Insurance Plans from A to Z

A deeper dive into the most often-overlooked insurance policies that could benefit your financial well-being

Insurance is an often invisible safety net that plays an integral role in establishing financial wellness. We can sometimes be quick to overlook it, but the reality is that the proper policies can be the glue that holds our financial world together.

Life is unpredictable at times, and insurance provides protection against that while delivering peace of mind on the side.

We’re mostly familiar with the major kinds of insurance—health, home, auto, and life, but these policies are just the tip of the iceberg. What lies beneath can quickly wreck financial plans if a disaster slips through the cracks. Let’s dive into to those lesser-known insurance, shall we?

The Foundational Insurances

Before delving into the lesser-known insurances, let's briefly touch upon the foundational policies you should consider:

Health Insurance

Undoubtedly, health insurance is a necessity, and one of the most costly, too. In 2023, Americans spend an average of $560 per month on health insurance premiums, up from $541 in 2022. Health coverage safeguards against exorbitant medical expenses and provides access to quality healthcare when you need it most. Every policy is unique too, and some (like HDHPs) even allow for additional provisions like HSAs.

Whether it's routine check-ups, hospitalizations, or emergency treatments, health insurance ensures that you receive the care you need without incurring substantial financial burdens.

Home Insurance

About 80% of mortgage holders pay home insurance directly through an escrow account, meaning the cost is conveniently packaged into their monthly mortgage payment. While super convenient, that’s also a reason why it’s so easily overlooked. Your home can be one of your most significant investments, so protecting it with comprehensive home insurance is crucial. Home insurance is designed to cover damages to your property caused by fire, theft, natural disasters, and more. Additionally, home insurance often includes liability coverage, which protects you if someone gets injured on your property and files a lawsuit.

Auto Insurance

If you own a vehicle, auto insurance is a legal requirement and a safeguard against accidents, theft, and damage to your vehicle or others involved in an accident. Auto insurance typically includes liability coverage at a minimum, which pays for bodily injury and property damage caused to others in an accident where you're at fault. The average car owner spends around $144 per month on such premiums.

Life Insurance

While you may not need life insurance , this type of insurance is critical for anyone with a family and loved ones that depend on them or their income. It typically provides a lump sum payment to your beneficiaries, offering a safety net during challenging times. Your loved ones can use the payout to cover funeral expenses, pay off debts, maintain your family's standard of living, or even fund future expenses such as your children's education.

Important Secondary Insurances: Property and Renters Insurance

While the foundational insurances are essential, there are secondary policies that can further protect your assets and belongings.

Property Insurance

Beyond your home, you may have valuable possessions that require protection. Property insurance covers items like jewelry, electronics, and artwork against theft, loss, or damage, even when they are outside your home. This type of insurance is especially valuable if you own high-value items that may exceed the limits of coverage provided by your homeowners' policy. Property insurance can also extend to cover personal belongings while you're traveling or if they are stored in a separate location, such as a storage unit.

Renters Insurance

Often overlooked by tenants, renters insurance is an affordable way to safeguard your personal belongings against theft, fire, or other covered perils. It can provide liability coverage in case someone is injured in your rented space. Even if you don't own the property you live in, your personal belongings are still worth protecting. Renters’ insurance can cover the cost of replacing your belongings in case of damage or loss, providing you with peace of mind. Surprisingly though, recent data shows that only 57% of American renters have this form of coverage.

Miscellaneous Insurances — Pet, Travel, etc.

Now, let's explore some unique insurance policies that might not immediately come to mind.

Pet Insurance

Our furry friends are cherished family members and their health and well-being matter. Pet insurance helps cover veterinary bills in case of accidents, illnesses, or routine care. Veterinary expenses can quickly add up, and having pet insurance can alleviate the financial burden, allowing you to focus on providing the necessary care and attention to your animal companions. While it’s less expensive than human insurance, $47 per month on average for a cat, for example, isn’t exactly cheap. Do your due diligence to research different plans and what they cover—you may still end up paying high vet bills and medication costs, even with pet insurance.

Travel Insurance

Whether you're planning a dream vacation or a business trip, travel insurance can be worth considering. It safeguards you against trip cancellations, lost luggage, medical emergencies abroad, and other unforeseen circumstances that can disrupt your travel plans. Travel insurance can also reimburse you for non-refundable expenses if your trip gets canceled or interrupted due to covered reasons, cover emergency medical expenses, medical evacuation, and provide assistance services while you're away from home.

Technology Insurances

Miscellaneous coverages for important and costly items like phones, computers, and other electronics are last on the list, but most certainly not least! Tech isn’t typically covered by any traditional policies, as you need to get this type of insurance from the seller. Make sure the insurance covers what you think it does (e.g., most phone and computer insurance plans don’t cover water damage!) before signing up for the ongoing fee.

Conclusion — Bringing it All Together

Keeping insurance policies buttoned up is just as much a part of financial wellness as anything else. Without these essential protections in place, all of our hard work and progress could be lost in an instant.

health, home, auto, and life insurance are of course the pillars of this protection, but as we reviewed, there are other valuable policies to consider—policies that we often overlook, but perhaps shouldn’t.

Remember, each person's insurance needs may vary, so it's essential to assess your unique circumstances and seek professional counsel.

What’s next? Download the Pocketnest app (if you haven’t already) and pop into your to-do list to stay on top of your financial plan.