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Insurance
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A good financial plan always includes insurance to protect against financial losses. There are three basic kinds of insurance you need to be aware of: Health insurance, life insurance, and property insurance. Each of these is important.
Good health insurance covers most, and sometimes all, of the cost of taking care of your health. It pays the bills for doctors, examinations, x-rays, surgery, medicines, hospitals, nursing care, and all sorts of medical procedures.
Life insurance pays the benefit amount to the named beneficiary when the insured dies. A term life policy covers the life of the insured for only a specific number of years -- the terms of the policy -- usually 10, 20 or 30 years. A whole life or universal life policy covers the insured person's entire life, and pays the face amount of the policy to the beneficiary when the insured dies.
The two most common types of property insurance are auto insurance and homeowner's insurance. Most states now require that you have auto insurance if you drive a car. The policy covers some or all of the cost of repairs to your car in case of any accident. It will also pay some of the costs to the owner of the other car or property damaged. It will also pay some or all of the medical expenses of people injured in the accident.
If you own your home, you need homeowner's insurance. Your home is a valuable asset and the insurance will pay for needed repairs to your home due to accidents, fire or storms. It will also pay to replace your home if it is destroyed. The contents of your home will also be covered in case of burglary.
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If you are eligible to join a group health plan through your work or other association, check it out. It could be a lot cheaper than a policy just for you or your family. Shop around for your health insurance and get the best policy for your needs. You may need additional coverage that is not included in your group insurance plan, such as dental and eye care insurance.
If you have financial dependents, such as elderly parents or a stay-at-home wife and several young children, you need life insurance. A minimum amount would be twice your annual income. If you have a good job and a good future., then you will want whole life or universal life, not term. If you have no financial dependents, then you probably don't need life insurance.
Your auto insurance must cover all your vehicles and all your drivers. When your kids get driver's licenses,m you must add them to your policy.
Your homeowner's insurance should also cover the unusual risks in your area, such as hurricanes in Florida and earthquakes in California.
Peterson Money Books
Book: RICH By Choice, by Erlend Peterson, CFP
A Complete Guide to Your Financial Success
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