Accidents and illnesses that put you out of work can't be predicted. Having insurance can protect the majority of your income if you become unable to work.
Insurance is an important part of financial planning because it protects you and your loved ones from the costs associated with accidents, disability, illness and death. When choosing an insurance plan to sign up for, you must consider your age, family and economic situation. The types of insurance you should consider during financial planning include auto, homeowners and disability insurance. Continue reading to learn more about why insurance is so important during financial planning.
Car insurance is necessary to protect you from costs incurred by accidents. Some insurance plans also cover you if someone else wrecked your car while driving it. Most states require that you have auto insurance before registering a vehicle, or you must pay a hefty fee to get out of it. You should not only have the bare minimum of auto insurance but a policy that provides enough to cover you in a tough financial situation.
Homeowners Insurance for Protecting Your Home
Homeowners insurance is another type of insurance to include in your financial plan. It helps protect you from expensive costs if someone is injured on your property or if a disaster damages your home. In order to be covered for the cost of repairs, you need coverage of at least 80 percent of your home's value. Typical homeowners insurance policies cover 50 to 75 percent, so you may have to increase your coverage.
Protection Against Disabilities That Put You Out of Work
Disability insurance isn't as widely known as auto insurance, homeowners insurance and life insurance, but it's also important during financial planning. Accidents and illness that put you out of work can't be predicted. You should have disability insurance that covers at least two-thirds of your income to be in a safe place if you become unable to work.
Insurance is a necessary component of your financial plan. Even if you have an emergency fund, you should have insurance. You don't want to dip into your emergency fund if you could have the majority of costs covered by your insurance policy. Some situations are expensive without insurance, so to protect your finances and peace of mind, it's important to have types of insurance that are relevant to you.
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