In order to make decisions on the type of insurance you need for your unique life situation, you should research what types of insurance are available in today's market. Based on trusted data, you will be able to decide your needs and plan accordingly. You may only need a few, or you might need many. Your decision is intimately linked to your level of risk tolerance. Keep in mind Murphy's Law, the popular adage that states "things will go wrong in any given situation if you give them a chance" or more commonly stated, "whatever can go wrong, will go wrong." In a nutshell, this is why we all need to carry the right type of insurance.

How to

Here are the basic types of insurance that most people choose from to remain protected.

1. Health and medical insurance

Health and medical insurances are usually available through employment (not necessarily always)
Many individuals have to seek private insurance
It is critical that you obtain health and medical insurance for you and your family to match your risk tolerance and your medical needs
- Most employers offer a choice between HMO (health maintenance organization) and TFSC (traditional fee service care)
- The cheaper the plan, the more the constraints are imposed on the consumer
- You need to evaluate and understand each plan that is offered to you prior to making a final decision.

2. Disability, long-term care insurance

A long-term disability policy can replace a portion of your lost income when you are unable to work for an extended period of time
- Be sure that you watch for cancellable versus non-cancellable policies
Long-term care insurance can cover the high cost of medical services for the elderly
You need to do your own research to fully understand the fine print in each policy to make sure you are adequately protected
- Seek the help of a professional to reduce the chances of not selecting the proper coverage for your unique situation

3. Life insurance

Life insurance is critical for individuals with family members to protect upon one's loss of life.
- Surviving children, spouse, or other dependents can use the funds to maintain their standard of living, protect loss of assets, or repay debt
- The amount you would need is dependent on:
  - Your family situation
  - What you aim to protect
If you have a mortgage, young children, or a sizeable debt, you might want to research options in whole life insurance or term-life insurance to keep your family protected

4. Mortgage and other asset/liability insurance

Your home and car are likely to be the most expensive consumer assets that are purchased on credit
Insurance is needed not only to protect the asset, but it is also required by terms of the loan to protect the creditors in case of loss or need for replacement of the asset
- Owners, as well as renters, can also get insurance to cover the contents of the home
- You need to do your research and find enough coverage to protect your assets according to your personal situation including personal, lawsuit, or umbrella liability coverage
- Keep in mind that every state has financial responsibility laws that states you must be able to pay for any liabilities that you may cause an accident

5. Business insurance

If you are self-employed, you would need to cover not only yourself, your family, and your loved ones, but also your business
- There are many options available to you after you decide which risks you need to insure
- Your goal is to feel confident you have proper coverage for protection against unexpected events in life

Practice

Now you know the basic insurance needs and coverage available. After conducting your own research, think of paying it forward and discuss your findings with a friend or a family member.

Congratulations! You can move on to Chapter 2. Insurance key terms and terminology

To review the full module on Insurance planning, click here.