A:

Your needs for insurance depend on your situation and can't be generalized for everyone, but there are a lot of options available. Risk management options have become overwhelming and somewhat out of control. Now you can purchase policies for terrorism insurance, pre-paid legal services, and pet insurance just to name a few. How do you know what policies you really need? Well, the answer is different for each person, so let's look at some of the more common insurance options:

a) Health/Dental Insurance
Considered by many to be the most important insurance to purchase, especially if you have a family. Don't take shortcuts here. If your company offers group insurance, compare those rates with individual polices to see which is better for your situation. (For more on this type of insurance, read Intro to Insurance: Health Insurance.)

b) Property Insurance (auto, boat, motorcycle, etc…)
If you have a vehicle, you'll need to get insurance. Don't get caught driving without it, some states have severe penalties if you get busted without this coverage.

c) Mortgage Insurance/Life Insurance
If you're the main money earner in your family, what would happen to your home if you were out of the picture? Could your family still make the mortgage payments to continue to live in the home? If this is a concern of yours, then you might want to consider term-life insurance to cover your mortgage loan. (Read How Much Life Insurance Should you Carry? for more depth.)

d) Disability Insurance
If you're concerned that, if you were to be injured, you would not be able to bring home a paycheck, look into short and long-term disability insurance. This insurance pays you a monthly check when you are unable to work due to a disability. (Read The Disability Insurance Policy: Now in English to learn more.)

e) Homeowner's Insurance/ Renter's Insurance
If you own a home or rent a home or apartment, you should consider this insurance to protect you and the property. It typically covers you if someone is injured at your home as well as the property inside and out.

f) Long-term Care Insurance
This insurance coverage is usually not thought much about or purchased until an individual reaches age 55 or older. This coverage provides for nursing care and other home services in the event that you are unable to care for yourself or your spouse. (Check out Long Term Care Insurance: Who Needs It? for more.)

There are many different types of unnecessary insurance coverage's available out there. While it's irresponsible to rule out any particular insurance coverage as bogus, some of those that most people could do without include those such as: Accidental Death Insurance, Credit Card Fraud protection, Appliance Insurance just to get started.

This question was answered by Steven Merkel.

RELATED FAQS
  1. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  2. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  3. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ... Read Answer >>
  4. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  5. Should I be worried about my insurance company?

    Yes, policyholders should also take a serious look at the financial stability of their current insurance company especially ... Read Answer >>
  6. How do I choose which insurance company to use?

    Picking an insurance company to use is not an easy task, considering the financial crisis of 2008 and 2009. Several financial ... Read Answer >>
Related Articles
  1. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  2. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  3. Home & Auto

    Intro To Insurance: Conclusion

    By Cathy ParetoInsurance is an integral part of any personal financial plan. The type of insurance and the amount of coverage you obtain all depends on your unique financial and family circumstances, ...
  4. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  5. Home & Auto

    Intro To Insurance: Fundamentals Of Insurance

    By Cathy ParetoHow does insurance work? Insurance works by pooling risk.What does this mean? It simply means that a large group of people who want to insure against a particular loss pay their ...
  6. Home & Auto

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  7. Home & Auto

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  8. Options & Futures

    Insurance 101 For Renters

    If it's time for you to leave the nest, find out how to protect your new home from disaster.
  9. Insurance

    5 Reasons You Should Check on Your Insurance

    Insurance gives you peace of mind, but you don't have to overpay for it. Rates change and discounts get added, which is why shopping around is important.
  10. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
RELATED TERMS
  1. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  2. Cover Note

    A temporary document issued by an insurance company that provides ...
  3. Assigned Risk

    A risk that an insurance company is required to provide coverage ...
  4. Insurance Industry ETF

    A sector-following fund that invests primarily in insurance companies, ...
  5. Classified Insurance

    Insurance coverage provided to a policyholder that is considered ...
  6. Insurance Coverage Area

    The geographic region in which an insurance policy’s benefits ...

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center