Insurance is financial protection. Along with your emergency fund, insurance makes up your safety net so that any number of potential disasters—such as an accident, illness, fire in your home, or death in your family—don’t wreck your financial security.
When you buy an insurance policy, you usually agree to periodically pay the insurer a certain amount of money—called a premium. In exchange, the insurer promises to pay you back or help cover your costs if you ever need to make a claim or file for reimbursement for covered losses.
You can find insurance to cover almost anything—from weddings to alien abductions to specific parts of your body—but the most common types for people are:
Your insurance needs typically change with major life events and milestones. Here are some of the different types of insurance you may need at different points in your life.
Sure, it’s an extra bill to pay for something you might never use (fingers crossed), but insurance can provide:
As you get used to navigating the world of insurance, keep in mind that:
Insurance is complicated and can vary a lot from policy to policy. Read your contracts closely so that you understand your coverage.
Insurance offers financial protection in case the unexpected happens. There are many types of insurance, the most common being health insurance, car insurance, life insurance, and homeowners insurance. Your insurance needs usually evolve as your life changes.