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4 Insurance Concepts Everyone Should Understand

While not the most exciting subject for people to discuss, insurance is one topic that should be on everyone’s agenda. Whether purchasing life insurance to keep family members protected against the sudden death of a loved one, having health insurance to pay for unexpected medical expenses, or auto insurance that can be used in the event of an accident, insurance is one topic that should not be ignored or overlooked. But before making various decisions in this area, it is good to have a basic understanding of certain concepts. Thus, here are four important aspects of insurance to keep in mind.

Insurance is a Safeguard Against Financial Ruin

According to a study conducted by Harvard University, 62 percent of personal bankruptcies in the United States happen as a result of medical expenses. This, coupled with the estimation that 500,000 people in the United States are expected to file for bankruptcy this year, shows the important role insurance plays in being a safeguard against financial ruin. Thus, rather than looking at insurance as an added expense to one’s budget, it should instead be viewed as an investment toward the future. Because of this, most experts recommend getting life, health, auto, and property insurance in place as soon as possible.

Even if You are Healthy, Have Health Insurance

No matter your age and how healthy you believe yourself to be, always make sure you have health insurance in place in case an accident or unexpected illness comes along. While it can sometimes be difficult to purchase due to high prices, the costs associated with insurance policies are far, far less than the costs that are incurred by those without insurance. For example, when a person reaches age 26, they are usually automatically removed from the health insurance policy of their parents. Once this occurs, they can opt to join in group health insurance through an employer, purchase an individual plan, or pay extra costs to remain on the policy of their parents. Whatever decision is made, it is vital to maintain health insurance coverage.

Beware of Extremely Cheap Car Insurance

When shopping for car insurance in today’s competitive marketplace, always be very wary of insurance that appears to offer extremely low rates for coverage. In most cases, this cheap coverage will only provide protection for the other driver who is involved in the accident, leaving you and your vehicle out in the cold. Thus, should your car be damaged or you be injured as the result of the accident, it will be up to you to pay the bills associated with vehicle repairs and possibly medical treatment. To make sure this does not happen to you, always purchase car insurance that is comprehensive, which will have coverage that includes you, your vehicle, and the other driver and their vehicle as well.

Renters Also Need Insurance

While the focus of most property insurance is on people who own their homes, more and more financial experts now recommend those who are renting homes, apartments, and other living spaces purchase renters insurance. A type of insurance aimed at protecting the belongings of a renter from theft or damage, these policies usually protect belongings located both inside and outside the home. Available through most standard insurance companies, it is generally reasonably priced and can be invaluable protection should the unexpected happen. However, if you decide to purchase renters insurance, it is also important to have your property and all belongings appraised on a yearly basis. By doing so, you can be sure of maintaining an adequate amount of coverage that will be enough to replace any items stolen or damaged. 

Since the vast majority of people fail to gain a solid understanding of insurance, they far too often find out that what they don’t know will indeed come back to hurt them in many ways from a financial standpoint. Rather than let this happen, it is always best to plan in advance for adverse situations that could place a strain on you financially. Therefore, by taking the time to think about the above-mentioned concepts and how they can impact your life, you will be ahead of the game should an unexpected situation develop in your life.

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