All About Insurance in 2021

Why Should I have Insurance?

This is the question I ask every semester when I teach this lesson. It is a very important question, just ask anyone who has had a lawsuit against them. The legal system in the United States is expensive and getting a lawsuit against you can cost you thousands or even millions of dollars. So why should we have insurance? The answer to that question actually varies from person to person, but the two most common answers are: protection for yourself and your family; or protection for your assets. My career choice is an example of the first: I am a teacher and school personnel who get hurt on the job can file a lawsuit against their employer (the school district). So, to protect myself from getting sued, I have insurance. My wife has insurance for her family’s protection; she is a nurse and sometimes there can be lawsuits against nurses because they make mistakes.


How Much Insurance Do You Need?

This is such an important question that you need to ask your insurance agent when you buy your car/house/etc., but if we’re talking about life insurance it’s not so much how much life insurance do you need, it’s how much life insurance can you afford? If you find yourself in a situation where it may be necessary to file for bankruptcy because of medical bills or other expenses then having too little will not help anything. Now let me answer one of the most common questions I get asked: How much do I need? That depends on what type of policy or policies that apply to your situation. You might want enough coverage for 10 years worth of bills if all goes well, but what happens if something terrible happens in year 3 or 4? Some people decide they only want enough coverage to pay off their mortgage since that would be enough money to live off until retirement age if something happened too early in life. Then there are those who want enough to pay off their mortgage and buy a new house and live very comfortably until retirement age. The answer to this question isn’t as simple as I would like it to be, so if you have any questions please feel free to leave me a comment or send me an email.


How Does Life Insurance Work?

This is the first question I ask my students during the lesson on insurance. The answer is: life insurance works by having someone take out a policy on you that will pay out money after your death. There are many different types of life insurance policies that can do different things for families or individuals, but they all work the same way in theory. Now here’s where it gets interesting … most people don’t think about how life insurance works because they never have something bad happen in their lives that makes them realize how important it is (and with good reason). Let’s say your friend dies suddenly from some sort of health problem, now let’s say he has no form of life insurance whatsoever; what happens then? Well, his family will not get one dime from him unless there was something written into his will before he died (which doesn’t mean anything if the person who wrote it isn’t around anymore). This may seem silly since most people understand this already, but I ask my students these questions just so they know exactly what happens when someone dies without making arrangements for money/assets/etc., especially when planning for families.


What Types of Life Insurance Are There?

There are three basic types of life insurance policies: term, whole life, and universal. The most common type is term because it’s the least expensive and it only lasts for a certain period of time (which is great for college students who will need to make a lot out of their money before they graduate). The term normally runs from 10 to 20 years in length. This means that if you die less than 10 years after your policy goes into effect, then there would be no payout from the insurance company. If you live past the 10-year mark then there would be a payout when you pass away. The term usually has higher premiums but lower death benefits than whole or universal life policies/policies. Whole life policies are just what they sound like … they payout when you die but have no expiration date so long as premiums are being paid each month/year/etc., which means that eventually, you will get a nice sum of money when the top person at an insurance company decides to retire or sell their shares in the company.


I hope this helps students understand why insurance is so important in life. I think it’s a topic that everyone should be able to appreciate, even if they don’t think they need it right now.

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