Different Insurance Plans

Discussing your needs with an agent helps find the best insurance.

Discussing your needs with an agent helps find the best insurance.

You’re young, and you think nothing bad can happen to you, so you find insurance a waste of money. You might change your mind if a catastrophe hits and you don’t have the money to survive it. Why wait to experience that problem first-hand? Prep for your future by investing in one or more of the following policies right now.

Homeowners

If you and your sweetie are just renting an apartment, then you don’t have to worry about protecting the building. That’s the landlord’s problem. Instead, you want to watch out for the stuff that you own, such as your video equipment or your dining room set. Renters’ insurance can cover you. It also protects you if someone gets hurt at your place. If you own a house, homeowner’s insurance does all that, but it also covers the structure. If your roof blows off during a hurricane, for example, your homeowner’s insurance will pay to fix it. Compare the costs of replacement versus actual cash value. The former is more expensive but restores your home to its original standard or workmanship and materials. Cash value is cheaper, but it awards you only the current fair market value of the destroyed item, which may not be enough to replace it.

Health

Health insurance pays for your medical expenses, such as doctor bills, diagnostic tests and hospital stays if you hurt yourself or catch a disease. You can generally get a preferred-provider plan, which is more expensive but lets you choose any doctor. Or you can join a health maintenance organization, which is less expensive but confines you to participting doctors and facilities. If you’re relatively healthy, you can save money with a plan that has a high deductible -- the amount you must pay out of pocket before insurance kicks in. You may then reserve your plan for medical emergencies. If you see a doctor regularly or are undergoing regular medical treatment, look for a plan with a low deductible so that most of your expenses are covered.

Life

Life insurance pays benefits to your heirs if you die, and is especially useful if you have several dependents or if you are the sole source of income for your family. The higher the amount for which you are insured the higher the monthly payment. So, picking the best plan involves balancing future needs with the current budget. You can get term insurance, which is less expensive, but it provides insurance for a specific length of time such as 10 or 20 years. Your heirs receive payment only if you die within the specified term. Cash value insurance is more expensive because it combines benefits with an investment feature. If you surrender the policy before you die, you may receive a cash value. Otherwise, it remains in force throughout your lifetime and pays benefits regardless of when you die.

Car

If you rely on wheels to get you where you want to go, car insurance is a necessity and is mandated in many states. It pays if your vehicle is involved in an accident. It consists of three main components. Collision covers damage if your car hits something. Comprehensive repairs problems not caused by accidents, such as vandalism. Liability handles claims and lawsuits if you damage another person’s property, or cause injury or death. If your car is beyond a certain age, say seven years, it may not be worth it to repair. In that case, you can save money by dropping comprehensive and collision coverage, and sticking only with the liability part.

About the Author

Aurelio Locsin has been writing professionally since 1982. He published his first book in 1996 and is a frequent contributor to many online publications, specializing in consumer, business and technical topics. Locsin holds a Bachelor of Arts in scientific and technical communications from the University of Washington.

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