Quick Primer on Insurance

4 minutes read | Posted on: Apr 17, 2023

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By: Smaya Anand

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Even after all of the financial planning in the world, there are still things that can go wrong. Unforeseen accidents always have the potential to happen, and that’s why it’s so important to have insurance. It may be expensive, but it can be incredibly helpful as well. So, we’ve created a guide of various types of insurance and what situations they can be useful in.

Photo by Scott Graham on Unsplash

Auto Insurance

Even if you’re the best driver in the world, you should still get car insurance. But which kind should you get? There are a few main types, each with their own uses.

  • Liability insurance covers other people’s costs if they are in an accident caused by you
  • UM insurance, or underinsured/uninsured motorist insurance, will help pay for medical expenses for you and your passengers in case a driver without liability insurance hits your car. In some states, this can help you pay for damages to your car as well.
  • PIP insurance, or personal injury protection insurance, helps you and passengers cover the costs of your medical expenses. It can also cover costs of money lost due to being injured, like lost wages or childcare. PIP is available no matter who caused an accident. However, it is not available in every state.
  • MedPay insurance is an alternative to PIP in case you live in a state that doesn’t offer it. If you are injured in a car accident, regardless of fault, your medical costs may be covered. However, coverage costs are usually low ($1,000- $5,000).
  • Comprehensive and collision insurance make sure that there are no damages to your vehicle. Collision covers accidents, regardless of fault, and comprehensive covers other types of damage, like that caused by storms, theft, or other environmental factors.

Life Insurance

This kind of insurance can be very useful if you are a primary wage earner in your family. It will make sure that, in the event of your death, that your family will still be provided for by paying them a similar amount to what your wages were. You can get life insurance on a term, like 10, 15, or 30 years, or you can get permanent life insurance, which will last a lifetime. Permanent life insurance is usually much more expensive, but offers more possible benefits.

Property Insurance (for renters and homeowners)

For homeowners, a home insurance policy can include many different types of coverage, each working together to make sure you have an easier time in case something happens to your house. Some of these include:

  • Dwelling insurance protects the structure of your house and other structures attached to your house, like a garage, in case of theft, storms, vandalism, or other environmental factors. It will help pay for rebuilding. While rebuilding, you will get money to live elsewhere in case you need to.
  • Personal property insurance protects the belongings that you have inside your house, which may include clothing, furniture, or appliances, in case of damage, and can help you replace them.
  • Liability insurance, similar to the liability insurance you can get with auto insurance, protects you in case something happens to someone else on your property. For example, if they fall down the stairs, or a tree branch falls on them, your liability insurance will pay for their medical bills, and if they sue it will cover the cost of an attorney.

For renters, the coverage is similar, though a little more narrow. In a renters’ insurance policy, you’ll probably receive personal property insurance and liability insurance. You’ll also get additional living expenses coverage, which can pay for a place to stay in case what you’re renting needs repair or rebuilding.

Health Insurance

In the US, healthcare is extremely expensive. Health insurance can help mitigate the cost of doctors and hospitals. Even if you think you’re healthy, there's no telling what could happen in the future, so make sure you get a good plan. Often, your employer will offer health insurance.

Disability Insurance

If you have or develop a disability that makes it harder to work, this kind of insurance can supplement your income while you rest. It can pay for 40-70% of what you were making before, and it is also often available through your employer.

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