4 Types of Insurance That Are Always Worth It, According to Experts
Written by
Andrew Lisa
Edited by
Chris Cluff
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If you’re willing to pay the premiums, you can insure just about anything.
According to GEICO, rocker Gene Simmons insured his tongue for $1 million. NFL star Troy Polamalu insured his hair — also for a cool million. A Dutch winemaker insured his nose for $8 million, but the terms of his policy forbid him from riding a motorcycle or working as a firebreather or a knife thrower’s assistant.
You might be able to insure anything you’re willing to pay for, but which types of coverage are always worth the price of the monthly premiums?
Some experts consider that to be a trick question.
“I would be cautious around anyone that uses the word ‘always,'” said Infinitive Wealth Advisory founder Mark Hayes, a CFP who has worked in the insurance space for nearly two decades. “Insurance is inherently a bet where some win and some lose. However, the biggest losing bet you can take is choosing not to get a policy, only to find out that you need it.”
These are the policies that you’ll (almost) always rather have and not need than need and not have.
Auto Insurance
The first one is easy because, unless you live in New Hampshire, you have to have it by law: auto insurance. Regulations vary by state, although nearly all 50 require liability coverage at a minimum. But no matter where you live, hitting the highway without it is trouble waiting to happen.
“Auto insurance is always worth the money, as being caught without it can result in hefty fines beyond what you may face from an accident,” said Paul Boudreau, an insurance broker at Rowat Insurance. “An auto insurance policy not only protects your car but also protects you as the driver when involved in at-fault accidents. Should you get into an accident without auto insurance, you may face medical bills, repairs, legal costs and possibly license revocation.
“Drivers might also consider optional collision and comprehensive coverage, which will cover the cost of your vehicle after an accident (collision portion) and for damage outside an accident or if it is stolen (comprehensive).”
Health Insurance
You no longer face a federal penalty for opting out of health insurance — but having the choice to go uncovered doesn’t mean it’s a good choice to make.
“Health insurance is the primary insurance coverage you must have,” said licensed insurance broker and consultant Adria Gross, founder of MedWise Insurance Advocacy. “The major reason for bankruptcy in the U.S. is medical bills. You would not want to face a hospital bill over $50,000, $100,000, $500,000 or possibly $1 million and not have health insurance.”
Home Insurance
Your body costs more to repair than just about anything else, but the structure it spends most of its time in is a close second.
“Far and away, home insurance is one of the best investments you can make for your home,” said Yasmin Purnell of specialist insurance provider Surewise. “Many of us don’t think about the financial devastation of losing our worldly possessions on a regular basis, but it’s far better to have that coverage in place before it’s too late.
“Home insurance covers either your home itself, just the belongings you have in it, or both, in the event of theft or vandalism, a fire breaking out, flooding and more. The cost to replace all your belongings plus repairs on your home in the event of a disaster such as a fire or a flood can be financially ruinous to many families; and, although it’s still an extremely traumatic experience to go through, having home insurance in place at least alleviates some of the financial stress.”
Life Insurance
If people in your life depend on your income, life insurance is as close to a must as you’ll find.
“Whenever an individual experiences the move from ‘me’ to ‘we,’ such as getting married or having a child, it is a great time to consider life insurance,” said Sahang-Hee Hahn, head of strategy and planning at Haven Life, a subsidiary of MassMutual.
But not all life insurance is created equal.
Brian McHale, an independent broker and owner of Policy Mutual, advocates for term life policies over whole or universal for their simplicity, transparency and low cost.
“Term life insurance is very affordable and the peace of mind it provides that your family is protected is well worth the money,” he said. “Life insurance, specifically term life insurance, is non-negotiable for anyone who has loved ones who rely on their paycheck for life’s necessities such as food, shelter and daily living expenses.”
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