You Should Buy Health & Life Insurance Before Investing Money
Health insurance and life insurance has a big role in your financial journey. Before we started to the how to invest money part 5of the investing for beginners series, let us first discuss what is a health insurance and life insurance all about. Let us also find out who really needs health and life insurance.Before you continue, make sure you have already read the part 1 to part 4 of our topic related to investing for beginners.
Part 1: Reasons of Investing
Part 2: Millionaire’s Money Mindset
Part 3: Getting Out of Debt
Part 4: Building Emergency Funds
How to Invest Money in Insurance
I do hope you’re following this easy to follow guide from our part 1 up to this part. Enjoy reading and start educating yourself on how to money the proper way. Going back to the topic, insurance is vital for your financial journey. It is a shield from financial losses or let’s say it is an income protection.
Image Credit: crudmucosa via Flickr CC 2.0Invest Money in Health Insurance
Health insurance is to protect the family against financial losses that might arise from illness or an accident involving any member of the family. There are 6 coverage of health insurance, and these are;
- Hospital expense insurance – a widely used form of health insurance
- Surgical expense insurance – provides payment for surgical costs
- General medical expense insurance – pays part or all of the costs for doctors’ call at the hospital
- Major medical insurance – to cover the major portion of the costs incurred as the result of a serious illness or accident.
- Dental insurance – provides reimbursement for expenses of dental services and supplies and encourages preventive care.
- Loss-of-income insurance – also called as the disability insurance
Citations and Reference: Dr. Eugene D. Wyllie, Dr. Nancy A. Lang, Dr. D. Hayden Green, Dr. Roman F. Warmke, Authors, Consumer Economics (Eight Edition) 1998 South-Western Publishing Company, Cincinnati, Ohio, USA p 348-350
ISBN: 0-538-08590-8
Invest Money Life Insurance
Life insurance is a voluntary financial agreement between an individual (insured), and insurance company. There is a policy which an insured individual can use when claiming benefits or coverage. The insured individual is obliged to pay the premiums (or the annual fee). When buying life insurance, an individual has the right to choose a payment schedule for the premiums, he can choose monthly, quarterly or yearly.
A life insurance is very important to the family especially if the primary wage earner dies. The insurance company will give the corresponding benefits to the family of the insured individual such as cash.
There are different types of life insurance and these are as follows;
- Term Insurance – the least expensive type of life insurance
- Straight Life Insurance – a life insurance policy that provides protection over a long period of years
- Limited-Payment Life Insurance – same as straight life contract except that premiums are paid for a limited time
- Endowment Insurance – the company that issues an endowment policy pays the face amount of the policy to the insured at a stated time.
- Combination Life Insurance – example of this type of insurance is Universal Life, a combination of term insurance and high-interest investment account.
- Annuity Contracts – designed to provide supplemental income (beyond private pension plans) during one’s retirement years.
Citations and Reference: Dr. Eugene D. Wyllie, Dr. Nancy A. Lang, Dr. D. Hayden Green, Dr. Roman F. Warmke, Authors, Consumer Economics (Eight Edition) 1998 South-Western Publishing Company, Cincinnati, Ohio, USA p 336-342
ISBN: 0-538-08590-8
It is advisable to buy insurance policy as soon as possible especially if you are the primary wage earner in the family because whenever you died, your family (beneficiaries) can get cash to use to recover from financial losses. The ideal face amount is the amount of money equivalent of your 3 to 5 years equivalent of your annual income.
Example, if you are earning $50,000 per year, the face amount of your insurance policy could be $150,000 good for 3 years. This simply means, your family has the chance to survive or recover until 3 years from financial losses. That’s why, it is important to buy insurance before investing your hard earned money.
Actually, it is fact that even though you are not investing, insurance has a vital role in our daily lives. We don’t know what will happen to us everyday, at least when we died, our family can have the money to use to survive. If you love your family, get insurance for yourself and for them, too!
In our next topic, since we already talked about the reasons why should you invest, how to have a millionaire’s money mindset to succeed in investing, building your emergency funds and buying health and life insurance, our next topic related to how to invest money series of topics will be knowing your net worth
As I’ve said awhile ago, investing will be more profitable if it’s done correctly. Knowing your net worth is one best way to analyze your financial situation. Knowing your current financial situation is very important before you invest your money. Analyzing your financial situation can help you create your financial goal or draw your own map to financial freedom. If you know where you are now, it will become more easy to know where do you want to go.
Please stay tuned to the series of topics of how to invest money. Spread financial literacy by sharing this post to your friends through any social media sites. If you want to add information on how to invest money in insurance, just leave a comment below. Do not forget, insurance are vital to achieve your financial goal.