The world is full of unexpected circumstances that we know may happen, but don’t know when they will happen or if they will happen at all. The only thing we can do is protect ourselves for the future, expecting that they will happen at some point and that we will be prepared.
These circumstances include being laid off and losing a job, being in an accident which immobilizes you or prevents you from working, and suffering health issues that end up being more expensive than they should. For these reasons in this article, we will be discussing some of the insurance policies that a working professional should consider.
The Type Of Insurances A Working Professional Should Consider
By definition, insurance is actually no more than just a contract. This contract has the policy to represent it in which a person or a corporation is financially secured in case of any loss. The policyholder must make monthly payments in order to have access to the insurance company’s pool of money in case anything were to happen for which the policyholder could not pay the required amount. A working professional should be protected because on average their salaries are higher than non-professionals. This may also correlate with a more “expensive” lifestyle which could easily be affected if the professional were to stop earning the same income he or she is used to, or something beyond their control were to happen to their assets or health. So then what policies are available for working professionals, and which ones are an absolute must?
Homeowner’s Or Renter’s: There’s no worse thing than to come home and find that there’s damage done to it or that you have lost your possessions. Recently, this has been the case for thousands of families in California due to the recent wildfires. In the twenty to thirty-five age group, sixty per cent rent instead of owning a home. Of those renters, sixty per cent of them doesn’t have renter’s insurance. Renter’s insurance can save you from robberies, natural disasters, and man-made accidents such as self-started fires. A homeowner’s policy, on the other hand, can also pay for you to rent were anything to happen to your home. Depending upon the policy you obtain, there may be a limit of days for which the policy will pay for your food and shelter, and there may be a percentage cap to pay for both the property and other items that were inside of it.
Auto: This is a given not only for working professionals but for people in general. We all need to drive unless you opted for a different option such as taking public transportation or riding a bike to save the environment. Given the probability that you are a working professional, you are more than likely driving a car and have auto insurance. If you don’t, we would simply like to ask, WHAT ARE YOU THINKING? If you were to get caught driving without insurance you may have your license suspended or will need to pay a high traffic fee and will be asked to fix your insurance situation immediately. Auto insurance protects you from any accidents that may happen and can cover both your car repairs, the other person’s car repairs, and any hospital expenses. If you have a loan on your vehicle, the lenders will demand that you get insurance because they will also want to be protected.
Long Term Disability: Because both money, the future, past, and present are best described through numbers and statistics, we will provide another shocking report on disabilities. During their work years, which can be anywhere from five to fifty years, around twenty-five per cent of all young professionals will become disabled or fight some sort of disability that will prevent them from earning an income. Because social security covers some aspects of disability, people often rely solely on this one government benefit, but working professionals should protect themselves with a long-term disability insurance.
Health: There’s a pretty shocking statistic about health and finances which states that around 60% of all bankruptcy cases in the United States happen after an illness for which the patient cannot cover the medical debt. Seventeen per cent of people ages eighteen to twenty-five lack health insurance and of those ages twenty-six to thirty-four, only twenty-two per cent don’t have health insurance. There should be no reason other than a rough financial situation why someone would not have a health insurance policy. This can protect you from putting yourself in total financial danger, and if you make less than forty-six thousand dollars, you may be eligible for subsidies (money was given/granted by the government).
The policies listed above are to be considered “must-haves”, but there are other policies which are available to you and you should avoid for the time being. These include:
- Universal and Whole Life
- Short-Term Disability
So what are the reasons to avoid these types of insurance? First off, you don’t want to be spending thousands of dollars on insurance if they will be of no benefit to you. You should instead focus on saving that money and investing into something that will pay you money until you have enough to diversify. Short-term disability will only cover expenses arising from illness so it is best to have your own emergency fund for this, instead of paying someone else a premium. Universal and whole life insurance policies should only be considered if you have a significant net worth, and/or if you have an estate that would be subject to estate taxes. Currently, only estates worth upwards of five million dollars are subject to these taxes.
In conclusion, in this article we discussed the different types of insurance policies available to young professionals starting their working careers, and for those who are already on their way. Some of these policies will be attractive, but may not be the best choice if you’re barely starting your professional life. You should, however, have car insurance, home or renter’s insurance, health, and long-term disability to protect you should anything happen in any of those four categories.