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Some people say there is no “having too much insurance” where some only keep the bare minimum. There is no right or wrong way to go with insurance. Its different for every person, and every family. It is always best to have some type of insurance to pay for expenses. During different parts of your life there are other insurances that are more important than most. We’re going to focus on insurances dependent on your health.
When You’re In Your 20s…
You might be in college and still on your parents insurance. Health insurance is one of the most important insurances to have. Healthcare is almost impossible to afford without it. And under the Affordable Care Act (ACA), you have to pay a tax penalty if you chose to go without it. The penalty for going uncovered for 2018 will be the same as this year: $695 per adult or 2.5% of household income in excess of tax filing thresholds, whichever is higher. This mandate was overturned with President Trump’s tax overhaul, but is still active for 2018. It will not go away until 2019.
Under the ACA children can stay on their parents policies until the age of 26. After that you will need to obtain your own coverage. If you have a job you can usually obtain it through your employer. Its important to remember just how important health insurance is. Even when the mandate is gone, healthcare is almost impossible to afford without it. You will always need health insurance.
And Then When You Get a Job…
It is easy for expenses to pile up: rent, car payment, auto insurance, etc. Can you imagine what would happen if you suddenly lost your job due to an car accident or some other type of accident. Disability insurance is designed to protect you from loss of income. If you are reliant upon your income to pay your bills (or if you have any dependents that are relying on your salary to cover household expenses!) this is a great insurance to have. It costs less than the income you would lose if you were prevented from going to work. Each policy is different and so its important to check the pre-existing condition clause and waiting period before you go making any claims. Insurance companies have to protect themselves, too!
There is Long Term Disability and Short Term Disability. You are able to sign up for both if you are offered them. And if you are signed up for both, you are able to make claims on both. But again it is important to be aware of any pre-existing condition clauses or waiting periods and conditions covered. Much of this information can be obtained by calling the carrier at which your policy is held through. Investopedia has an helpful article on choosing which type of disability insurance would be best for you.
When You Are In Your 30s and 40s
Life Insurance for if you get married and/ or have children. It protects their financial well-being if something were to happen for you. Often these are less than ten dollars a pay period if through your employer. The price varies, but life insurance is very affordable. If your spouse does not work and you have other dependents, everyone can agree that life insurance is a good idea.
Unsure of what amount of coverage you need? Lifehappens.org has a great calculator to help you figure out the right amount. Its good to look at this resource because we tend to get life insurance when its offered but sometimes not enough to cover our needs. Experts recommend replacing up to 10 times your annual income.
When You’re In Your 50s
We don’t want to think of what would happen to our families if we got a serious diagnosis. Insurance is all about thinking about what is the worst that can happen and being prepared in case it does. Better safe than sorry some say. Critical Illness Insurance is another type of insurance to help when you get diagnosed with certain medical conditions. When you get sick with something serious and are in and out of the hospital, it can quickly add up. Critical illness delivers a lump sum amount to offset those costs. You can use your critical illness in conjunction with your regular health plan. Depending on your family history you might consider getting this earlier rather than later.
Long Term Care Insurance covers exactly that, long term care. It covers care for people who are aging or are disabled and need help with their daily living. Some examples of what is covered are a nursing home or an attendant. We don’t like thinking about getting older and so often times this gets overlooked until we have reached a point of being disabled and it is much too late. But as you get older, you are more expensive to insure which is why it is a great idea to start thinking about everything early. Shopping sooner rather than later can save you money.