Protecting assets is an important part of financial planning that often goes overlooked. With so many types of assets and insurance, it can be a daunting task to discern what to cover, and how. Seven important types of insurance can help an individual protect assets throughout his or her lifetime and after.
Homeowner’s and Renter’s Insurance
Fire and lightning claims cost consumers an average of $80,000 per claim between 2014 and 2018. During the same period, liability and personal injury claims averaged about $26,872 per claim. Though financing companies require homeowners to have coverage, damages can exceed that coverage. However, individuals can look for extended dwelling coverage to add protection beyond policy limitations. Additionally, traditional homeowners insurance plans do not cover floods and earthquakes. Coverage for these catastrophic events can be purchased separately or added to policies. For renters, it is important to acquire coverage that protects personal belongings in the event of a flood, fire, theft, or other disasters.
Auto Insurance
Most states require individuals to carry auto insurance coverage. A person’s driving history, location, and yearly mileage are all factors that impact car insurance premiums. The type and level of insurance an individual chooses will also affect the cost of insurance. Generally, there are three types of coverage individuals can choose from to help cover personal liability for car accidents:
- Liability- Any injuries or damage to property at the fault of the insured are covered.
- Collision- This covers the cost for repairs or replacement of the insured’s vehicle resulting from an accident.
- Comprehensive-This coverage protects the insured against costs from theft, fire, weather-related damage, or other damages not resulting from an accident.
Umbrella Liability Coverage
Umbrella liability insurance helps to protect the policy holder’s assets in the event that the costs from a lawsuit exceed the coverage of the individual’s other applicable insurance plans. However, if damage to property from a DWI crash exceeds what an at-fault person’s insurance will pay, that driver’s umbrella liability policy won’t generally help to cover costs.
Health Insurance
Operating without health insurance puts an individual at risk of having to exhaust savings to cover costs in the event of an emergency. Even with coverage, a person can quickly rack up medical bills if he or she doesn’t have a comprehensive health care strategy. Incorporating a tax-deductible health savings account for upfront health, vision, and dental costs can help policyholders avoid dipping into personal savings accounts and provide him or her with a financial cushion in the event of a medical emergency.
Long-Term Disability Coverage
The SSA suggests that nearly 25% of 20-year-olds will become disabled before reaching the age of 67. Disability can significantly impact an individual’s earning capacity for the rest of his or her life, and a disability-causing accident can accrue high costs for medical treatment. Choosing to invest in long-term disability coverage can help an individual to maintain financial stability and possession of assets in the event he or she experiences a life-altering injury.
Long-Term Care Coverage
People who are in need of in-home or nursing home care can face high expenses for treatment and assistance. As an individual ages or experiences disability, his or her earning potential decreases, and medicare often does not cover long-term care costs. Long-term care coverage can help an individual to protect personal savings and retirement funds by providing financial relief for these costs.
Life Insurance
When a provider passes, family members are left to financially stabilize while dealing with grief. Assets such as homes, vehicles, and other property may be at risk of loss if dependents are unable to continue monthly payments. A life insurance policy helps the insured to protect his or her income on behalf of dependents and ensure that loved ones can continue to have financial stability.
