Understanding Insurance: A Quick Guide to Coverage Options

Insurance can be a tricky subject for many. It covers the “ifs” in life - What if my home is damaged? What if I’m in a car accident? What if my child gets sick? Because these scenarios have yet to happen, it can make people focus more on upfront insurance costs than the benefits available. 

The whole insurance environment can be confusing, especially with the multitude of options available. How are you supposed to know which types of coverage you need or want? And how do you pick which plan will best cover your needs? 

We’re here to help you understand the different types of insurance options available and what is typically covered by each. Armed with this knowledge, you can protect yourself and your family and enjoy a greater peace of mind as you review your insurance options for the coming year.

Homeowner’s Insurance 

Homeowner’s insurance protects your property in the event of damage or theft. Insurance covers the cost of repairs or rebuilding if needed. It can also protect you from liability for any injuries that occur on your property. If your home sustains damage and needs repairs, your homeowner’s insurance can also cover living expenses while you find somewhere else to stay during the repairs. 

Depending on where you live, you might need additional coverage. For example, if you live in a flood zone, you might consider Flood Insurance. If you live near the coast, typical homeowner’s policies offer limited hurricane coverage. You might consider additional protection if your home is in an area prone to these storms. 

Do I Need Homeowners Insurance? 

If your home is financed, most lenders will require borrowers to have insurance protection in place to protect the lender’s financial interest in the house. Even if your lender does not require homeowner’s insurance or you own the property outright, purchasing this coverage is strongly recommended to protect your most significant financial investment.

Renter’s Insurance 

Renter’s insurance protects your belongings in the event of theft or damage to your personal property. It includes items like clothing, furniture, and electronics should they be stolen or damaged due to fire or water damage. It can also cover temporary relocation expenses if you must stay elsewhere due to a covered disaster event. 

Do I Need Renter’s Insurance? 

Some landlords may require you to take out a renter’s insurance policy as part of your rental or lease agreement. Your landlord will also have their own homeowner’s or landlord's insurance on the property. Their coverage is designed to protect them and the property as the owner, whereas renter’s insurance protects you and your personal belongings as the tenant. Even if you are not required to carry renter’s insurance, the cost is usually minimal and well worth the investment.

Auto Insurance 

Depending on the specific coverage you selected, your auto insurance policy can cover your car in the event of theft or damage. Collision coverage pays for damage sustained from an accident involving a collision with another vehicle or object or if your car flips over. Comprehensive coverage pays for other damage sustained from fire, flood, falling limbs and debris, and other weather events. Uninsured motorist coverage reimburses you if you’re involved in an accident with another driver who does not have insurance or whose insurance isn’t sufficient to cover the damages. Auto insurance will also cover some medical-related expenses, and you have the option to add additional healthcare protection with Personal Injury Protection (PIP). 

Do I Need Auto Insurance? 

Most states require drivers to maintain insurance coverage on all vehicles with active registrations. Car insurance protects you from incidents, and the higher the level of coverage you choose, the more instances will be covered by insurance and the less out-of-pocket expenses you’ll pay. 

Life Insurance

Purchasing a life insurance policy provides financial protection for your loved ones after your death. Upon your passing, your insurance company issues a payout to the beneficiaries you named in your policy. Life insurance can be used to pay for funeral expenses for the deceased or living expenses for the surviving beneficiaries. Many people open a policy large enough to pay off their home or provide funds to help their family due to loss of income. Some employers may offer discounted life insurance coverage to their employees, but you can also select coverage on your own. 

Do I Need Life Insurance? 

Life insurance is not required for most people. However, depending on your personal and family circumstances, you may decide that life insurance is necessary. The simplest way to determine if life insurance would benefit you is to ask yourself: Are there others who my passing would financially impact? If so, consider taking out a life insurance policy and naming those affected individuals as beneficiaries of your policy. 

Disability Income Insurance  

Disability coverage protects a portion of your income if you are unable to work due to a covered illness or injury. You can choose between short-term or long-term disability options. Disability insurance covers most common illnesses and injuries, regardless of whether they are work-related or not. The funds can be spent on anything your ordinary income would be used for, including living expenses, bills, loan payments, childcare, and more. 

Do I Need Disability Insurance? 

Your employer may provide limited disability coverage at no cost to you. You can also purchase this protection on your own. If you have dependents who rely on your income, having disability insurance in place can help protect your family’s financial well-being should anything happen to you and prevent you from working normally. 

Health Insurance

Health insurance covers a variety of medical needs and services, including preventative care, emergency care, prescription medications, hospital care, prenatal and natal care, rehabilitative care, laboratory testing, medical equipment, home health care, and more. Health insurance is often one of the more confusing types of insurance, with varying deductibles, out-of-pocket expenses, and more. If you have questions about health coverage for you and your family, speak to an insurance agent to ensure you enroll in the right policy.

Do I Need Health Insurance? 

Health insurance is no longer required on a federal level; however, some states may require residents to be insured. While health insurance is not mandatory in most states, having adequate coverage can be a vital part of staying healthy – physically and financially. 

Health insurance can help protect you from high medical costs and prevent you from going into significant debt. Unfortunately, medical-related expenses continuously rank near the top of the reasons why individuals face financial challenges and file for bankruptcy.

Dental Insurance  

Dental insurance can be used for preventative care (routine cleanings and exams), primary care (fillings and tooth extractions), and major care (crowns and surgeries). Enrolling in a dental plan can help you minimize out-of-pocket costs on your visits throughout the year, especially if you expect substantial dental work to be needed. If you have a history of dental issues or know you will need regular treatment, enrolling in dental coverage can be a cost-effective way to pay for it. 

Do I Need Dental Insurance? 

Dental coverage may be included under your health insurance plan. If dental isn’t included in your plan, you’ll need to enroll in a separate dental plan if you want to have coverage. Dental-only plans are much cheaper than health insurance policies, and the lower monthly costs are usually much more affordable than paying for dental care entirely out-of-pocket.

Vision Insurance 

Vision insurance is used to help you pay for eye care and eyewear if you need it. It covers your routine eye exams and the cost of purchasing glasses or contact lenses. It can also cover other vision-related services, including some surgeries. Enrolling in a plan that includes vision coverage can minimize out-of-pocket costs for you and your family.

Do I Need Vision Insurance? 

Vision coverage may also be included in your health plan. If not, you’ll need to enroll separately, just like with dental. Vision-only plans are also available for a fraction of healthcare plan costs so that you can find sufficient coverage for you and your family. Enrolling in vision coverage can help you save significantly throughout the year, especially if you or your family members wear glasses or contacts. 

Pet Insurance 

Pet health insurance helps pet owners pay for veterinary costs for their furry friends. This coverage can reimburse you for routine care, prescription medications, laboratory tests, surgeries, and more. 

Pet liability insurance is another type of coverage to consider for your companion, especially if you rent your home. It doesn’t cover any health-related concerns, but it can protect you from the cost of damage or injuries caused by pets to property or individuals. Pet liability insurance can cover medical bills, legal expenses, and costs to repair or replace damaged property.

Do I Need Pet Insurance? 

Although it’s not required, having pet insurance provides financial relief as it can cover the unanticipated costs of pet ownership. Some landlords may require you to have pet liability insurance for any pets that live with you. This coverage may be a provision included under your renter’s insurance, or you may need to purchase it separately. 

Insurance can be a tricky subject. It’s hard to know what coverages will benefit you the most and outweigh the costs associated with them. However, with proper protection, you and your family will have peace of mind knowing you’re covered physically and financially.  

If you have questions regarding insurance policies, ask your employer or insurance agent to thoroughly explain the contract before you sign. Our team is here to help answer all your questions on coverage offered through the credit union. Please stop by any of our convenient branch locations or call 248-322-9800 extension 5. 

 

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