Insurance Options: What's Covered?

There are four types of insurance that most financial experts recommend: life, health, auto, and long-term disability insurance.

Life insurance provides financial support for your survivors. Health insurance protects you from the financial burden of serious accidents or illnesses. Long-term disability insurance supports those who become unable to work, protecting you from a loss of income. Auto insurance prevents you from bearing the financial burden of an expensive accident.

When selecting insurance, it is important to consider your specific situation, including children, age, lifestyle, and employment benefits.

Long-term disability insurance

The benefit period for long-term disability insurance, or the period during which benefits will be paid, can vary from a few years to the rest of the insured's life. Insurance companies indicate that the average disability lasts 9 to 18 months, but this can depend on the occupation and classification of the insured's job. The more hazardous the job, the higher the premium charged by the insurance company is likely to be.

Health insurance

Health Maintenance Organization (HMO)

HMOs deliver health services through a network of healthcare providers and facilities. They usually offer the least freedom to choose healthcare providers and require a referral from a primary care doctor to see a specialist. HMOs often have lower premiums and less paperwork compared to other plans.

Preferred Provider Organization (PPO)

With a PPO, you have more freedom to choose your healthcare providers, including out-of-network doctors, but you will pay more to see them. PPOs may have deductibles, and you will likely pay a higher deductible for out-of-network doctors. They also tend to have more paperwork if you use out-of-network providers.

Exclusive Provider Organization (EPO)

EPOs offer a moderate amount of freedom in choosing healthcare providers, and you don't need a referral to see a specialist. However, EPOs do not cover out-of-network providers, so you will have to pay the full cost yourself if you go out of the network. EPOs typically have lower premiums than PPOs offered by the same insurer.

Point-of-Service Plan (POS)

A POS plan combines features of an HMO and a PPO. It offers more freedom to choose healthcare providers than an HMO and requires a primary care doctor to coordinate your care and refer you to specialists. POS plans may have deductibles, and you may pay a higher deductible for out-of-network providers. They also involve some paperwork if you go out of the network.

In addition to these common types, if you are under 30, you may also be able to purchase a catastrophic health plan, which has a very high deductible but covers preventive care and a limited number of primary care visits for free.

Choosing the Right Health Insurance Plan

When choosing a health insurance plan, it is important to consider your budget, your health needs, and your preferred level of freedom in choosing healthcare providers. You should also review the summary of benefits for each plan to understand the specifics of the coverage offered.

Auto insurance

There are several types of auto insurance coverage:

• Liability coverage: This is the most common type of auto insurance and is required by law in most states. It covers the cost of injuries and property damage caused to others in an accident that is your fault. The minimum liability coverage required by law is $15,000 for the injury or death of any one person, $30,000 total for the injury or death of multiple people, and $5,000 for property damage.
• Uninsured/underinsured motorist coverage: This covers the cost of injuries and damages caused by a driver who does not have insurance or does not have enough insurance. It includes uninsured motorist bodily injury coverage, underinsured motorist coverage, and uninsured motorist property damage coverage.
• Collision coverage: This covers the cost of repairs to your vehicle caused by a collision with another vehicle or object, regardless of fault.
• Comprehensive coverage: This covers damage to your vehicle caused by something other than a collision, such as fire, theft, vandalism, or natural disasters. It does not cover mechanical breakdown, wear and tear, or maintenance.
• Medical payments coverage: This covers the cost of immediate medical care for you and your passengers, regardless of fault.

In addition to these standard coverages, there are also several optional coverages that you can add to your auto insurance policy, such as rental reimbursement, towing and road service, and coverage for extra equipment.

When purchasing auto insurance, it is important to shop around and compare quotes from multiple companies. The cost of auto insurance can vary significantly, and it is important to find a policy that fits your budget and meets your coverage needs. It is also essential to review your policy carefully and understand what is covered and what is not.

Life insurance

There are two main types of life insurance plans: term insurance and permanent insurance. Term insurance provides protection for a specified period, which could be as short as one year or for a specific number of years, such as 5, 10, or 20 years. The longer the term, the higher the initial premium. If the insured person dies during the term, the company will pay the beneficiary the face amount of the policy. However, if the insured person lives beyond the term, no benefit is payable. Term insurance is generally considered the least expensive form of life insurance.

Permanent insurance, on the other hand, is designed to provide coverage for the insured's entire lifetime. This type of insurance is more expensive than term insurance but can provide additional benefits such as a cash value component, which can be used for loans or to pay policy premiums. Whole life insurance is an example of permanent insurance, which includes a cash value component similar to a savings account.

When choosing a life insurance policy, it is important to consider your financial situation and determine how much money would be required to maintain your beneficiaries' standard of living. Additionally, the policyholder's age, gender, health, lifestyle, and family medical history can all impact the cost of life insurance premiums.

Accident insurance

• Ambulance fees
• Intensive care costs
• Major diagnostic test and exam fees, such as x-rays, blood tests, CT scans, and MRIs
• Physical and emotional therapy
• Rehabilitation costs
• Lost wages from missing work
• High health insurance deductibles
• Unexpected medical expenses

When choosing an accident insurance plan, it is important to consider what is and isn't covered by the plan, as well as how payouts are received (i.e. one payment or multiple payments). Additionally, it is worth comparing the cost of accident insurance with the potential long-term savings it could provide.

Frequently asked questions