nce is not required. During an accident, it would be your responsibility to recover damages from the other driver. By requiring auto insurance, the risks associated with an accident are lowered – as all drivers should be covered.
Following the Affordable Care Act (ACA or Obama Care), health insurance is now federally required as well. This topic has become a major political issue, and will likely change to some degree under the Trump administration. With that said, in 2017 health insurance is still required under federal law and the penalties can be stiff for not complying. Click here to read our in-depth discussion of health insurance.
Life, Disability and Annuities
Life insurance covers the risks associated with an early death. It is most commonly used by families who have one primary bread-winner within a household. If this bread-winner were to pass away unexpectedly, the family could face significant financial difficulties. In exchange for a monthly premium, life insurance pays family members a lump sum in the event of an early death.
Disability is very similar to life insurance, but covers the risk of becoming disabled. This risk can present two problems for individuals and families:
- When a person becomes disabled, they may no longer be able to work the same job, or hours, they have historically.
- The cost of caring for a disabled family member can be enormous.
Annuities are just opposite from life insurance, as they cover the risk of living longer than an individual can afford. In exchange for paying an insurance carrier a large single premium (many times $100,000), the insurance carrier will provide a guaranteed stream of annual income for as long as you live. Many times, life or disability insurance is included within annuities. Read the fine print carefully and review the “what to look out for” section of this article before purchasing an annuity.
Business and Liability Insurance
For business owners, business and liability insurance are two of the most critical categories. This type of insurance covers your business (or you personally) in the event that you make a major mistake on the job.
Carpenters take out liability insurance to protect against accidents or mishaps during the building process. Stock brokers take out errors and omission insurance, which covers any mistakes they make when entering orders or completing large transactions. Restaurants can take out insurance policies which cover undercooked food or sanitary mistakes which may result in lawsuits.
All of these situations can be costly to resolve and these costs can even send a small or medium-sized business into bankruptcy. If you are a business owner, carefully consider the risks associated with your business and see if an insurance solution exists.
When we said that almost anything can be insured, we meant it. Here other types of insurance that exist.
Celebrities which are known for a particular feature or talent have been insuring their body parts in recent years. The concept of insuring body parts remains the same: celebrities are looking to pay an insurance carrier to assume the risk of them losing the asset. According to Latina.com, America Ferrer’s smile is insured for $10 million, while Rihanna has a $1 million insurance policy on her legs.
If you’ve ever been to a charity golf tournament, you have probably seen a hole-in-one prize. This hole-in-one prize will award any player a car or large check for sinking the shot. For a charity golf tournament, making this payment could send the tournament into the red. Golf tournaments typically insure this risk by purchasing hole-in-one insurance. If someone sinks the shot, an insurance carrier foots the bill, rather than the event organizer.
Finally, crop insurance. This is one of the most common types of insurance used in the United States but still falls into the “other” category. If you are a farmer, you are very familiar with this type of insurance. For the rest of us, it may be a new concept. During the growing season, farmers carry a huge amount of weather related risk. A severe drought, mas