|

Insurance Basics

In This Article:

Page 1

You don't often hear somebody say that they want insurance. “Boy, I wish I could double up on my homeowner's insurance,” is a phrase that certainly would cause you to look twice at the person speaking. Insurance, unfortunately, is something we buy because we need it—not because we want it.

Money Morsel

An insurance deductible is an amount you'll be required to pay in the event that you file a claim. Your insurance company will pay the remaining expenses, after your deductible. The higher the deductible you have, the lower your premium should be.

We need insurance to protect ourselves from the environment, from others, and from ourselves. Insurance is a way to reduce risk by sharing financial losses within a group of people. There are many types of risks, both financial and nonfinancial. These risks include the following:

  • Disability or death
  • Property loss
  • Personal liability
  • Risk from failure of others, such as a breach of contract
  • Speculative risks, such as the stock market

When considering these risks, you must decide if the protection you receive is worth the cost of the insurance you buy.

Many types of insurance are required. If you have a mortgage, your lender requires you to have homeowner's insurance. Most states require auto insurance.

In addition to these required insurances, you must decide what type of coverage you need for your family, and what you're able to spend on them. Riders, options, and basic insurance all come at a cost so you need to review the price and the coverage as part of your total financial picture.

You may need to provide your own insurance for some risks by putting aside funds on your own. You might want to set aside money for dental bills or a nursing home stay, for instance.

Let's look at some of the kinds of insurance that are important to you and your family.



Next: Page 2 >>

More on: Family Finances

|

Excerpted from The Complete Idiot's Guide to Personal Finance in Your 40s and 50s © 2002 by Sarah Young Fisher and Susan Shelly. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

To order this book visit the Idiot's Guide web site or call 1-800-253-6476.


highlights

Bug Off! 6 Tick- and Mosquito-Borne Diseases
Which bug bites are dangerous? Learn about 6 diseases spread by ticks and mosquitoes, the signs and symptoms, and treatment options if someone in your family gets infected.

Find Today's Newest & Best Children's Books!
Looking for newly released books for your child? Try our new Book Finder tool to search for new books by age, type, and theme, brought to you by Galactic Hot Dogs.

Top 10 Backyard Party Games for All Ages
Looking for some fun outdoor games for your Fourth of July party or barbecue? Check out these awesome group games, from sack races to cornhole, to make your backyard a kid-friendly party spot!

Registered for Kindergarten — Now What?
Try our award-winning Kindergarten Readiness app! This easy-to-use checklist comes with games and activities to help your child build essential skills for kindergarten. Download the Kindergarten Readiness app today!

stay connected

Sign up for our free email newsletters and receive the latest advice and information on all things parenting.

Enter your email address to sign up or manage your account.

Facebook icon Facebook icon Follow Us on Pinterest

editor’s picks