I started a discussion on the steps to budgeting a few weeks ago and will now continue the weekly segment. This week I will discuss step 5, having an insurance plan. Why is having adequate insurance so important to your budget? Insurance is intended to offset the costs of bills related to medical costs or unexpected disaster. If you don’t have insurance to protect your assets you could find yourself in a pile of debt after a disaster. Most insurance you never want to have to use, but you don’t want to be caught without it.
There are several major types of insurance that I think are important for everyone to consider having.
1. Medical – This is very important and yet 1/3 of Americans do not carry consistent medical insurance. Without medical insurance a brief hospital stay can leave your family with a large bill that can months to pay. There a lots of different plans for your family’s unique needs. Make sure you know what your insurance covers and that your deductible is an amount you can afford.
2. Life – Life insurance is intended to supplement your family income if you pass. Also, if you have debt, life insurance will ensure your heirs can pay it off and not inherit that also.
3. Home or Renter’s – Anyone who has a mortgage should already have home owner’s insurance. This protects your assets. Did you know that even if you don’t own a home you should have insurance on your property. Renter’s insurance is relatively inexpensive and generally covers most, if not all, of your household possessions.
4. Automobile/Motorcycle – Liability coverage is required by law, however, full coverage is an option if you have a more expensive or financed vehicle. Both our cars are paid off and are older, so we only have liability insurance in case of an accident.
Insurance is important to maintain a budget in cases of medical emergencies or disaster. But, you can be smart about choosing your insurance and shop around to ensure you are getting the best deal for the coverage your family needs.