08 Types of Insurance and the Reasons You Need It in 2022

Types of Insurance

Life will throw you a curve ball – there’s no doubt about that. Whether you have insurance when it’s completely different.

Insurance protects you from the unexpected costs such as the medical expenses. And while most people know that insurance is important, not everyone knows the different types of insurance that exist and how they can help.

Some common types of insurance include:

  • Health insurance
  • Car insurance
  • Life insurance
  • Home insurance

But there are others, too. Here are eight types of insurance, and eight reasons you might need it.

1. Health insurance

Why you need it: Expected and unexpected health care expenses — including routine visits, medications, emergency stays, and dangerous surgeries — can accumulate quickly and cause a lot of debt for those who can not afford the out of pocket costs.

Who needs it: Everyone

What it is: Health insurance is a contract between a health insurance company and a policyholder that requires the health insurance company to pay all or at least part of all medical costs.

2. Car insurance

Why you need it: Driving while uninsured is both illegal and dangerous because the driver and their vehicle are generally not protected against accidents, collisions, theft and vandalism.

Who needs it: Drivers

What it is: Auto insurance covers cars, motorcycles, trucks and other vehicles, and is meant to protect against bodily harm or bodily injury that may result from driving, whether the accident is reckless or an accident.

3. Life insurance

Why you need it: Death can be expensive ⁠— from settling an estate to planning a funeral, the costs involved can really set you back ⁠— but a life insurance policy will ease the financial burden on the surviving spouse and dependents (i.e., children).

Who needs it: With dependents

What it is: In the event of death, a life insurance policy pays the beneficiary an agreed-upon amount of money to cover expenses left by the deceased. The beneficiary is the person or entity named in the policy who receives benefits, such as a spouse.

4. Homeowners Insurance

Why you need it: Preserve your home and keep its property value high, as well as having it covered in the event of major damage, such as a house fire.

Who needs it: Homeowners and landlords

Definition: Homeowners insurance covers the home you live in and any associated structures, such as a porch, garage, and porch.

5. Comprehensive insurance

Why you need it: If you think you may need additional coverage in addition to another type of insurance policy, for example on a home or a car, comprehensive insurance will further help protect you from the risk of being sued for damages.

Who needs it: Anyone already insured

Definition: Liability insurance is the so-called comprehensive insurance, because it covers the costs in excess of other insurance policies.

6. Tenants Insurance

Why you need it: Things happen – This is a mantra that every tenant knows is true, and so they protect themselves and their property while renting. In fact, many owners ask for it.

Who needs it: Tenants

What it is: Renters insurance is used by renters to cover personal property in the event of damage or theft, and it is not the responsibility of the landlord.

7. Travel Insurance

Why you need it: The planning to travel to a new destination? Then be sure to cover the cost of the airfare in case of a medical emergency or other accident that may cause the trip to be interrupted.

Who needs it: Travelers

What it is: Travel insurance covers flight cancellations, lost or misplaced baggage, travel accidents, and even medical expenses during a trip.

8. Pet insurance

Why you need it: Paying in pet insurance may be more cost-effective than paying a lump sum to the vet if your pet needs emergency medical treatment, such as an emergency room visit.

Who needs it: Pet owners

Definition: Pet insurance (often for dogs and cats) covers all or part of veterinary treatment when a pet is injured or sick. There are two types of pet insurance: a health plan that covers routine visits and shots, and a more comprehensive health insurance plan for genetic diseases and major surgeries.

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