Being prepared for the uncertainties will ensure that life is still manageable in the event of a financial crisis. For instance, a life insurance policy will protect the family when the insured becomes disabled or dies. Without insurance coverage, personal circumstances can be expensive, so it’s essential to purchase an insurance plan that works on your financial situation.
Among other insurance policies, there are four types that everyone needs. These include life insurance, health insurance, long-term disability coverage, and auto insurance. If you have children and a spouse, it’s a good idea to get life insurance. On the other hand, anyone with a vehicle must have auto insurance.
In this article, you’ll know why having insurance helps you become financially secure:
1. Payment of Losses
An insurance policy is a contract used to compensate individuals or organizations for covered losses. Hence, one of the most important benefits of insurance is financial protection or reimbursement against losses.
For instance, the life insurance policy protects the family of the policyholder by providing financial benefits for assistance and funeral expenses. The amount of support varies with the type of insurance plan availed.
The most common types of life insurance include:
• Term Insurance: It’s the simplest form of life insurance that provides coverage for a specified ‘term’ of years, usually 20 to 30 years. When the insured dies during the active coverage of the policy, a death benefit will be paid. However, if the death occurs beyond the effectiveness of the policy, there would be no benefit coverage or payout. But, the policy can be renewed and extended with higher premiums.
Usually, term policies are availed because it’s less expensive compared to whole life insurance.
• Whole Life Insurance: This type of insurance provides coverage for the entire life of the policyholder. Aside from guaranteed death benefit claims, it also contains a savings component called the ‘cash value.’ The interest on the savings portion may accumulate on a tax-deferred basis. The investment component of the insurance can be the source of funds in the future.
2. Comply with Legal Requirements
Another benefit of having an insurance is the compliance with legal requirements. Basically, insurance policies meet the statutory requirements and provide evidence of financial resources. For instance, an auto insurance policy by the vehicle owners helps control costs associated with car accidents. Instead of paying the damages out of your pocket, the insurance company will pay for most of the expenses associated with auto accidents. Hence, in this case, it’s important to choose the best auto insurer to get the most out of your benefits.
Filing an SR-22 certificate is a compliance to the minimum auto liability insurance requirements in your state. The document is also called the certificate of financial responsibility and varies from one state to another. Owning the certificate provides evidence of liability coverage of the vehicle insurance policy.
Here are some of the circumstances when SR-22 is a must:
• Reckless driving
• Being convicted of Driving Under Influence (DUI)
• Driving with a suspended license
• Involving into an accident with no auto insurance
• Caught driving without an active auto insurance policy
It would be devastating and complicated to the driver without the SR-22 certificate. For insurance purposes, buy the cheap SR22 Insurance with the lowest down payment. Some shops offer regular SR-22 with auto insurance policy and non-owner SR-22 certificates.
3. Manage Risks
Insurance is an effective tool for risk management. Once you’ve categorized the risks on your financial plan, it’s important to find insurance.
The common insurance plans availed by individuals and businesses include:
• Property insurance: It protects the assets against losses and damages from circumstances and weather-related afflictions, including earthquake, fire, wind, flood, and the impact of snow and ice. Property damage and losses, like vandalism and theft, can also be protected depending on the policy.
• Business crime insurance: It’s used to protect businesses from damages and business-related crime, like forgery, fraud, robbery, embezzlement, misrepresentation, and the like.
• General liability insurance: It’s used to protect businesses and the organization from claims involving property damage and injured parties. The insurance also provides coverage for attorney fees and medical expenses.
• Product liability insurance: It protects the business against lawsuits caused by injury or death of the manufactured products.
• Professional liability insurance: It protects professionals, like lawyers, accountants, physicians, and engineers against negligence and other claims made by the clients. However, criminal prosecution and other forms of liability under civil law aren’t covered by the policy.
There are more types of insurances available to purchase. Before buying the policy, consider the probability of the risk and the safeguard features it offers.
4. Support the Credit of the Insured
The insurance can secure the lender and the borrower under unpredictable circumstances, such as damages and losses. When the insured borrower dies, the insurance will pay for the remaining debts of the policyholder. This situation works for credit life insurance since it’s designed to clear off the outstanding debts of the borrower.
Credit life insurance is usually sold by banks during mortgage closing, or when you avail of a car loan and other credit lines. The purpose of the insurance is to protect the living dependents of the insured from paying the loan.
Bottom Line
It’s important to be prepared when dealing with contingencies in life. The essentials of insurance as mentioned in this article will help you achieve a sound and stable financial plan.
To ensure that you’ll get the most of your insurance, purchase the right plans under reputable insurance companies.
This post is sponsored by SR22 Savings