How Do You Know How Much Insurance You Need & What Kind?

By Sara


Last Updated: March 30, 2023


There are so many types of insurance that it can be overwhelming to know how much insurance you need and, more specifically, what kind.

However, knowing how much you need can help you narrow down what kind of insurance you need. Keep reading to learn how you can figure out how much insurance you need and what kind. 



How do you determine how much insurance you need?

To know how much insurance you need, you need to know this information: 

  • Your salary 
  • Yearly expenses 
  • Family 
  • Assets
  • Loans
  • Future expenses 
  • Other situations 

Insurance is something you have to protect yourself and your family. We pay a part of our care as monthly payments. When you need to use the insurance for its intended purposes, you will have to pay a much smaller total than the original cost because insurance will cover the rest. 

Think of high-cost expenses that you may want to be covered, like your: 

  • Life
  • health
  • Car
  • Long-term care

These four areas are usually the most common things people cover. 


What type of insurance would you consider the most important?

No one insurance is better than the other, because everyone's situation is very different.

For example, someone may have a family while someone else doesn't, and the person with a family may want life insurance.

While all insurance can be argued to be important, having life insurance is one of the most important types of insurance to have.

If you do not have health insurance, there can be a lot of issues for you. In addition, there are more affordable ways to get health insurance if you can't afford it.

Like health insurance, car insurance is also required if you have a car. Other insurances are optional and may not be something you need now in your life. Your needs will always change, and so will your insurance needs. 


What 4 types of insurance should everyone have?

There are four types of insurance that everyone should have:

  • Life insurance
  • Health insurance
  • Long-term disability insurance
  • Auto insurance 

These are the four main types of insurance that almost everyone has. These are all types of insurance that will protect most areas of your life. You want to have insurance for instances of something happening. 

While you don't want to get into a car accident and have to repair your car, these things happen and can cost a lot. So having insurance for high-liability things can be a safe financial protection. 

You also want to ensure you and your family are cared for if something happens. Again, you don't want bad things to happen, but you also want to know that your family can afford their bills far into the future. 


What are 4 things you should look at when choosing an insurance plan?

When choosing an insurance plan, there are four key things to consider: 

  • Term 
  • Premiums 
  • Deductible
  • Coverage 

The term is one of the first things you need to find out when choosing insurance. Some insurances are for only a year, and you need to renew, like health insurance. Others are for many years or your lifetime, like life insurance. 

Next is your premiums which are your monthly payments. All insurance will have a premium to pay to be insured. If you don't pay, you are not insured. Always find out how much you owe monthly or in a year to ensure it fits your budget. 

Knowing your deductible is another key factor when deciding if a type of insurance is financially right for you is your deductible.

Your deductible is what you pay out of pocket before insurance pays the rest. For example, certain insurance plans are high deductibles plans. These high deductible plans require you to pay more out of pocket, but your premium is lower. 

The last thing to know before choosing an insurance plan is your insurance coverage. Every insurance plan will have different coverage. For example, some will cover more accidents, while others only cover very specific things.

Depending on how much or little coverage you need will help you decide which type of coverage is best. 



How Much Insurance Do You Need?

Insurance is a great thing to have during emergency situations.

To find the best type of insurance, you must understand how much you need. Everyone's needs are different, but most people have the same four types of insurance. Always consider the main factors of an insurance plan to ensure you are picking the right coverage. 

Photo by Kindel Media


Leave a Reply

Your email address will not be published. Required fields are marked *