Getting rid of unnecessary insurance policies is a great way to save money,but there are 3 insurance policies that just about everybody needs. Not having these insurance policies can be both expensive and time-consuming.
Many people find out how necessary these policies are the hard way. They think that their luck will always hold out and they will never need the insurance policies. These people end up spending a lot more money because they tried to live without the necessary insurance coverage.
The three insurance policies that the average person really needs are:
- Health Insurance– The United States does not have a national health insurance program for most citizens, and despite what many people think, Obamacare will not provide such insurance coverage. The majority of Americans have to buy their own health insurance. You need to have health insurance because of the high cost of most medical procedures, even if you are healthy. If you don’t have coverage, try shopping for it online. Obamacare will provide some cost reduction options, and it makes it illegal for insurers to deny coverage because of preexisting conditions. That means it should be easier and perhaps cheaper to buy insurance when Obamacare is implemented next year. Something to remember is that you will be required to buy health insurance starting in 2014. You can also deduct health insurance premiums from your income tax.
- Renters or Homeowners Insurance — A basic homeowners or renters insurance policy provides enough money to replace the contents of your home if it gets destroyed. If you rent, your landlord’s insurance probably doesn’t cover the contents of your place. If you have a mortgage, the mortgage insurance doesn’t cover the cost of replacing your home’s contents, nor will such insurance or your landlord’s insurance protect against lawsuits such as slip and falls. A basic renters or homeowners insurance policy is cheap and it will protect you. Remember, if you don’t have such a policy and your home burns, you’ll have to pay for all new stuff out of your pocket. Can you afford to really buy a new TV set, computer, furniture, washer and dryer, stove, refrigerator, and clothing all at once? Do you have the money to pay for a lawyer if somebody slips and falls on your front step and sues you? Probably not. That’s why you need homeowners or renters insurance.
- Life insurance — If you have children or others that are dependent upon your income, you need life insurance. Never assume that the life insurance provided through your employer is enough. Try shopping around for life insurance and seriously consider purchasing whole life insurance. Most life insurance policies are term life, which lapse if payments are not made. Whole life policies always remain in effect after you purchase them. It is also possible to borrow money against some whole life policies. Another big advantage to whole life policies is that they are considered retirement investments by the IRS. That means funds in them are deferred, so they don’t have to be reported on your tax return. That can help reduce your income tax bill. If somebody else is dependent on you, make sure you have at least several hundred thousand dollars’ worth of life insurance to support them if you die.