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3 Insurances Everyone Should Have

insurances most people should purchase

 

Insurance is one of those funny things that most people hate buying, try to never use, but are gloriously thankful for if the right situation comes along. There are some insurances that I believe we can do without, but I think there are 3 insurances most everyone should have; health, life, and disability.

There are Still Tons of People without Health Insurance

Despite over 11 million new signups for health insurance through Obamacare, there are still plenty of people who don’t have health insurance. The penalty for not having insurance is not enough of a deterrent for many people, and the list of reasons you can forgo the penalty due to a hardship exemption is broad enough to cover just about anyone who doesn’t want to purchase. For those of us who don’t qualify for a subsidy or for those who don’t want one, seeing premiums double or triple every year makes it tempting to go without, especially for the young and healthy.

I had a patient just this week who was upset that her insurance didn’t cover eye care, despite a $700 a month premium. She said she was thinking about droping insurance and saving that money to self insure. It is unlikely that a healthy person would spend $8,400 a year on medical bills. I do see her point, but how much of a gambler do you want to be?

Cliché but it Could Happen to You

This article jumped out at me because it was about eyes, but basically, the lady in the story was a young mom and athlete who entered one of those mud races that are popular at the moment. She literally got mud in her eye that contained a flesh eating bacteria. Vision was eventually lost but not before she racked up $100,000 in medical bills.

I’m also following the journey of a former employee’s husband right now. They quit work a few years ago to travel North America in their SUV. I thought it was pretty cool at the time, even though they lived on a shoe string budget with no plans for insurance or savings. It was cool until he contracted a rare disease called neurosarcoidosis, which has left him disabled and in a wheelchair. Both my friend and the lady who lost an eye are trying to raise money on GoFundMe to pay medical bills and take care of upcoming needs.

There are just too many stories like this for people to go without at least a major medical plan. I hate paying monthly premiums so that I’ll still have to meet a $10,000 deductible if I am sick or injured, but you cannot self insure unless you have millions. Do without something else before you drop health insurance. You don’t want the next chapter of your life dependent on how much money you can raise via GoFundMe.

Disability

One in four twenty year-olds will have some sort of disabling incident before they reach retirement age.  Yes, you can receive disability benefits from the federal government, but it can be an arduous process and sometimes pays very little. It also would not cover someone who can’t do their job but can do other work. I might lose an eye that ends my optometry career, but I could still be a teacher or cashier at the supermarket. Is this what I want to do if I have a career ending injury?

If you don’t want to be forced into another job after a disability or stuck waiting for the government to determine your eligibility, then  please purchase disability insurance that is occupation specific. It’s cheap. I pay only around $200 a year through the American Optometric Association. It’s well worth it for peace of mind.

If you are already financially independent, then disability might not matter, but for those of us who are still on the path, I think it’s a must.

Life Insurance

I know I’m getting old after one of my life insurance policies came to term last month. I purchased a policy to cover the balance owed on my optometry practice and commercial building over a decade ago. If I’d kicked the bucket, Jim would have had to figure out how to keep it running long enough to sell, a tough situation for someone who has never worked in health care.

Since then, we’ve had a child, bought and sold properties, and both added other policies on ourselves. I probably would have been fine to leave this one expired but decided to renew it, making me worth a cool million dead. That sounds like a lot, but we still owe mortgages on our house and rentals. If Jim or I died tomorrow, our life insurance would pay those off and give whoever was left enough money to pay for our daughter’s college education, hire help if needed, or just take a year or two off to figure out the next step. It would suck for my family to be motherless, but it would be a million times worse if they were broke and stuck with bills.

If anyone depends on your income, you need life insurance. Even if you are single, it might not be a bad idea to have some small amount of life insurance if you don’t have savings. I’d hate to stick my family with funeral costs. I guess they could put me in a pine box, but I don’t think they would.

I have all three of these insurances plus several others that help me sleep better at night. I hope I never have to use any of them because needing them means really bad news. Being well insured, my family and I will only need to worry about taking care of our health and well being instead of wondering how bills will get paid if the unthinkable ever does happen.

What insurances do you think are necessities? Are you a gambler in regards to health insurance?

Image: Flickr

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

12 comments

  1. Despite how crazily messed up health insurance is, I still can’t imagine not being without it. Well, if it were just myself then I’d be much more likely to go that route as opposed to doing so with the kiddos. We’ve been putting off disability insurance ourselves. The quotes we’ve received aren’t as cheap, though would still be the right move.

  2. Life insurance is super important especially if you’ve just started a family. I had never really given life insurance much thought until we had kids. The worst thing possible would be to leave my wife and/or kids hanging high and dry is something happened to me. Better safe than sorry.

  3. I can’t stress enough what a bad idea it is to self-insure. You’re young and healthy? Well, so was I at 19. I ended up with a rare neurological disease. The doctors all thought I was too young to even have it.

    Three months later I had maxed out the lifetime benefits on my dad’s plan. (To be fair, I’d been on it for years, but I’d rarely gotten sick.) That’s because I was in the ICU for 2 weeks, a long-term care facility for 2.5 months and then physical rehab for 10 days. One of the doctors at the long-term care facility sent a bill for $70,000. That didn’t include the room, PT/OT, respiratory care, meds, etc. Just the one of 3 doctors I saw.

    As for federal disability… I don’t know if healthy people understand that the average length of an approved case is 2 years. You get back payments, but first you have to survive for 2 years. And even once you get it, you can’t really live on it. My husband currently gets $830 a month. Can *you* live on $830 a month? No? Then get disability insurance!

  4. We are definitely not gamblers with our insurance. It’s crazy to think about how many people are walking around, especially without health insurance. I look at it as an investment. Cost a little bit of money to guarentee I never lose a WHOLE bunch of money. Sorry to hear about your friend!

    • Nothing is guaranteed. People who have health insurance still go bankrupt due to medical bills. Moreover, it could be a crisis of a non-medical nature that bankrupts you. Everything is a gamble.

  5. We joined a health sharing ministry in January of this year. Even though it stressed me out at first, I’m fine with it now. It’s not expensive as traditional health insurance, but helps to accomplish the same thing. The premiums for traditional health insurance in my state are extortion level with 12K-13K deductibles. I refuse to be extorted. If prices come down, I will maybe reconsider.

  6. Yes I agree I have all three. I found term life on my outside of work, the medical is covered by the wife’s plan, and disability is covered by my employer. I may need to get a second term life policy to cover the additional gap coverage, as my old policy now is not enough coverage.

  7. I definitely do not gamble when it comes to health insurance. Our insurance was maxed out in back-to-back-to-back years due to surgeries and it was always for something that you can’t prevent and you can’t avoid. I can’t imagine owing the entire bill.

  8. Some things to add:

    Some people, I’m sure, forego disability insurance because they think Social Security will cover them. Think again. Social Security Disability uses the strictest possible standards to define “disabled”. If you aren’t in a body cast for the rest of your life, you likely don’t qualify.

    Also, when looking for disability insurance, make sure that the company defines a disability as “own occupation” (meaning they pay out if you can’t work in your current field and/or job, even if you are able and do find other work). If a policy defines a disability as “any occupation”, then run away fast. Your policy only pays out if you can’t do ANY job. Social Security uses this definition cranked up to eleven.

    Also, later in life, start considering Long Term Care insurance. Because, no, your health insurance does NOT cover your extended stay in a nursing home or the home care attendant that wipes your butt for you. Neither does Social Security. Medicare does, but only to a degree, with a dizzying array of regulations and restrictions, and is secondary to your primary insurance. Medicaid, if I’m not mistaken, does so for a certain amount of time and only as a loan. That’s right, you gotta pay that back!

    I don’t want to get too political on here, but I don’t think Obamacare addressed the root of the problem. Rather than addressing the COST of health care, the national debate was about getting everyone health insurance. That’s not enough. Your patient has a point in wanting to self-insure. I’m not saying she’s right, but what’s the chances of her having an $8400 medical bill each year? But because she has insurance, the politicians can all pat each other on the back and say they fixed the health care system. When your choices are $8400/year in premiums for a policy that doesn’t cover anything, or the possibility of a six figure medical bill, then the law did NOT do anything to benefit the people. Thank God I have insurance through my employer because I couldn’t possibly afford insurance that expensive. Not in a “I’d have to cut back on this or that” sort of way, but in a “I need to get a second job to afford this” sort of way.

    Sincerely,
    ARB–Angry Retail Banker

    • I second that Obamacare tends to put the feather in the cap about having so many people insured, but if the insured still can’t afford basic care, it’s all for naught.

  9. I totally never considered getting disability insurance. But I would really hate to get disabled and not be able to pay the bills. I guess I’ll have to look into it!

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