Types of Insurance Coverage You Should Consider Getting
Insurance is one of the few things you buy with the hope that you'll never need to use it. If an emergency or accident occurs, however, insurance can help offset the costs associated with recovery. By understanding the basic types of insurance, you can better protect your home, your family, and your health.
Property and content insurance
Car, Home & Content, and Landlords insurance are three main types of property and casualty insurance:
Car insurance provides financial reimbursement for injuries and property damage if an accident happens. Auto insurance often includes a variety of deductible options, liability limits, and additional coverage choices.
Home & Content insurance usually includes protection for a broad range of potential catastrophes, including fires, tornadoes, burglaries and legal liability. Mortgage lenders require customers to have proof of home insurance on properties with an outstanding loan. A variety of coverage options and deductibles, liability limits and additions are available. Homeowners insurance protects not only the dwelling, but also personal property, subject to policy exclusions. Extra protection may be needed for flooding or earthquake damage.
Landlords insurance covers the cost to replace or repair Rental property (such as household goods, furniture, clothing and electronics) if it is damaged or destroyed in a catastrophe like a fire or burglary.
With these types of insurance, it’s important to determine whether you want to insure the “replacement cost” or “actual cash value” of your possessions. Actual cash value is the estimated value after depreciation. The premium on replacement cost insurance will be higher than the actual cash value option.
For renters, contents cover is suggested to protect their personal items as well as against any public liability claims from damage to the rental property.
Mortgage Protection Insurance
Mortgage protection insurance is a simplified form of personal insurance available to mortgage holders. It is designed to protect the borrower in case of loan default, and also cover the cost of regular monthly mortgage repayments if you die, become seriously ill with a medical condition or lose your job.
Mortgage protection insurance should not be confused with lender’s mortgage insurance (LMI), which is a form of insurance that the lender (however, borrower pays) takes out if it thinks the borrower is high risk. With LMI, the premiums for the policy get added to the borrower’s loan amount. Whereas, in the case of mortgage protection insurance, the borrower owns the policy and pays the premiums for it directly.
Health insurance
Whether you’re going in for a routine check-up or having major surgery, a good health insurance plan can help reduce what you pay for medical care. When purchasing health insurance for yourself or your family, you can choose different levels of cover that reduces cost associated with Hospitalisation and/ or Extras such as dental etc.
Income Protection Insurance
Income protection insurance, also known as salary continuance, can help you manage your expenses if you are unable to work for a certain amount of time if you are sick or injured. When purchasing income protection, consider what other types of life insurance you need as well, such as life cover and total and permanent disability cover.
Income protection insurance replaces the income lost through your inability to work due to injury or sickness. It is an important consideration for anyone who relies on an income. It is especially suitable for self-employed people, small business owners or professionals whose business relies heavily on their ability to work and don’t have sick leave cover from employer.
Life insurance
Life insurance can help to replace lost income in the event of a death and can be important if you’re responsible for the financial well-being of a child, spouse, or other loved ones. While there are several options, two common life insurance products are:
Term life insurance provides the largest amount of coverage for the lowest cost. Policies typically have terms between 1 to 30 years. If the policy holder dies during the term of the policy, the value of the policy goes to the beneficiaries.
Whole life insurance coverage builds cash value within the policy that can be accessed at a later date, and while premiums are generally higher they do not increase as you get older, these are not common nowadays.
Once you have a basic understanding of the types of insurance available, you can research or work with an agent to find specific policies that fit your needs.