Insurance Basics: What You Need and Why

Insurance protects you from financial shocks. This article summarizes the most common coverages and how to evaluate them.

Key insurance types

• Health insurance: covers medical costs; understand premiums, deductibles, and networks.
• Auto insurance: required in most places; compare liability, collision, and comprehensive options.
• Homeowners/renters insurance: protects property and liability; renters policies are cheap and often worthwhile.
• Life insurance: helps dependents after your death; term life is usually the most cost-effective for most people.

How to choose coverage

1. Calculate risk exposure: what would cost you if something happened? (medical bills, rebuilding home, lost income)
2. Compare policy limits, deductibles, and exclusions.
3. Check insurer financial strength and customer service reviews.

Cost-saving tips

• Raise deductibles where affordable
• Bundle policies (home + auto)
• Shop annually and ask about discounts
• Improve home safety (alarms, fire prevention) to lower premiums

Insurance is about balancing risk and cost. Buy enough to avoid catastrophic losses, but don’t over-insure predictable small expenses.