Why You Need Insurance

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Why You Need Auto Insurance

The main purpose of auto insurance is to protect you and your assets from the financial consequences of being in an auto accident.  And “assets” means everything you own, not just the value of your automobile. Lawsuits stemming from auto accidents can be extremely costly, and can devastate an individual’s financial situation for years to come. In the case of a lawsuit, everything you own is at risk—your home, your wages, your investments. It is extremely important to have sufficient liability coverage to protect you and your family from potential financial harm.

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Auto insurance companies offer a wide variety of coverage options so you can tailor your policy to your specific needs and your budget.  Auto insurance is a versatile tool to use in your financial planning.  Among the benefits are:

Besides safeguarding the assets you’ve worked so hard to accumulate, having adequate coverage allows you to you feel more secure when you are driving, knowing you have the protection in place to deal with any of the perils you may face on the road.  Insurance can cover your medical bills in the event of an accident.  Insurance can pay the full cost of repairs or replacement of your vehicle after an accident, as well as pay for damages to another person’s car or property due to an accident you are involved in.

Auto insurance can pay for damages or repairs to your vehicle that result from such varied perils as theft, vandalism, or natural disasters. And importantly, it can protect you and your vehicle from harm caused by uninsured or underinsured motorists. Even with state laws in place that require motorists to have insurance, many people do not, or they choose to only carry the absolute minimum, which may not be adequate to compensate you in the event of an accident in which they are at fault.

Some people skimp on their auto coverage because they have a safe driving record with no prior collisions.  The problem with that philosophy is, you also have to worry about the other drivers on the road. You have no way of knowing whether they are safe drivers or not. And many people don’t realize that you can be sued even if you are not at fault in an accident.

When you consider the consequences of being sued, versus the relatively modest cost of the coverage, having adequate liability coverage is important to sound financial planning.  Individuals with substantial assets often purchase additional coverage in the form of an umbrella liability policy, which protects you from all sorts of lawsuits, including those arising from auto accidents. The cost of this insurance is also relatively modest.

Why You Need Health Insurance

Many people don’t give health insurance much thought. It’s just something provided by their employer, and they don’t have much say in the terms or conditions of the health insurance provider’s coverage.  Lots of other people don’t worry about health insurance too much because they are young or have been healthy all their lives.

We are all aware that the cost of health care is rising significantly, and is expected to do so in the years to come. As baby boomers get older, they access the health care system more frequently, and advances in the technology of treatment have resulted in higher costs as well.  In America, we expect to have access to the best medical care, but are often surprised how much this care costs.

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Health insurance is important for all of us to have because the cost of treatment resulting from a serious illness, or an accident, can be enormous. Not being adequately covered can have devastating consequences to an individual’s finances, wiping out their savings. Health insurance, then, isn’t just a convenient thing to have to lower the cost of a routine doctor’s visit, or give you a price break on prescription drugs. It is a vital tool to protect your family’s assets from the liability of a huge health care bill.

You never know when a serious illness might strike. Having a history of good health is no guarantee of that being the case in the future. We all age, and the likelihood is that most of us, sometime, will be faced with a serious medical condition.

Health insurance also promotes wellness, by providing consumers with information about preventive care and tests that should be done to ensure early detection of illnesses. Many policies cover most or all of the cost of these tests. In effect, the insurer is a partner, with your doctor, in trying to make sure you stay healthy.  It’s in the health insurance provider’s best interest, too: they save money if you don’t have expensive claims.

When you obtain health insurance, one of the first things you do is find out if your doctor is part of that provider’s network.  Your out-of-pocket costs are usually lower if you use an in-network physician.  This encourages consumers who don’t have doctors to find one; and it is a good idea to already have a relationship in place with a doctor before you have an illness.  The doctor will already be aware of your medical history.

Surgeries and treatments for serious illnesses can cost hundreds of thousands of dollars. Looked at it from this perspective, the annual premium for health insurance is a good value for the benefit it provides.  With the myriad of health care plans available, the choices of coverage and deductibles, you can design a health insurance plan that fits your budget and protects your assets—and free you from the worry of not being able to afford medical care when you need it most.

Why You Need Personal Umbrella Liability Insurance

Auto and homeowner’s policies have some liability coverage, but not nearly enough to pay damages in this range. What happens? You would be liable for the damage award in excess of your coverage.  You could end up having to liquidate  all your assets to satisfy the judgment—everything you’ve worked for all your life, or be forced to make payments for years to come, seriously impacting your family’s lifestyle.

Fortunately, personal umbrella insurance is quite affordable.  $1 million of coverage can be obtained for less than $300 per year. You can obtain coverage as high as $5 million.

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For example, if the settlement of the lawsuit against you ended up being $750,000, your auto or homeowner’s policy would pay the amount up to its limit, let’s say, $300,000, and the personal umbrella policy would take care of the remaining $450,000.

Even a seemingly small incident like a neighbor slipping on your icy sidewalk can end up causing a judgment in excess of your homeowner’s insurance liability coverage.  The umbrella policy can make up the difference.

Judgments in personal injury lawsuits are not necessarily based on the other person’s ability to pay, but common sense says that if you live in a wealthy neighborhood and a person is injured on your property, the size of the judgment against you could be higher than that for a person in an impoverished neighborhood.  If you want to protect your assets to the highest degree you can, having personal umbrella liability insurance in place is a smart way to go about it. Many people regard personal umbrella liability insurance as one of the most cost effect forms of insurance as well.

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