Life insurance is a contract between you and an insurance company designed to provide financial protection for your beneficiaries in the event of your death. Policies come in various types with different features and costs. How good is your life insurance knowledge?

1. What is the primary purpose of life insurance?

A. Save money for retirement
B. Cover medical expenses
C. Provide financial protection for loved ones
D. Invest in the stock market

2. What is a beneficiary in a life insurance policy?

A. The person who pays the premiums
B. The insurance company
C. The person who receives the death benefit
D. The policyholder’s financial advisor

3. What is a term life insurance policy?

A. A policy that covers you for your entire life
B. A policy that covers you for a specific period
C. A policy that combines life insurance and investments
D. A policy with a guaranteed cash value

4. What is a whole life insurance policy?

A. A policy that covers you for a specific period
B. A policy that covers you for your entire life
C. A policy that only covers accidental death
D. A policy that covers critical illnesses

5. What is a rider in a life insurance policy?

A. An additional coverage option
B. The policyholder’s address
C. The amount of the death benefit
D. The premium payment schedule

6. What is the death benefit in a life insurance policy?

A. The amount paid to the policyholder while alive
B. The amount paid to the beneficiary upon the policyholder’s death
C. The cost of the life insurance policy
D. The policyholder’s age

7. What is a cash-value life insurance policy?

A. A policy that builds up a savings component
B. A policy that only covers accidental death
C. A policy with no cash value
D. A policy that covers a specific period

8. What are the primary factors affecting the cost of life insurance?

A. Age, health, and smoking habits
B. Marital status and number of children
C. Education level and income
D. Homeownership status and location

9. What is the purpose of a life insurance needs analysis?

A. Determining the right amount of coverage
B. Choosing the best insurance company
C. Selecting the appropriate policy type
D. All of the above

10. How might your credit score affect your life insurance?

A. Credit score has no impact on life insurance
B. A poor credit score can lead to higher premiums
C. A good credit score guarantees lower premiums
D. Only certain types of life insurance consider credit scores

Test your life insurance knowledge quiz ANSWERS

1. C–The primary purpose of life insurance is to provide financial protection for loved ones.
2. C–The beneficiary is the person who receives the death benefit.
3. B–A term life insurance policy covers you for a specific period.
4. B–A whole life insurance policy covers you for your entire life.
5. A–A rider is an additional coverage option.
6. B–The death benefit is the amount paid to the beneficiary upon the policyholder’s death.
7. A–A cash-value life insurance policy builds up a savings component.
8. A–Age, health, and smoking habits are well-established factors affecting insurance rates. Other factors may influence rates to a lesser extent.
9. D–A life insurance needs analysis helps determine the right amount of coverage, insurance company, and policy type.
10. B–A poor credit score can lead to higher premiums for some life insurance policies.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

The post Test your life insurance knowledge appeared first on Credit Sesame.

Your home is probably the biggest purchase of your life. The median sales price of a house in the United States was $454,900 in the third quarter of 2022, giving homeowners plenty of reasons to protect what may be their largest investment outside of a retirement fund.

Home insurance is meant to provide financial security resulting from problems big and small at home. It is especially useful if a disaster happens against since you’re unlikely to have enough cash on hand to rebuild your home.

Understanding how home insurance works can make it easier to decide what type of insurance is right for you.

The fundamentals of home insurance

Homeowners insurance pays out if your home is damaged or destroyed in an event covered by the insurance policy. It also typically covers injuries to someone on your property or if you’ve caused property damage elsewhere.

What is home insurance?

Home insurance is a contract between you and an insurance company. You pay an annual premium in exchange for the insurer paying to repair or replace your home if it is damaged or destroyed by a covered peril. 

After making a claim, you usually pay a deductible to cover your share of repairs. The insurer pays the rest, up to your coverage limits.

Why should you have home insurance?

Insurance is meant to cover loss or disaster, and losing your home to a fire or some other catastrophe is practically the definition of disaster. Without homeowners insurance, you would have to pay for repairs yourself. Your mortgage provider and property tax assessor still expect their payments, whether you are insured or not.

Homeowners insurance is not legally required. But if you have a mortgage, then your lender likely requires you to buy insurance to protect its investment. Even without a mortgage, home insurance is a good idea to protect you from liability and other problems.

Home insurance must not be confused with mortgage insurance, which reimburses your lender if you fail to make loan payments or default on the loan. Mortgage insurance is often required when buying a home if your down payment is less than 20% of the home loan.

The different types of home insurance

There are six categories of home insurance coverage those that offer different types of protection. Understanding the differences can help you decide what you need.

The type of home insurance you should buy is largely dependent on the type of home you live in and your preferences for coverage. You may want everything covered, or just the basics. Renters, homeowners with a lot of valuable possessions, and condo and trailer owners may each need and want different kinds of insurance.

1. Dwelling coverage

Dwelling coverage is typically for an amount of money to rebuild your home. It covers the structure of your home, along with the walls, floors, windows and roof. Built-in appliances such as furnaces are covered, as are attached property to your home like a porch, garage or deck.

Covered claims include for damage caused by fire, lightning, wind, freezing, and hail. A flood, earthquake and routine wear and tear are not typically covered. 

2. Other structures coverage

Some standard policies include other structures in their dwelling coverage. If not, then you may want to buy coverage for other structures such as a shed, fence, gazebo or garage that are not attached to the house.

Most policies cover events that are not specifically excluded. Like dwelling coverage, you are likely to be covered in case of a fire or snow damage. The amount most people need is typically 10% of dwelling coverage.

3. Personal belongings coverage

Also called personal property coverage, this coverage is for furniture, clothes, electronic devices, sports equipment and other personal items that are stolen or destroyed by fire, hurricane or other insured event. Most policies insure the items wherever they are, such as if your laptop computer is stolen overseas.

Coverage is typically for 50% to 70% of the amount of dwelling insurance. 

Expensive items like jewelry and furs are covered, but usually up to a set dollar amount.

4. Liability protection coverage

Liability covers against lawsuits for bodily injury or property damage that policyholders, family members or pets cause to other people either unintentionally or through neglect. The cost of defending the policy holder in court and any court awards are covered by the liability portion of a policy, up to the policy limits.

A typical amount of coverage is $100,000 to $500,000.

5. Additional living expenses coverage

Also called loss of use, this part of a homeowners policy helps if your home is uninhabitable after a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses while your home is being rebuilt.

The coverage amount for additional living expenses is usually 20% of dwelling coverage.

6. Medical payments coverage

Typically, medical payments coverage pays if you cause physical injury to someone outside your home. Unlike liability coverage, no lawsuit is involved and you do not have to be at fault for medical coverage to pay out. 

Overall,  the details of coverage may vary so it is important to read the terms of each policy, which may be unique to you.

Matching policies to your needs

The coverage types listed above are offered in several types of insurance policies called “policy forms.” Some policies offer more coverage than others. They may have different names at different insurance companies, but typically the policy forms are known as HO-1 to HO-8.

Most common: HO-3

An HO-3 is the most common policy offered. It is “open peril” for the structure of your home that will pay for repairs caused by any peril that is not specifically excluded. Earthquakes and floods are often excluded.

Personal property, however, is a “named peril.” This means that belongings are only covered if they’re damaged by perils specifically listed in the policy. If the peril is not listed then your belongings are not covered.

HO-3 policies are often required by lenders. Owners of multifamily homes may want this coverage to cover risks of having renters live in their houses.

Limited coverage: HO-1 and HO-2

HO-1 typically covers 10 perils, as opposed to 16 in an HO-3. Coverage is limited and many insurers no longer offer this type of policy form.

HO-2 also provides limited coverage, but it may cover a broader range than HO-1.

Renters: H0-4

This policy is specifically for renters and covers 16 perils and personal liability coverage. Personal belongings are insured, but the building’s structure is not.

Extensive coverage: HO-5

An HO-5 policy offers the broadest coverage. Your home and belongings are covered for all causes except those excluded in the policy. Homes must typically be well maintained and in low-risk areas. These policies are sometimes called “comprehensive form” or “premier” coverage.

Condo and co-op owners: HO-6

An HO-6 policy is designed for owners of condominium and cooperative units. Personal belongings and structural parts of the building that the policyholder owns are covered, such as the interior walls of an owner’s unit. It protects against 16 perils, and provides personal liability coverage and covers additional living expenses.

Mobile homes: HO-7

Owners of mobile or manufactured homes, trailers, sectional homes, RVs and modular homes may want an HO-7 policy. It covers the home’s structure, personal belongings, liability, additional living expenses and medical payments.

Personal belongings are covered under a named perils policy. The specific circumstance causing the damage must be named in the policy, such as fires, theft, smoke and vandalism.

Older homes: HO-8

Older homes under an HO-8 policy are covered for up to 10 perils. Reimbursement for any covered damage is paid on an actual cash value basis instead of the replacement cost. Depreciation costs are usually subtracted. Historic homes and registered landmarks usually have this type of policy.

What is not covered by home insurance?

Damages from flooding and earthquakes typically are not covered by home insurance. You can buy add-ons for such coverage.

Here are some other incidents that are usually excluded from coverage:

• Intentional damage
• Water damage from drain and sewer backups
• Landslides and sinkholes
• Mold, fungus and infestations by birds and vermin
• Wear and tear or neglect
• Nuclear hazard
• War or other government action
• Power failure

Can I get extra protection?

Yes, you can usually buy extra insurance through what are called endorsements if your policy does not cover something or if it does not provide a high amount of coverage that you may need.

Flood and earthquake insurance typically are add-ons, as is extra coverage for water backups and service line protection to water and other utility lines that you’re responsible for leading up to your home.

What are the 16 perils?

Policies such as the popular HO-3 policy offers the broadest coverage against 16 disasters or perils. They are:

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Overflow of water from plumbing, heating, air conditioning, automatic fire sprinkler system, or household appliance.
14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water system, or air conditioning or auto fire-protective system.
15. Freezing of plumbing, heating, air conditioning, fire-protective system, or household appliance.
16. Artificially generated electrical current

Our insight

Home insurance can sound complicated, but it does not have to be. Most homeowners want to cover the full cost of replacing their home if it’s totally destroyed by a disaster such as a fire.

After that you may also want to insure your belongings so they can be replaced, and have liability insurance in case someone is hurt on your property. Coverage for additional living expenses can be handy if you have to live at a hotel while your home is being repaired.

While home insurance is not required by law, your lender (if applicable) will probably require it. Insurance can make it easier to sleep at night knowing you do not have to pay out of your pocket to replace your home if something major happens to it.

Last word

If you’re thinking of buying a home, be sure to shop around for home insurance policies that fit your needs. Your auto insurance company may be able to a discount for having multiple policies, and you may qualify for discounts if your home has storm windows, fire sprinklers and other safety features. 

Home insurance can give you peace of mind and help protect your financial future by protecting what’s likely to be one of the biggest purchases of your life — your home.

The post Different Kinds of Home Insurance appeared first on Credit Sesame.

In most states, it’s legal for insurance companies to check your credit score when you apply for coverage. And 95% of them do. It’s a practice called credit-based insurance scoring, and many insurers believe that a consumer’s insurance credit score predicts how likely they are to file a home or auto insurance claim.

What is an insurance credit score?

Insurers don’t pull the same report that banks or credit card companies see. Instead, they use a special insurance credit score to decide whether to underwrite your policy. This means they decide if they’re willing to insure you and to rate your policy. Rating your policy means determining how much your policy will cost,

While most types of credit scores run between 300 and 850, the commonly used LexisNexis Attract insurance score ranges from 200 to 997. FICO doesn’t list its credit-based insurance score range. FICO^® insurance scores are not available to consumers, but you can request a report with your score from Lexis-Nexis. You may also be able to access a seven-year claims history report for free once every 12 months at LexisNexis.

Do credit scores really predict insurance claims?

Is it fair for insurers to use your credit score when determining your premium or deciding to insure you? According to the Insurance Information Institute, many researchers have studied insurance claims and credit scores and found a clear relationship between lower credit scores and higher numbers of claims.

In addition, the Federal Trade Commission (FTC) has reported to Congress that multiple studies since FICO created the system in the 1990s have confirmed “a strong relationship between credit-based insurance scores and the frequency with which claims were made, as well as between scores and the total dollar amount insurance companies paid on these claims.” In short, studies have repeatedly concluded that insurance credit scores predict how risky a consumer would be to insure. Therefore, most states allow insurance companies to use this information to set rates.

Some critics have expressed concern about the use of credit-based scores in rating home and car insurance policies. The knock on credit scoring is that it creates “proxy discrimination” against people of color — for instance, causing them to pay more for homeowners insurance than their neighbors with the same coverage requirements.

On the other hand, the FTC wrote in its July 2007 report, “Credit-Based Insurance Scores:
Impacts on Consumers of Automobile Insurance,” “Credit-based insurance scores appear to have little effect as a ‘proxy’ for membership in racial and ethnic groups in decisions related to insurance. …Tests also showed that scores predict insurance risk within racial and ethnic minority groups. …This within-group effect of scores is inconsistent with the theory that scores are solely a proxy for race and ethnicity.”

Which states allow credit-based insurance scoring?

The National Association of Insurance Commissioners (NIAC) says that most states don’t allow credit-based insurance scores to be “the sole basis” for insurance rating or underwriting decisions. Some states require insurers to notify you if your credit score has caused an adverse decision.

As of November 2022, California, Hawaii, Maryland, Michigan, and Massachusetts ban or limit the use of credit scores in determining policy rates. As of March 2022, Washington State prohibited insurance companies from using credit scores to set policy rates on auto, homeowners, and renter’s insurance through March of 2025. This was to combat the effect that COVID had on credit ratings throughout the state.

Other states, such as Oregon and Utah, allow insurers to use credit information when underwriting a new customer. However, credit can’t be the only factor in the decision and it can’t be used to cancel your policy once you’re a customer.

Insurance credit score factors

Your “insurance credit score” from FICO incorporates five general areas to predict how well you manage and limit risk. Here are those factors and the weight they get in your credit-based insurance score:  

• Payment history
  • How you make payments on credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.
  • Negative credit events like missed payments, bankruptcies, collections and charge-offs
  • Delinquency level (months past due)
  • Past-due and collection amounts
  • How much time has passed since a negative credit event (they become less important over time)
  • Number of past due accounts
  • Number of accounts paid as agreed
• Amounts owed
  • Total amount owed on all accounts
  • Amounts owed on types of accounts (credit cards, auto loans, etc.)
  • Number of accounts with balances
  • Credit utilization (percentage of revolving credit used)
  • Remaining balances on installment loans (percentage of installment loans still owed)
• Length of credit history
  • Age of oldest account
  • Average age of accounts
  • Age of oldest account, by type of account
  • Time since accounts opened
• New credit/inquiries
  • Number of recently opened accounts, and percentage of accounts that are recently opened
  • Number of recent “hard” credit inquiries (when you apply for credit)
  • Time since recent account opening(s)
  • Time since hard credit inquiries
• Credit mix
  • Activity on various types of accounts (credit cards, retail accounts, installment loans, mortgages, auto loans, etc.)

FICO says that no single piece of credit information or factor alone determines your score.

• A score takes into consideration all the above categories of information, not just one or two.
• Weighting of the factors listed above varies and depends on the overall information in your credit report. This means that a given factor may be more important for you than for someone else with a different credit history.
• As the information in your credit report changes, so does the importance of any factor in determining your score. Therefore, it’s impossible to say exactly how important any single factor is in determining your score.
• The levels of importance shown here are for the general population and vary according to your exact credit profile. And the combination of information varies from person to person and also for any individual over time.

The FICO Insurance Score only considers your credit report. Insurers also review your past claims history, driving record (for auto insurance), property inspection (for homeowners insurance), the type of auto/home, and the value of whatever you are insuring.

Again, the weighting of the factors above is for the general population. It’s a starting point; then weighting is tweaked based on the credit profile. For some profiles — for example, consumers with limited credit history — the weighting of these categories may be a little different.

What’s a good insurance credit score?

Many insurance sites state that a good insurance credit score is 750 or higher. Here is how the LexisNexis tiers shape up, according to the Connecticut Insurance Exchange:

• Excellent: 776-997
• Good (Average): 626-775
• Fair (Below Average): 501-625
• Poor: Under 500

You can increase your insurance credit score by reducing debt and making your payments on time (within 30 days of your due date). You can’t magically lengthen your credit history, and your credit mix is not that important, so those are the most obvious ways of improving.

How much does your credit score affect your insurance premium?

Your credit probably has a much greater effect on what you pay for insurance than you believe. According to consumer advocates at United Policyholders,  your credit history is likely to have more impact on your premium than any other factor. In fact, says the organization, “a consumer with the worst credit score – everything else equal – can pay two, three or four times as much as a consumer with the best credit score.” And a driver with a clean record may pay more than a driver with an accident or violation solely because of credit history.

According to data from Quadrant Information Services, these are the average annual full coverage auto insurance premiums in the United States by credit tier:

• Excellent credit: $1,556
• Good credit: $1,771
• Average credit: $1,907
• Poor credit: $3,002

If your insurance score is less than excellent, improving it could save you hundreds or even thousands every year on your policies. Checking and monitoring your credit score (for free right here at Credit Sesame) is a great way to see where you can improve and begin to pay less for insurance.

You may also be interested in:

• Do Employers Check Your Credit Score?
• What Is the Difference Between Term and Whole Life Insurance?

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post Insurance Credit Score: What is it and how is it used? appeared first on Credit Sesame.

Americans have an important financial choice to make at this time of year. It is open enrollment period for health insurance plans.

What is open enrollment?

Open enrollment is a period in late fall when individuals can sign up or change their health insurance without a qualifying event such as getting married, having a baby or losing other health coverage. During this period, you can change to plans that cover even pre-existing conditions. In 2022, the open enrollment period runs from November 1 through January 15, 2023; although some states and employers have different periods. You can see plans and prices on the government marketplace or some states have their own health exchanges, currently including:

• California
• Colorado
• Connecticut
• Idaho
• Kentucky
• Maine
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New Mexico
• New York
• Pennsylvania
• Rhode Island
• Vermont
• Washington DC
• Washington

What is a health savings account?

According to the Internal Revenue Service, an HSA is a tax-exempt account that can be used for medical expenses.

The tax exemption applies in three ways:

1. Contributions you make to an HSA can be deducted from your taxable income. This is true even if you don’t itemize deductions on your tax returns.
2. Investment earnings on the money in an HSA is tax-exempt.
3. You don’t pay taxes when you take money out of an HSA, as long as you use it for qualified medical expenses.

A health savings account (HSA) may allow you to handle your medical expenses more efficiently. In addition to helping to pay for near-term medical costs, an HSA can also be a tool for building long-term wealth. Because of that hidden superpower, HSAs aren’t just for people who are concerned about high medical expenses. In fact, they may be suited to people who don’t anticipate spending much on health care in the year ahead. An HSA can do double duty by helping you manage upcoming medical expenses and build long-term wealth.

To put money into an HSA, you have to be actively participating in a high-deductible health plan (HDHP). An HDHP is a type of health insurance plan with a higher deductible than most health insurance plans. In December 2022, that deductible is around $1,400 for individuals and $2,800 for family plans. If you do not have an HDHP, open enrollment is the time to sign up for one and take advantage, if desired, of a health savings account.

How to benefit from a health savings account

There are two ways you may benefit from having an HSA:

1. In the near-term with an HDHP.
2. In the long-term as a saving vehicle.

Health savings account and HDHP

High-deductible health insurance means you risk having high out-of-pocket costs if you need health care during the year.

An HSA helps you set some money aside to pay those out-of-pocket expenses. This even includes over-the-counter medication. You can also use money in the HSA towards paying your health insurance premiums.

This approach might be appealing if you don’t typically have a lot of medical expenses from year to year. It’s still important to have health care coverage in case something unexpected happens. An HDHP allows you to get that coverage while paying lower premiums than you would for a health insurance plan with lower deductibles.

HSA wealth building for future medical expenses

An important feature of HSAs is that it is not use-it-or-lost-it. You can typically roll the money in an HSA over from year to year.

If you have a healthy year with little or no out-of-pocket medical expenses, you can keep funds in your HSA for future expenses. You can even invest the funds so they grow within the account.

Currently, annual HSA contributions appear to be limited to $3,650 for an individual and $7,300 for families. However, this can add up over time and give you a nest egg for paying future medical expenses.

According to data from the Bureau of Labor Statistics, health care costs represent just 5.3% of spending for people aged 25 to 34. However, for people aged 65 and over, this jumps to 13.5%. Accumulating money in an HSA can help you meet those rising health care costs.

Advantages of a Health Savings Account

Since you are bound to encounter health care costs at some point, money in an HSA can be more valuable than other retirement savings for three reasons:

1. No tax on the way in or out of the plan. With retirement plans like a 401(k) or IRA, money is taxed either on its way into or out of the plan. With an HSA, contributions are deductible and distributions are tax-exempt as long as they are used for eligible medical expenses.
2. No age restrictions on when you can take money out. With retirement plans, there are restrictions on how soon you can take money out. If you take money out early, you face a 10% penalty on top of any ordinary tax consequences. Money in an HSA can be taken out at any time, providing it is used for eligible medical expenses.
3. Opportunity for additional contributions beyond retirement plan limits. HSA contributions can supplement your retirement savings. There is an annual dollar limit to how much you can contribute to a 401(k) or IRA. Putting money into an HSA can allow you to get additional tax benefits over and above retirement plan contribution limits.

Balancing health savings with other savings

You can have an HSA and other savings accounts and just need to figure out how much to save in each.

Emergency savings

It’s good to have some money set aside in an ordinary deposit account for meeting unexpected expenses. To get this kind of financial cushion, you should build an emergency fund before putting money in an HSA. However, emergency expenses are often used for unexpected medical bills. So you can think of an HSA as part of your emergency savings.

401(k)/retirement savings

HSAs have tax advantages over retirement accounts but are limited to use for medical expenses. So, it may make sense to have both an HSA and a retirement account.

If you participate in an employer-sponsored retirement account that makes matching contributions. You will likely get the most bang for your buck by contributing enough to the retirement plan to get the maximum employer match. After that, you could direct additional savings into an HSA. This helps you prepare for future health care costs and gives you better long-term tax advantages. The contribution limit for HSAs is relatively small, so if you reach the ceiling and can still save more, add that excess to your retirement account.

A Health Savings Account has uses beyond the coming year’s medical expenses. Used in conjunction with a high deductible health plan, it can help you cover both near-term and long-term health care costs.

With open enrollment season for many health plans running out soon, consider adding an HSA and an HDHP to your December shopping list.

You may also be interested in:

• Which States Help Consumers with Medical Debt?
• Medical Debt is Contagious – How Not to Catch It

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post Health Savings Account: What is it and is it Right for You? appeared first on Credit Sesame.

Life insurance is a way of ensuring that the people who depend on you are provided for financially should you die unexpectedly. 

Deciding what type of insurance to get can be challenging. Your choice affects the cost and benefits of your life insurance. The difference between term and whole insurance is primarily how long the policy lasts. However, there are also differences in policies provided.

How Does Life Insurance Work?

Basically, life insurance consists of two components:

• Premium. The amount you pay, typically monthly, for the policy
• Death benefit. The amount the policy pays if you die

When your policy is set up, you choose who receives the death benefit. This person is known as the beneficiary. You can have multiple beneficiaries on a life insurance policy, and in most cases, you can change your beneficiaries later.

The point of a life insurance policy is to protect against the unexpected. As an example, take a healthy 25-year-old who is the primary breadwinner for her family. 

A young healthy person is not expected to die any time soon. However, if the unexpected happens and she dies prematurely, her beneficiary would receive a death benefit worth many times what she paid into the policy.

This way, her loved ones could be covered financially for the unexpected loss of her ability to provide for them. That’s the point of having life insurance. You hope your beneficiaries won’t need it, but you want to make sure it’s there if they do. 

The big question then becomes one of how long you need to provide that protection. This is where the choice between term and whole life insurance comes in.

What Is Term Insurance?

The word “term” refers to a specific amount of time. Term life insurance policies are designed to be in effect only for a set period of time, such as 10 or 20 years. 

If you die during that term and you’ve kept up with your premium payments, the policy pays a death benefit. If the term expires before you die, the policy does not pay a benefit.

The premiums are relatively inexpensive.

What Is Whole Life Insurance?

Whole life insurance is as a permanent life insurance policy. It is the simplest and most common type of permanent life insurance. 

Permanent life insurance policy is not limited to a specific term. It stays in effect for as long as you continue to pay the premiums.

Another characteristic of permanent life insurance is that it may have a savings component. Under the terms of the policy, policyholders may received a dividend periodically.

Other forms of permanent life insurance have a variety of premium structures, savings components and death benefit arrangements. However, the two main characteristics shared by most permanent life insurance policies are

• Remaining in effect for as long as the premiums are paid.
• Having a savings component in addition to a death benefit.

These components of whole life insurance policies add to the cost of the policies. 

Term vs Whole Life Insurance

For younger adults in particular, the most prominent difference between term and whole life insurance is that term insurance is cheaper. However, since term insurance only lasts for a limited amount of time, you are faced with a decision of what to do once the term expires. 

You can try to get a new term insurance policy at that point. However, you are older and may have acquired health problems. Premiums are almost certain to be more expensive, and you may not even qualify for life insurance. 

Because of that, if you want to make sure you’re insured beyond the length of a term life insurance policy, whole life offers a longer-term solution.

A whole life policy may also pay dividends that allow you to build savings all the time. However, there is no guarantee that the value of those savings will exceed what you could earn by getting a cheaper term policy and investing the money yourself. 

The following table summarizes how term and whole life insurance address different needs:

Deciding What Type of Insurance Is Right for You

Both term and whole life insurance have their pros and cons, so the choice depends on your situation. Here are some considerations:

• If money is tight, term insurance might be the only way you could afford a policy that would provide a sufficient benefit.
• If you’re saving money rapidly and plan to retire within 10 to 20 years, term insurance might be the most cost-effective way of filling the gap until you’ve saved sufficient resources for your family to live on.
• If you’re fairly young but have sufficient income to afford whole life insurance, it might be the best option for providing insurance over a long time horizon.
• If you have very young children or long-term dependents, a whole life policy might be the best way of making sure they’re provided for even if it’s many years before you die.

Whichever type of life insurance you decide on, it’s very important to shop around for the best price. It’s a very competitive market with lots of different options, so be sure to compare prices and coverage details carefully before choosing.

You may also be interested in:

• Which States Help Consumers with Medical Debt?
• Rising Inflation and Healthcare: The Harsh Consequences

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post What Is the Difference Between Term and Whole Life Insurance? appeared first on Credit Sesame.

• Many health insurance and auto insurance companies are providing some type of financial relief due to COVID-19.
• Check to see what your insurance companies are offering.
• Reductions may be retroactive to March.

Some insurance companies, specifically health insurance and auto insurance companies, are providing some type of financial relief, such as reducing premiums, due to the COVID-19 pandemic. 

As a result, we recommend you contact your insurance companies to determine what type of relief they may be offering. If it’s not enough, try to work out an individual payment plan with your insurer. It’s important to note that what one insurance company may be offering will not necessarily be standard throughout the country, so reaching out to your lenders directly is key to ensure you’re properly informed.

For example, California Insurance Commissioner ordered all insurance companies to “provide a premium credit, reduction, return of premium, or other appropriate premium adjustment as soon as possible. These reductions or other types of adjustment, ordered by the state, are retroactive to March of 2020.

America’s Health Insurance Plans (AHIP) has listed  what major healthcare providers are doing to alleviate the financial burdens caused by COVID-19, such as waiving co-pays, removing deductibles, eliminating prior authorizations, and more, depending on the provider. See the list here.

Many auto insurance companies are providing discounts, credits, refunds, rebates, and more:

• Allstate
• Farmers
• Hanover Insurance Group
• Liberty Mutual
• MetLife
• Nationwide (Nationwide is also providing financial relief for home and business customers)
• State Farm
• Travelers
• USAA

In the meantime, Credit Sesame is a free valuable resource to help you monitor and protect your credit and explore other credit options during these uncertain times. 

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Disclaimer: You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved. This blog article is for informational purposes only and should not be relied on as financial advice. Although reasonable efforts have been made, we do not guarantee the accuracy of the information presented.

The post Insurance Companies Offering Relief appeared first on Credit Sesame.

Or at least you would be, but you got sick right before your vacation, so you’re just in your apartment. Oh, and you’re out a few hundred bucks because your flight was non-refundable.

It’s one of our biggest vacation fears – something goes wrong either before or during a trip, ruining the whole experience and costing a lot of money – and there’s nothing we can do about.

Or is there?

Travel insurance is less common than health insurance or life insurance, but when it comes to saving your vacation and your budget, it can be invaluable.

What travel insurance gets you

Travel insurance protects you from financial loss if something happens during your travels.

Miss a flight? Lose your luggage? Misplace your passport? A good travel insurance policy can help you recoup your costs, whether it’s refunding the price of a ticket or setting you up with somewhere to stay if you have to spend an extra night somewhere because of a missed flight. Things covered in a standard travel insurance policy include:

• Non-refundable trip costs (like a plane ticket)
• Policyholders (or companions) too sick or injured or injured to travel
• Medical evacuation
• Lost baggage
• Canceled or delayed travel
• Lost passport

Not every mishap is covered, but every travel insurance policy outlines what is and isn’t included. Get sick and have to cancel your trip? You’re probably safe. Oversleep and miss your flight? You may be on your own.

The cost of your policy depends on what’s included and, crucially, your total trip cost. A typical travel insurance policy will cost between 4% and 8% of your trip total. All in all, it’s a relatively affordable way to protect a trip, especially a high-cost one that you’ve been saving up for for a while.

Consider this: A $2,000 vacation would cost $80 to $160 to insure. If that amount helps you sleep better knowing you have recourse if something goes wrong on your trip, you may want to work the additional cost into your budget.

Another, more specific, form of insurance you might consider is travel health insurance. Most travel insurance policies include medical treatment and evacuation coverage, so if you need to get airlifted from your Amazonian excursion to a hospital, you won’t have to foot the bill even if your health insurance doesn’t cover it. Travel health insurance spins off that aspect of trip coverage. That means you don’t get comprehensive travel protection, but you gain health related coverage for a fraction of the price.

A number of major insurers and financial institutions, from USAA to AIG, offer travel insurance products. Groups like AAA and travel companies like Hotwire also partner with insurers to sell their own brand of travel insurance. Before you buy, find out what’s covered, the cost, and whether or not there are distinctions between domestic and international travel.

Travel insurance alternatives

You want some level of protection on your vacation, but you’re not interested in taking on the added cost of travel insurance. After all, that’s money you could be spending on mojitos on the beach. Luckily, you may get coverage in other ways (although the coverage is more limited than what you’ll get with a full travel insurance policy).

Take your renters insurance, for instance. It protects the things in your apartment. But did you know it also protects your things when they’re not in your apartment? That means if something gets stolen or damaged while you’re globetrotting, your renters policy may still help you repair or replace it.

Don’t forget about your auto insurance policy. Worried about an accident or vehicle breakdown? Most personal car insurance policies have some sort of rental car coverage in place, so that may be all you need. If your policy has limitations, rental car insurance is a low-cost alternative.

As always, check your policy to see what is and isn’t covered, and call your insurer if you’re unsure. Don’t assume your policy protects you in a certain scenario only to find out later that it doesn’t.

Finally, don’t be afraid to look outside of insurance to see what coverage you already have. Some credit cards offer trip cancellation, trip delay or baggage delay insurance for flights, hotels or even some other travel expenses charged to the card. They also offer extra protection for car rentals, too. These policies vary across cards and issuers, and exclusions typically apply. However, a few travel credit cards provide pretty robust coverage. Beyond that, services like Freebird allow you to rebook a flight for as little as $19.

Overall, whether or not you opt for travel insurance depends on two things: Your budget, and how well you worry about the unknown. If you’d rather be safe than sorry, and you can swing the extra cost of a travel insurance policy, it can be a comprehensive way to protect against most things that can go wrong on a vacation. Even if you don’t purchase a travel insurance policy, see what policies you might already have that can help you. You may be protected without even realizing it.

The post Travel Insurance this Summer: A Do or Don’t? appeared first on Credit Sesame.

Your credit score has a way of sneaking into other areas of life where you might not expect it to matter, and since the mid-1990s, your car insurance premium is one of them.

Credit Score and Car Insurance

Auto insurance companies see a statistical correlation between creditworthiness and the frequency of auto insurance claims. Most providers use a special type of credit score to set your rates. Although not every state allows the use of credit scores in this way (Massachusetts, Hawaii, and California), most states do.

Here’s what you should know about how your credit can affect the cost of driving your car every year.

Credit-Based Insurance Scores vs. Credit Scores

Insurance companies receive a credit score that is formulated specifically for the industry. It’s called a credit-based insurance score and it predicts how much of a risk you present as a policyholder. This could hinder or help you, depending on whether your score leads to higher or lower premiums.

The credit-based insurance score is drawn from elements of your credit history, but according to the National Association of Insurance Commissioners, not everything in your credit report goes into the credit-based insurance score.

FICO® and VantageScore® credit scores are designed to predict how likely you are to fulfill your credit obligations.

Insurance isn’t the only industry that gets a special score for you. You also have an auto loan score, a credit card score (called a bankcard score) and a mortgage score, too.

How Credit Behavior Reflects Insurance Risk

“There are two primary reasons why credit would affect somebody’s premium.” Katherine Moura from CoverHound explained. “The obvious reason is that credit score is [one] indication of whether a customer will pay their premium. The less obvious reason is that insurance companies have found a correlation between credit score and the chances of accidents.”

Although some insurers do not include credit score in their auto policy rating system, years of data show a strong correlation between credit behavior and the likelihood of filing a claim.

Each insurance policy applicant poses a risk to the insurance company. The risk is that the consumer may encounter a claim-worthy incident and file a claim; thus, the insurance company pays out more. Of course, this is exactly the reason we want insurance. It is, nonetheless, in the insurer’s best financial interests to minimize the risk of claims filed.

Separate independent studies and even a Federal Trade Commission report point to how the fact that, much like age, credit-based insurance scores are effective risk predictors for auto policies.

The use of credit-based insurance scores is controversial, which is why some states ban this rating method. Even so, it is legal in most of the country. A consumer’s best financial interests are served, then, by maintaining a good score.

Top 10 Reasons Your Auto Insurance Premiums Are So Darn High

Driving Record and Other Contributing Factors

Of the many factors that go into your auto policy rate, credit-based insurance scores may not carry the most weight.

“Whether or not somebody currently has insurance is the single-most influential factor. Driving history, the age of the driver and the vehicle to be insured are also more influential” than credit-based insurance scores, says Moura.

Improve Your Credit to Pay Less for Insurance

Insurers are not likely to reveal their algorithms for determining insurability and premium levels. Some providers rely heavily on credit-based insurance scores while others focus more on driving record, past claim history or other factors. Because of the proprietary nature of the business, it’s hard to say how much your insurance rates could improve if you increase your credit score. Moura indicated that the difference between a high score and low score could affect rates by as much as 25%.

With all other items like driving record, driver age, and vehicle held constant, Moura said that someone with an excellent credit score is more likely to receive the lowest insurance rate available. In general, as scores decrease, rates go up.

Your Insurance Payments Don’t Affect Your Credit Score

Ironically, although insurers use your credit to determine the premium you pay, they do not report on-time, late or lapsed payments to the credit bureaus. A late or missed premium will result in a canceled policy, not a collections account.

Also, when the insurer pulls credit, the inquiry doesn’t hurt you. Insurance inquiries are considered a “soft hit,” similar to when you check your own credit score.

Comparison Shop for Insurance But Take Care of Your Credit Score

Moura reminds us of the importance to comparison shop. Insurers have different pricing philosophies and use different algorithms to determine your premium. If you’ve got a low credit score but excellent driving history, for example, you may see a range of prices when you request quotes.

Your credit-based insurance score is based on your credit history and the same factors that affect your other credit scores. Payment history, debt utilization, account age, inquiries and account mix all contribute to your score. Here are a few tips on how to improve your credit score.

The post How Your Credit Score Affects the Cost of Your Car Insurance appeared first on Credit Sesame.

What do I mean? Well, you might know that right now is Open Enrollment for Obamacare. It’s the only time, barring Special Enrollment Periods, that you can buy health insurance coverage for 2017. Open Enrollment runs through January 31, 2017, but if you want coverage to start on January 1, you have to apply by December 15.

Is there a better way to ring in the new year than with health insurance coverage? Imagine if something goes haywire on New Year’s Eve – like your town’s local ball drop gets out of control and you have to run, Indiana Jones-style, from a giant out-of-control acorn. Don’t you want the peace of mind that you can afford any hospital bills that arise?

For 2017, the penalty for not buying health insurance – the individual mandate – is $695 ($347.50 for minors) or 2.5% of your annual income, whichever is higher. You might as well buy health insurance, right? You’re going to be paying nearly $700 anyway (plus the full cost of hospital bills which, to say the least, can add up).

The clock is ticking, but you’re not out of time just yet. Here’s what you need to know about the December 15 health insurance deadline.

Buying health insurance is faster than ordering dinner

Here’s a fun game to play: the next time you order something on Seamless, have your friend start shopping for health insurance! Your friend can probably have a plan picked out before your food arrives, because shopping for health insurance is a lot easier than people make it out to be. In fact, you can pretty reasonably settle on a plan in three steps.

1. Figure out your healthcare budget

Financial experts recommend preparing to spend about 5% of your gross annual income on health insurance premiums – the amount you pay each month to have insurance – but your individual needs might vary.

If you have a history of going to the doctor often, have certain (potentially expensive) medications you need covered, or you’re planning a pregnancy or a surgery, you might choose to spring for a plan with a higher premium, because it probably has a lower deductible and your insurer will cover the costs more quickly.

On the other hand, if you don’t expect to go to the doctor frequently, you might opt for a plan with higher deductibles to lower those monthly premiums. It’s a balancing act, and you need to know what your budget can handle.

2. Figure out your must-haves and nice-to-haves

Is there an expensive medication you absolutely need, so your insurer absolutely needs to cover it? Maybe make that a deal breaker. If it’s not a huge deal for you to leave your doctor of 10 years to find one who is in your network, then you know you don’t have to plan around that restriction.

If you have some wiggle room in your budget to allow for a higher premium, you might be willing to make exceptions for plans that are slightly more expensive. The idea is to have a plan in mind of where you’d be open to making concessions. That way, you don’t start shopping with a deer-in-the-headlights look and end up drawing a hard line where you can’t pick any plans, or you’re too flexible and end up with a plan that doesn’t meet any of your needs.

3. Compare plans

I know, this sounds obvious. Silly, even. But some people are so eager to get their health insurance shopping out of the way that they choose the first one that looks reasonable. This is a plan that has to last you the whole year, and being hasty could result in your budget being blown. So instead of rushing to the finish line, take all of those things we just talked about – the cost, the preferences, everything – and actually compare plans. Which have premiums that fall within your budget? Which ones cover the most of your needs?

If you have an apples-to-apples comparison of your plan options, you can pick which one is actually right for you, instead of the one that you think is right for you.

The last thing you want is health insurance buyer’s remorse.

So you’re saying you missed the deadline…

We all run a little late sometimes. We’ve all slept through an alarm or missed the bus or forgot about a health insurance enrollment deadline. It happens. But like your parents always told you, actions have consequences. So what do you do if December 16 rolls around and you wake up in a cold sweat, realizing you forgot to apply?

Well, what you do is apply for health insurance on December 16 for February 1 coverage. It’s not ideal, but remember that December 15 is just to get coverage starting January 1. You can still apply to get 2017 coverage by January 31; you’ll just have to wait for coverage to start until March, which could result in a lapse in coverage.

But actually, try to avoid any and all accidents while you’re uninsured. Medical bills add up – quickly. When we spoke to Miranda Marquit of Planting Money Seeds about health insurance, she told us a story of the time she broke her wrist. If she hadn’t had health insurance, her bill would have cost her $40,000.

Besides the potentially-crippling medical debt, not having health insurance will also cost you in other ways. Health insurance is mandatory under Obamacare, and thanks to the individual mandate, you need to pay a penalty for not having health insurance. If that sounds like paying something to get nothing in return, that’s exactly what it is.

But let’s say you miss the December 15 and January 31 deadline. You still might not be out of luck. Obamacare offers Special Enrollment Periods that allow you to enroll in a health insurance plan throughout the year under specific circumstances, like turning 26 (and getting kicked off your parents’ health insurance), moving to a new ZIP code, or having a baby. You won’t always qualify for one of these events, but as a last-ditch effort, they’re worth looking into.

This might be your last chance to ever buy ACA-supported health insurance

President-Elect Trump will probably scrap Obamacare. We know this because he’s said it, Republican Speaker of the House Paul Ryan has said it, and recently-appointed head of the Department of Health and Human Services Tom Price has said it. So there’s a pretty good chance Obamacare doesn’t make it out of this term fully intact.

Which, of course, brings up the issue of how it affects you.

There are two important caveats here. First, nothing is actually going to happen to your health insurance plan in 2017. Everything is in place for the upcoming year, and barring potential changes to Medicare and Medicaid, health insurance won’t be touched until at least 2018. Second, whether or not Obamacare is totally dismantled or just tweaked remains to be seen.

But changes are almost certainly coming. Maybe it’ll be the type of purchasing assistance you get from the government, or the types of consumer protections insurers are required to offer, or the premium cost. Who knows.

But we do know what happens now. Now, you can’t be denied insurance for pre-existing conditions. Now, there are 10 essential benefits that every plan supports. Get your health insurance for the upcoming year and you can handle any checkups, surgeries, and procedures before things become too unknown.

Plus, it means you’ll actually understand your health insurance options, which, as we’ve learned, really gives you a leg up on a lot of people.

Study up

Did you read through this article and think, “Hey, this is great! Also, I don’t know what premium or deductible or Obamacare mean…”? Well, good news (sort of) – you’re not alone.

PolicyGenius performed a national survey to find out just how much people knew, or didn’t know, about health insurance. We asked people to define four common health insurance terms – co-pay, coinsurance, deductible, and out-of-pocket maximum.

Only 4% of people could define all four terms.

To be honest, the reason why buying health insurance takes so long for most people is because they simply aren’t well-informed. When you know you have to figure out how your copay affects your health insurance, but you don’t know what a copay is, it’s easy to hit a roadblock. You feel unsure or confused or defeated. But when you can sit down, look at plans, and confidently say “Okay, my deductible is X, my co-insurance is Y, and that means I’ll be paying Z for healthcare,” it makes the whole thing go a lot smoother – and quicker.

Plus, you can brag that you know what coinsurance means, and who doesn’t want to do that?

You have a lot of choices to make over the next few weeks: what to do when that last minute present isn’t Amazon Prime-eligible, how you can avoid your family as much as possible, what plans you’re going to make for New Year’s Eve. Health insurance doesn’t have to be one of them. With a little bit of education and a little bit of planning, you can knock out your health insurance shopping in an afternoon.

Not too bad for an entire year’s worth of protection.

PolicyGenius is rethinking insurance from the consumer’s perspective – because it’s about time somebody did. Our digital insurance advisor and online quote engines for life insurance, health insurance, pet insurance, renters insurance and long-term disability insurance will help you to get the coverage you need.

The post 3 Key Ways to Ring in the New Year With Health Insurance appeared first on Credit Sesame.

Insurance can also be confusing. What types of insurance should you get? How much coverage? How do you choose from all the options? Furthermore, who can you turn to for help? Insurance agents can seem just about as trustworthy as used car salesmen.

Let me tell you a secret: choosing insurance for yourself isn’t rocket science. You’ll need to do some research on your own to find out what works best for you, but it’s not an impossible feat.

Here is a brief overview of the top 10 types of insurance products Millennials should consider.

1. Health Insurance

Unless you live under a rock, you know that you need health insurance. I’m not going to lecture you on all the reasons why. You do need health insurance, more than any other type. Your health is your greatest asset.

Still, 16% of Millennials have no plan to purchase health insurance in 2017. The most common reason given is that the premiums are unaffordable. The penalty now imposed on all taxpayers who fail to sign up is cheaper than the cost of coverage. Here are a few things you can do to lower the cost.

• Check with your state’s health insurance exchange. Many states offer generous subsidies that can help lower your cost drastically.
• Know what type of plan you need—some are cheaper than others.
• If you’re under 26, you are still eligible to be covered under your parents’ plan—even if you’re not living with them, are married, or aren’t claimed by your parents as a dependent.

2. Vision/Dental Insurance

Children must be covered by vision and dental insurance as a part of the Affordable Care Act. This is not the case for adults. You can buy standalone vision and dental plans through the ACA marketplace if your health insurance doesn’t cover it.

You can use the same cost-cutting measures listed above to lower your cost, but be warned: vision and dental plans are allowed to boot adult children off their parents’ policies.

3. Auto Insurance

If you have a car, you are legally required to maintain an active auto insurance policy. Each state dictates the minimum amount coverage you must purchase.

Some states require only liability insurance for any bodily injury or property damage you may cause, while other states also require you to be insured in case you are in an accident caused by an uninsured or underinsured motorist or you need medical treatment yourself.

If you’re unsure of whether you need insurance above the minimum requirements, check to see what expenses each type of policy covers and consider whether you would be able to pay these costs out-of-pocket on your own.

4. Life Insurance

Life insurance is not just a product for the wealthy. Depending on your situation, you might need it as well. Just ask yourself one question—if you were to pass away, who would be affected financially?

If you have a stay-at-home spouse, any children or debt that may be transferred to a cosigner in the event of your death, you need life insurance. If anyone depends on your income, even in part, you should be covered in an amount that will help those people get through the first year after your death. You should also consider the amount of savings available to your family members for funeral expenses, which can easily reach five figures.

Do some basic research into the types of coverage that are available and how much they cost. One bonus – the younger you are, the less it costs (generally speaking). Reputable providers, like our partner Haven Life, can explain your options and make the research process as painless as possible.

5. Disability Insurance

Disability insurance may be even more important for Millennials than life insurance. A quarter of Millennials today will become disabled at some point before they retire. If this happens to you, not only will you be unable to work, but your medical and care costs will likely rise at the same time.

Disability insurance can protect you and your family from going broke if you become disabled. These plans are typically offered in two flavors: short-term or long-term. You may not need short-term disability insurance if you have a 3-6 month emergency fund already. Also, short-term disability is commonly offered as a standard benefit by many employers, or by the state where you live. You might even be eligible for short-term disability payments if you become disabled while collecting unemployment benefits. Maternity leave is considered short-term disability by many programs.

6. Renters/Homeowners Insurance

If you have a mortgage, you already have homeowners insurance (it’s required).

If you rent, you need to purchase renters insurance.

If your rental home burns in a fire, is robbed or vandalized, or is damaged by a weather event, replacing your possessions will likely be an expensive undertaking.

Renters insurance policies are cheap—I pay $250 per year.

It’s a small price to pay in case I experience a loss.

7. Umbrella Insurance

Umbrella insurance is so named because it acts as an umbrella to cover claims above and beyond your existing policy limitations. When things go wrong, they often do so in a big way, and your other insurance policies might not cover the full amount. Umbrella coverage is only available as a rider on an existing policy.

Umbrella insurance acts as a barrier between expenses you must pay for and your own money. It is especially important if you engage in risky activities or work with the public, especially in our litigious society.

Not everyone thinks of themselves as “high-risk,” but ask yourself how a person might get hurt at your home. Do you have a pool, large dog, snowy stairs, or power tools? Could a customer trip and fall at your business location?

8. Travel Insurance

Travel insurance is often offered as an optional add-on when you book a trip online, but know that you’ve got options for coverage. Third-party travel insurance might offer you just the coverage you need at a cheaper price. You can even get some travel insurance coverage automatically through some credit cards if you use your credit card card to pay for the trip, be sure to read over the terms of this benefit for your particular card.

You can buy à la carte coverage for things like lost baggage, trip cancellations, trip delays, emergency medical services, or even emergency evacuations. You can also purchase comprehensive travel insurance which bundles these together.

You don’t need to buy travel insurance for all the trips you take, but it is a good idea in some cases. Spending a lot of money on a far-away trip, packing uber-expensive items in your bags, or having a health insurance policy that doesn’t cover you outside your area all good reasons to consider buying travel insurance.

9. Liability Insurance for Freelancers

With Millennial freelancing on the rise, it’s important to consider liability insurance. Liability insurance for freelancers comes in two flavors: professional liability and general liability. Which type of insurance you should choose depends on what you do in your business.

Professional liability insurance (also known as “errors and omissions insurance”) covers you if someone sues you based on something you create, whether it’s a play, blog post, graphic, advertising campaign or other content. This type of coverage is appropriate for people who provide professional services, like writers and graphic artists.

General liability insurance covers you if someone is injured on or by your property. This type of coverage is appropriate for people who work directly with the public or in dangerous trades, such as dog trainers, landscapers, shopkeepers, electricians and furniture makers.

10. Tuition Insurance

As the cost of higher education continues to rise, and in light of the very real possibility of leaving school before your degree is complete, tuition insurance is an important consideration. This type of policy will refund you in full or part for the tuition you paid if you have to drop out due to medical or family reasons (i.e., not just because you changed your mind or are performing poorly).

It’s best to consult your school’s tuition policy to find out whether they already have a refund policy in place.

If you have major health issues or you like to participate in high-risk activities like snowboarding or BASE jumping, tuition insurance might be a wise investment.

The bottom line

Consider realistic worst-case scenarios that fit your personal situation before you dismiss out of hand the idea of purchasing insurance. When you do consider coverage, contact several providers to discuss what and how much coverage you need before making your final decision. By working proactively now, you can ensure that you and your loved ones will be able to weather the storms to come with minimal financial stress.

The post Are You Protected? 10 Types Of Insurance Every Millennial Needs to Know About appeared first on Credit Sesame.