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Auto insurance
If you drive and you own a car, you must have auto insurance. Each state has a required minimum, but it can be worth paying for extra coverage or add-ons like roadside assistance (the additional cost is very minimal and there are much more effective ways to save money on auto insurance).
Are there any alternatives? Nope. Auto insurance is mandatory.
Health insurance
Having access to healthcare is vital due to the high potential cost of many treatments. There are many affordable plans out there including high deductible plans and group plans that are worth looking into if you haven’t got much money to spare. Some people are lucky enough to get health insurance through an employer.
Are there any alternatives? If you’re on a very low income, you may be able to apply to Medicaid, allowing the government to provide coverage. Savings accounts such as HSAs can also be used to pay for treatment, but often it’s still worth having health insurance for any potential expensive procedures.
Life insurance
Life insurance can offer a payout to your loved ones when you die, which could help to pay for your funeral or simply provide some funding if you were the sole provider. There are different types you can choose from: whole life insurance and universal life insurance. None of us really know when we’re going to go, so it can be worth taking out.
Are there any alternatives? You may not need life insurance if you already savings or a trust fund set aside. Pre-paid funerals can also help to pay for funeral costs in advance, although life insurance can pay for funeral costs and more.
Home insurance
If your home gets burgled or there is a fire, it could be useful to have home insurance to pay for repairs and to replace valuables. Home insurance rates can be very low and can often be combined with other plans like auto insurance to save further costs.
Are there any alternatives? Investing in stringent home security measures to reduce the risk of a burglary and investing in fire safety measures could be another option, but there’s no guarantee that you’ll ever fully prevent these disasters.
What about other types of insurance?
You may find that certain other policies like pet insurance are valuable if you have a pet or travel insurance if you go travelling. If you run a business, there are also many types of insurance that you can benefit from.
Insurance policies you don’t need tend to include things like extended warranties on products or niche insurance policies like earthquake insurance. Few people ever see the benefit of these types of insurance and preventive measures are often more effective.
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