with those daily expenses that your paycheck generally covers
Many employers offer both short- and long-term disability insurance as part of their benefits package. This would be the best option for securing affordable disability coverage. If your employer doesn’t offer long-term coverage, here are some things to consider before purchasing insurance on your own.
A policy that guarantees income replacement is optimal. More often policies payout 50% to 60% of your income. The cost of disability insurance is based on many factors. And this is including age, lifestyle, and health. The average cost is 1% to 3% of your annual salary. But before you buy, read the fine print. Many plans require a three-month waiting period before coverage kicks in. Also, provide a maximum of three years’ worth of coverage, and have some significant policy exclusions.
There were 6.7 million car accidents in the U.S. in 2018, according to the National Highway Traffic Safety Administration. An estimated 38,800 people died in car crashes in 2019 alone. The number one cause of death for Americans between the ages of five and 24 was auto accidents. And this is according to 2018 CDC data. Over 2.7 million drivers and passengers were injured in 2018. The 2010 economic costs of auto accidents, including deaths and disabling injuries, were around $242 billion.
While not all states require drivers to have auto insurance, most do have regulations regarding financial responsibility in the event of an accident. States that do require insurance conduct periodic random checks of drivers for proof of insurance. If you do not have coverage, the fines can vary by state and can range from the suspension of your license to points on your driving record to fines from $500 to $1,000.
If you drive without auto insurance and have an accident, fines will probably be the least of your financial burden. Also, If you, a passenger, or the other driver is injured in the accident, auto insurance will cover the expenses and help guard you against any litigation that might result from the accident. Auto insurance also protects your vehicle against theft, vandalism, or a natural disaster, such as a hurricane or other weather-related incidents.
Again, as with all insurance, your individual circumstances will determine the cost of auto insurance. To make sure you get the right insurance for you. Compare several rate quotes and the coverage provided. And check periodically to see if you qualify for lower rates based on your age, driving record, or the area where you live.
Finally, some experts have endorsed that life, health, long-term disability, and auto insurance are the four types of insurance one must-have. Always check with your employer first for available coverage. If your employer doesn’t offer the type of insurance you want. Obtain quotes from several insurance providers. Those who offer coverage in multiple areas may provide some discounts if you purchase more than one type of coverage.
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