How to choose coverage for your budget

Many people, when buying a vehicle or a home, start by making a budget of what they can pay according to their income and expenses. Ideally, insurance and coverage is something that can be handled in the same way. The cost of insurance and coverage can be quite a significant one in personal finances, especially when we consider all lines and types of insurance including auto, home, medical and life insurance.

In this article we will cover some tips so that you can be more prudent when choosing coverage, this will give you peace of mind without having to make commitments or adjustments in your lifestyle.

What type of insurance do I need?

1. Insurance lines – It is always important to take into account one’s personal situation and those changes that are looming in the near future (change of employment, addition to the family, etc.).
   • Medical Plan – For those people who are employees, it is important to determine if their employer offers a medical plan, either full or partial coverage. Of all the lines of insurance, a good medical plan should be at the top of your list; you and your family members need to be in good health first and foremost.
   • Car Insurance – Every driver and vehicle owner needs to be insured, either by public liability insurance (minimum required by the State) or for those who decide to have complete protection, additional coverage for motorists, personal injury, collision and all risk.
   • Home Insurance – If you have a home with a mortgage, chances are you already have coverage for your home and the payments are included in your mortgage payment or escrow account. It’s always a good idea to check coverage quotes every two to three years to ensure you get a competitive rate. If you own your home and don’t have a mortgage, you’ll want to make sure you have coverage to protect your investment, if unfortunately there is an accident or loss, you could face difficult costs to replace or repair the damage.
   • Life Insurance – Some employers offer life insurance to provide peace of mind and financial assistance to family members or dependents in the event of your death. All heads of families with many dependents or dependents who do not generate income should consider having life coverage so as not to leave their relatives in a precarious situation.

2. Coverage Limits – This is the next step once you have an idea of ​​what type of insurance you need. It is advisable to consult a professional specialized in insurance (insurance broker or agent), by providing personal data this person should be able to calculate the coverage in the lines that are of interest or in which you need coverage.
3. Quotes and Proposals – Now that you have the lines of insurance and the limits of coverage, the next step is essential to achieve a package that fits your budget and is competitive in the market. Remember to use tools like this to help you get the best deal.
4. Payment calendar – Many insurers will offer you discounts if you make a prepayment of the year or every 6 months. But since it is not always possible to pay for these expenses in prepayments, all of them must offer the option of monthly payments, except for home insurance that is paid annually or twice a year. It is very important to understand the payment schedule so that one can budget the household finances.
5. Recurring Payments – ideally many insurers offer recurring payment so you don’t have to remember to make payments every month. It’s a good idea to use this service so you don’t forget to pay and affect your rates or lose coverage when you need it most.

   In the case of home insurance, it is advisable to set aside that money even if you do not have to make the monthly payment so that the funds are already available at the time of making the annual or semi-annual payment.

How much should I pay on average for the different coverages?

Although the average cost of coverage in each of the lines mentioned above may vary significantly, we include national averages here to give you a frame of reference.

• Medical plan – For those people who are not employed in the private sector, it is advisable to look for what kind of options or help there are when it comes to medical plans. For business owners, you should be guided by the total cost since you will not have the employer’s contribution. In a study conducted by the Kaiser Family Foundation in 2021, the average costs of health plans in the United States are as follows.

Coverage Type	Total cost	Employer Cost	Employee Cost
Individual	$7,739	$6,440	$1,299
Family	$22,221	$16,253	$5,969

• Car Insurance – as we mentioned in our article (‘Inexpensive Car Insurance Policies’), the average Car Insurance costs are as follows:

Coverage Type	Monthly cost	Annual cost
Public Responsibility	$60	$720
Full Coverage	$136	$1632

• Home insurance – In our article (‘Inexpensive Home Insurance Policies’), we refer to the study by the Value Penguin company which studied the average cost:

Coverage Type	Monthly cost	Annual cost
Liability and Risk Insurance	$157.50	$1,890

• Life insurance – It is important to note that life insurance can have two types of structures, term life insurance and savings life insurance.
  • Term Life Insurance – Like auto or home insurance, this type of coverage only covers in the event where there is an accident of loss of life of the main insured. Usually, the younger and in better health, the main insured can receive more competitive rates since they are considered a low-risk person. An insurance professional can recommend appropriate coverage based on the insured’s income and financial obligations.
  • Savings Life Insurance – This insurance guarantees you a savings capital at the end of the policy, this is in addition to the amount that the insurer covers if the insured has an accident where there is loss of life. This coverage can also vary widely in price, but you can generally get better rates the younger you are and the healthier you are.

In conclusion:

There are all types of insurance that fit all types of budgets, but in the end it all comes down to what type of risk one wants to take when buying a car, a property or in terms of health and lifestyle.

There are people who feel comfortable assuming risk because they think they will never find themselves in a situation where they need these types of coverage, but it is recommended that at least one of you orient yourself with industry professionals who explain the risks, benefits, and odds that one will need this type of coverage.