Personal insurance can help keep you and your loves ones financially secure if something happens to you. But what policy is best for you will depend on your income, dependents and needs.
Types of personal insurance
Personal insurance can provide protection and peace of mind for you and your family. You can buy multiple policies separately or save money by bundling a policy with one insurer. Which types of insurance you need depends on your income, dependents and lifestyle.
Life insurance
The most basic type of life insurance pays a lump sum benefit to your beneficiaries when you die. That money can be used to:
Pay for funeral costs.
Pay off your mortgage and any other debts.
Cover the loss of your income and help with day-to-day expenses.
Pay for your children’s education.
Cover any other extra expenses your family might have
Key man insurance
Key man insurance is a life insurance policy taken out by a business on one of its employees. If something happens to the employee, the death benefit it paid out to the company to help cover the costs of losing the employee. For example, if a CEO dies, the benefit can help cover the cost of the drop in stock, as well as the time it takes to find a replacement.
Small businesses will sometimes take out a policy on the owner or manager so that the business can survive if it needs time to close down and reorganize if they die.
Disability insurance
Disability insurance, also known as income protection insurance, pays a percentage of your income if you’re temporarily or permanently disabled and can’t work.
Disability insurance can:
Help you pay for nursing care and physical therapy not covered by your health insurance.
Cover some or all of the cost of renovating your home to fit your current needs and lifestyle.
Pay for day-to-day expenses if you’re unable to work.
Critical illness insurance
Critical illness insurance pays you a lump sum benefit if you’re diagnosed with a critical illness such as heart disease, cancer or stroke. Insurers may have different guidelines for which medical conditions qualify, so check the fine print before purchasing a policy.
Critical illness insurance can:
Pay for copays, deductibles and medical expenses not covered by health insurance.
Pay for physical therapy and in-home nursing care.
Cover bills and other expenses while you’re unable to work.
Bottom line
The right life insurance policy can protect you and your loved ones if something happens to you. If you’re leaving a spouse or children behind, a death benefit can help cover any expenses when they don’t have you to rely on. And if you’re still working, consider adding on coverage that protects you if you’re sick or disabled. Compare life insurers to get the policy that fits your needs and budget.