There are a large number of insurance options on the market. Although comprehensive coverage is important, your coverage may be too much. Paying too much for insurance may make your financial situation poor in other areas, such as your emergency fund or retirement savings. How do you know which types of insurance are absolutely necessary and which are redundant?


The five different of type insurance are as follows:


  1. Car Insurance
  2. Health Insurance
  3. Life Insurance
  4. Home-Owners or Renter Insurance
  5. Disability Insurance
  1. Car Insurance


There are several different types of car insurance covering different situations, including:

  • Uninsured or Underinsured Motorist: If the person who hit your car does not have enough insurance to cover the damage, this will provide you with protection.
  • Liability:  There are two forms of liability insurance: personal injury liability and property damage. These do not include drivers or passengers, only pedestrians.
  • Collision:  If you have an accident, whether you are at fault or not, collision insurance will cover the cost of car damage.
  • Comprehensive:  Although collision insurance only covers damage to your car due to an accident, comprehensive insurance covers any car-related damage, whether it is a tree falling on your car or a child’s vandalism, such as neighbor kids etc
  • Personal Injury Protection:  This type of insurance will cover medical expenses related to driver and passenger injuries.
  1. Health Insurance

Health insurance covers necessary medical expenses, from doctor visits to surgery. In addition to illness and injury insurance, health insurance also covers preventive care, such as monthly check-ups and tests.


Health insurance is the most important insurance one must get.

    • Needs:  Compared with people with family members, the elderly, or people with chronic health problems, young, healthy singles need less insurance. If you think you will use your insurance frequently, you will want to find a plan with a lower deductible and co-payment.
  • Doctors: If you like your doctor, try to find a plan that allows you to keep your current doctor
  • Cost:  Analyze your budget and determine what you can afford. Keep in mind that plans with higher copayments and deductibles also have lower premiums, while plans with higher premiums generally have lower copayments and deductibles.


  1. Life Insurance

Life insurance covers death-related expenses, such as funeral expenses and morgue expenses. Life insurance can also help you repay any debts, such as mortgages and loans, or daily expenses. If you are the main breadwinner of your family, life insurance will also help your family make up for lost income. The latter is the main reason people buy life insurance. It is important to note that life insurance will expire. If it happens after the expiry date of your life insurance, your beneficiaries will not be able to receive your death compensation. In addition, if you make a false claim to an insurance company and are discovered by them, they may reject your beneficiary’s claim. For example, if you do not tell your insurance company that you smoke and they review your life insurance application for fraud, your beneficiaries may risk not getting your death benefit.


Life insurance is the type of insurance that most people want to avoid considering. However, this is very important. If you have family members, you are also responsible for ensuring that you provide them if you die early, especially if you have children or an unemployed spouse. Life insurance will help your family to cope financially when you die. With it, you can ensure that your family can continue to live financially even after your death.


  1. Home-Owners or Renter Insurance

Homeowners’ insurance covers your home from damage and theft, as well as other hazards, such as damage to visitor’s property, or any costs incurred due to someone being injured on your property. It also includes the foundation, roof and walls of your home, as well as personal property. However, you may need additional insurance to cover natural disasters, such as floods, earthquakes, and wildfires. Renters’ insurance covers damage or theft of personal belongings in the apartment and, in some cases, your car. It also covers liability costs if someone is injured in your apartment, or your belongings are damaged or stolen from your apartment. However, renters’ insurance usually does not cover extremely valuable items, damage caused by pests and natural disasters.


Homeowners insurance is absolutely essential, because the house is usually your most valuable asset and is usually required by your mortgage lender. Not only your home is protected, but most of your valuables and personal belongings are also protected. Renter insurance is not that important, unless you have a large apartment with a lot of valuables in it. But even if it isn’t, know that renters insurance costs are usually very low, so it may be worth your peace of mind. Our blog post on renters insurance issues can help you determine whether purchasing renters insurance is suitable for your situation.


  1. Disability Insurance

Disability insurance is similar to life insurance because it provides financial protection in the event of an accident. If you are injured and unable to work, disability insurance will cover your lost income. Disability insurance can cover permanent, temporary, partial or complete disability. However, it does not include medical care and long-term care services.

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