Wednesday, 28 October 2009

Types of Insurance That Even a Frugal Person Should Have

When you have barely just enough money to get by after the major expenses of housing, food and other bills, narrowing down the types of insurance you have can be key to keeping you out of debt. When you’re on a limited budget, you unfortunately don’t have the luxury of purchasing all the types of insurance available so you’ll have to choose the most important ones. So before agents start contacting you as part of their round of insurance leads, know the types of insurance that you absolutely need.

Auto Insurance
If you drive a car, auto insurance is not an option. Since it is mandatory, try to focus on getting the lowest premiums by choosing plans with higher deductibles. Deductibles that are $500 or higher can really decrease your monthly premiums and save you money. Drivers with the cleanest and safest records get the best rates so be careful on the road. Driving recklessly will only cost you more money. Check with state laws and see if you must include collision coverage in your plan, which covers damage to your car. For older cars, collision coverage may not be worth it if you sustain damage to it. If you’re a student, some insurance companies may be willing to give you a discount for good grades so inquire about special discounts such as those.

Health Insurance
You may not think you need health insurance now because you don’t feel sick, and especially if you are young, health insurance may seem like a lot of money every month. But just one unexpected hospital stay or even a single visit to the ER for any reason can cost thousands of dollars. Without insurance, an accident or illness can bring your out-of- pocket medical bills to tens or hundreds of thousands of dollars very quickly. Hospitals and providers may even turn you away. Just like with auto insurance, choose higher deductibles for lower premiums.

Renter’s Insurance
If you own a home, then home insurance is required but if you are a renter, protecting your big ticket valuables is smart, especially since renter’s insurance is relatively inexpensive. Depending on location, and other factors, renter’s insurance can run around $100 to $200 a year for about $20,000 worth or more of your personal belongings. In the event such as a fire, you’ll be glad that your pricey purchases such as your TV, computer, stereo, and clothes will be covered. Know the difference between replacement cost coverage and actual value coverage. Replacement cost coverage is a smarter choice since is would give you the amount of money it would take to repurchase new items, such as a computer, instead of actual value coverage, which would give you a smaller amount for the value of the worth of your items now. Consider using the same insurance company that you use for auto insurance, since they may be able to give a discount for having more than one plan with them.

Life Insurance
Life insurance is important if someone else, such as a spouse, child or other family member depend of you financially. If not, then life insurance isn’t necessary.

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