Insurance Selection Paper Decide On Insurance Options

Insurance Selection Paperdecide Upon Which Insurance Options You Want

Decide upon which insurance options you want to buy. Paper should clearly indicate each of the eight insurance options and explain why you did or did not choose to purchase the insurance. Finally, provide a brief explanation about how the insurance selections have affected your budget choices. If your car insurance is higher than what is included here, use the car insurance premium you currently pay.

Paper For Above instruction

Choosing appropriate insurance coverage is essential for financial stability and peace of mind. In this paper, I will analyze each of the eight provided insurance options, evaluate my needs, and justify my decisions accordingly. Additionally, I will discuss how my insurance choices influence my overall budget, ensuring that I maintain a balanced financial plan.

1. Term Life Insurance

I have opted to purchase the term life insurance coverage, which costs $25 per month and provides coverage of five times my gross income. This decision is driven by the importance of securing financial protection for my dependents in the event of my untimely death. Term life insurance offers a substantial death benefit at an affordable cost, ensuring my family’s financial stability. Given my current financial responsibilities and the relatively low premium, this insurance coverage aligns well with my budget and long-term planning.

2. Long-term Disability Insurance

I have chosen to include long-term disability insurance, which costs 1% of my gross salary annually, because the potential loss of income due to disabling illness or injury is a significant risk. This coverage pays 60% of my gross salary if I cannot work in my occupation until age 65, with a three-month waiting period before benefits commence. The rationale behind this decision is to protect my income and maintain my financial obligations if I am unable to work for an extended period. Although the annual cost represents a small percentage of my income, the financial security provided is invaluable.

3. Short-term Disability Insurance

I decided to purchase short-term disability insurance for $50 per month because it offers immediate income replacement—100% of my gross income—for up to three months if I become ill or cannot work. The short-term nature of this coverage complements the long-term disability, ensuring coverage during the initial critical period of illness or injury. The high cost-effective benefit of income replacement makes this policy a necessary addition to my insurance portfolio.

4. Health Insurance

I have elected to buy health insurance at a cost of $500 per month. This insurance covers all preventative exams and immunizations and reimburses 80% of other expenses like doctor visits and prescription drugs. Given that I am too old to be covered under my parent’s medical insurance policy, having comprehensive health insurance is crucial to protect against high medical costs and ensure access to necessary healthcare services. Its coverage significantly reduces financial strain from unforeseen health issues.

5. Dental Insurance

I opted for dental insurance, costing $50 per month, to cover routine dental bills including minor procedures and braces for children if applicable. Oral health is an important part of overall wellness, and dental procedures can be costly without insurance. This policy is a reasonable expense that ensures coverage for necessary dental care and promotes good dental hygiene, preventing more expensive issues in the future.

6. Car Insurance

For car insurance, I included my current premium, which is $50 per month, to cover vehicle repairs in case of an accident and liability coverage up to $300,000 for injuries to others. Since my existing car insurance premium aligns with the provided options, I will continue with my current plan to maintain consistency. Car insurance is essential for protecting my vehicle and financial liability in accidents, and it fits within my weekly budget.

7. Homeowners/Renter’s Insurance

I have decided to purchase homeowners/renter’s insurance, which costs 1% of my home’s value or annual rent. Since I rent, I will base this premium on my annual rent expense. This insurance covers personal property loss due to fire or theft, as well as rebuilding costs and temporary living expenses if needed. Protecting my possessions and residence is necessary for safeguarding my financial assets and peace of mind.

8. Umbrella Liability Coverage

Lastly, I chose to include umbrella liability coverage at a cost of $500 per year. This policy provides additional liability protection up to $2 million, which is valuable in the event of lawsuits or claims exceeding my auto and homeowners/renter’s policies. Since this coverage is only available if I hold auto and homeowner’s/renter’s insurance, my selection enhances my overall liability protection, minimizing financial exposure from unforeseen legal claims.

Impact on Budget

My insurance selections have a cumulative effect on my monthly and annual budget. The combined premiums for health, life, disability, dental, car, homeowners/renter's, and umbrella insurance amount to a significant portion of my income. Prior to choosing these options, I reviewed my existing financial situation and identified areas where expenses could be adjusted. The decision to purchase comprehensive coverage ensures security but necessitates disciplined budgeting to accommodate these fixed costs. The most substantial impact is from health insurance, which at $500 per month, comprises a sizable expense. To afford these premiums, I have adjusted my discretionary spending, prioritizing saving and essential expenses. This exercise underscores the importance of balancing risk management with financial sustainability, emphasizing the need for a well-planned budget.

Summary of Insurance Purchased and Total Cost

I decided to purchase all eight insurance options: term life, long-term disability, short-term disability, health, dental, car, homeowners/renter’s, and umbrella liability coverage. The total monthly cost includes $25 for term life, approximately 1% of my gross income for long-term disability, $50 for short-term disability, $500 for health insurance, $50 for dental, $50 for car insurance, and a percentage of my rent for homeowners/renter’s insurance, plus $41.67 monthly for umbrella liability. With these coverages, I am protected against significant financial risks related to health, life, disability, accidents, property loss, and legal liabilities. While the premiums are a notable expense, they provide critical peace of mind and financial security that outweighs the cost.

References

  • American Council of Life Insurers. (2022). Life Insurance Basics. https://www.acli.com
  • National Association of Insurance Commissioners. (2023). Disability Insurance Overview. https://www.naic.org
  • Kaiser Family Foundation. (2021). Health Insurance Coverage & Costs. https://www.kff.org
  • Insurance Information Institute. (2020). Car Insurance Explained. https://www.iii.org
  • American Dental Association. (2022). Dental Coverage & Benefits. https://www.ada.org
  • U.S. Department of Housing and Urban Development. (2021). Homeowners and Renters Insurance. https://www.hud.gov
  • J.P. Morgan Asset Management. (2022). The Importance of Umbrella Insurance. https://am.jpmorgan.com
  • MoneyGeek. (2023). Guide to Budgeting for Insurance. https://www.moneygeek.com
  • Investopedia. (2023). How Insurance Affects Your Financial Planning. https://www.investopedia.com
  • Stanford University. (2022). Risk Management and Financial Security. https://fsi.stanford.edu

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