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The subject of Insurance, for many people, is sure to provoke heavy eye lids and perhaps even a yawn or two. But there is hardly a topic more important to a person's financial health and well-being than that of insurance. The lack of adequate insurance can turn a once rosy financial scenario into financial disaster in a heartbeat. Contrary to what some may say, the concept of insurance is not a rip-off. For many people, insurance is both a necessary and valuable part of their financial picture. On the flipside, having too much insurance, over-paying for insurance, or even worse, paying for insurance you don't need, are pitfalls you need to avoid for financial success. Consequently, insurance is one personal finance topic you won't want to ignore.

Ideally, insurance will provide you with peace of mind while not breaking the bank. But finding an affordable insurance product that makes the most sense for you does take some work. By arming yourself with the necessary information, and learning to effectively assess your financial needs, you stand a much better chance to safely secure your family's future. Included in this section are a series of objective and straightforward articles that will both educate and guide you towards figuring out the right course for you.

Life Insurance

Life insurance coverage is designed to ensure that loved ones are taken care of financially in the event a major breadwinner of the family dies. Whether or not you need to take out a life insurance policy naturally depends on the specific needs and circumstances of your family. A life insurance policy should cover the expenses to ensure that your spouse and children will be taken care of for as long as necessary - including mortgage payments, medical expenses, and children's college tuition. Experts agree that a good rule of thumb is to take out a policy that covers 2 to 6 times your annual income. You should take into consideration the rate of inflation and potential increases in education costs.

Term life insurance provides the cheapest type of policy. It's also the simplest. It's pure insurance that has no savings or investment component. A term life policy will pay a lump sum to a designated beneficiary upon the policyholder's death. Taking out a $300,000 term life policy means $300,000 will be paid as the death benefit.

The type of life insurance policies called cash value policies includes not only a death benefit, but an investment feature as well. Consequently, these policies are more expensive than term life policies. Types of cash value policies include Universal Life, Universal Variable Life, Variable Life, and Whole Life.

Auto Insurance

Auto insurance is a necessary prerequisite of car ownership today, safeguarding drivers not only from having to pay for extensive repairs to the vehicle itself, but also covering damage to other people's property in the event of an accident. Auto insurance comes in many variations and with a wide array of possible conditions. But all policies can be classified into the following three types of insurance:

Collision coverage:
  • Pays for repairs or replacement of your vehicle if it is damaged by a collision
Comprehensive coverage:
  • Pays for repairs or replacement of your car if it is damaged not only by a collision, but by any other circumstances. This includes fire, vandalism, theft, and so-called "acts of God" - lightning, a fallen tree, flood, and other natural disasters.
Liability coverage:
  • Covers the repair, replacement, or medical bills for any damages incurred to other people or property, including injuries or death of any third party.

While liability insurance is required by most governments, collision and comprehensive insurance are optional. The decision to purchase this extra coverage is left up to the auto owner or driver.

The best way to find affordable auto insurance is to shop around and compare rates between different carriers and insurance companies. There can be a big difference in rates between the well-known and discount insurance carriers. You may also be able to cut costs by combining your auto and homeowners insurance plans with one company, or by inquiring about group rates available to those in your field or alumni from your college.