3 Types Of Insurance And Why You Really Do Need Them

No matter how well we plan, no matter how thoughtfully we pack the car and picnic basket or how carefully we drive to the beach, sometimes you step out and feel that first drop of rain. You can’t always count on life being perfect.  That’s why, whether you’re looking at personal or general insurance, you have to Protect Yourself.

Making sure you have proper insurance protecting your family and assets as a safety net keeps you on the path to Financial Freedom—especially when emergencies occur. With that in mind, there are two types of insurance you should consider: General and Personal.

What is General Insurance?

General insurance is for the people and property in your life. Your home, car and possessions fall under general insurance, but also travel, health and business concerns. And don’t forget long-term care insurance. Inevitably, everyone will need at least one or more of these insurances. So make sure to review and update your policies annually to reflect any changes in your life.

But it’s not always just replacing our possessions or protecting our health and well-being. Sometimes we find ourselves in a situation where our earning ability is put in jeopardy. And that can be the most devastating type of asset loss. That’s where Personal Insurance comes in.

What is Personal Insurance?

There are two types of personal insurance: Income Protection and Cash Lump Sum.

Income protection insurance is there for when accident or illness threatens your earning ability. Often up to 75% of your income is paid tax-free and on a regular basis. Most countries around the world have a similar type of insurance available. Just be sure to update this policy if you change jobs. Because if you don’t keep your earnings information current, your policy can be invalidated.

Cash lump sum insurance includes life insurance, total and permanent disability coverage and trauma coverage. These types of insurance offer a lump sum payout should you experience a traumatic event.

Insurance is a frequently overlooked or even consciously avoided area of the financial safety net. Yes, planning for the worst or spending money on an expense you hope you’ll never have to use is uncomfortable. But putting a contingency plan in place to protect the hard work you’ve put into building your financial future is just smart.

image credit: Bigstock/viczast

Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.

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