Insurance 411


When it comes to insurance, it can be hard to tell which kinds are actually important to get, and which are supplementary at best.

For example, what exactly is Multiple Birth Insurance (also known as twin insurance), and do you need it if you’re pregnant? Or what about pet insurance for Fido and Fluffy? (We’ve actually covered that topic already. You can read all about it right here.)

While some types of insurances will be purchased purely on preference, others should not be left for debate. Below are four types of insurance that every person should have. Stick with those basics, and you should be pretty much covered in any type of emergency.
Health Insurance
Oh, health insurance. It goes without saying (but is worth mentioning) that this topic is fraught in America. If you’re on the fence as to whether or not the cost is worth it, consider this: A recent study found that an average emergency room visit (one visit) costs 40 percent more than a month of rent.


If you’re all “Well that’s okay, I don’t see myself landing in the emergency room any time soon,” then perhaps one of these graphs from the International Federation of Health Plans will sway you. Some highlights include:

  • 2012 physician fees for a routine visit were $68
  • 2012 total hospital and physician costs for a C-section were $10,545
  • 2012 total hospital and physician costs for an appendectomy were $8,156

If you’d rather not spend $70 for a simple check-up, let alone thousands should you ever need something more serious, health insurance is clearly a cost worth having.

Home or Renters Insurance
Since health insurance can be considered essential for protecting your health, home or renters insurance should be considered an important way to protect your stuff. Check out some of these statistics, courtesy of the Insurance Information Institute, as proof:

  • About one in 20 insured homes have a claim each year.
  • About one in 200 insured homes have a property damage claim due to theft each year.
  • About one in 230 insured homes have a property damage claim related to fire, lightning or debris removal every year.

While we can’t always stop bad weather, accidents and theft from affecting our homes, having a good home or renters policy is a surefire way to help alleviate some of the stress that comes with replacing possessions when those things do happen.

Car Insurance

For most people, their car is their livelihood. It takes them to and from work and home, drives their kids around, enables them to pick up food and medicine and household items. In fact, according to the DOT: Federal Highway Administration, Americans drive nearly twice as much these days as they did in 1980, with the average driver logging 13,476 miles per year, or 37 miles per day.

That’s a lotta driving
Even if you consider yourself to be a pretty darn good driver, there’s everyone else who’s out there on the road with you to think about. Even relatively small fender benders can end up costing you big time. According to a study by the Insurance Institute for Highway Safety, when a high-bumpered SUV collides with a regular-bumpered car at only 10 mph, damages to both vehicles ran from $2,995 to $7,444.

That’s not something we’d like to pay for out of pocket.

Life Insurance (If You’re a Parent)
If you’re young and healthy and without kids or a spouse, life insurance is probably far from your mind … and that’s okay. If, however, you’re a mom or dad with a family to provide for, suddenly life insurance becomes very important. Life insurance is, in a very general sense, an easy way to provide money for your kids should something happen to you, as well as potentially a way to help pay off any leftover debts that may be withstanding.

Of course the specifics of life insurance can get tricky. (Should you get a “term” or “permanent” policy? If you’re going with permanent, should you consider “whole” or “universal”?) To help you find the plan that will be best for you and your family, you should shop around for a life insurance broker who you both like and trust. Ask for recommendations from friends and family, and check out reviews online.

While it’s true that all four of these insurance policies will add to your monthly bills, the experts agree — the small amount you’ll owe each month will more than be worth it should something unfortunate happen and you’re not covered at all.

And then there’s the peace of mind that will come with knowing you and your loved ones are protected. That, as they say, is priceless.

Cheryl Lock is a personal finance writer at and former editor at LearnVest and Parents magazine. When she’s not writing, she enjoys travel, which she blogs about at


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