What are the Benefits of Insurance? (2022 Guide)

— Last Updated May 27, 2022

What are the Benefits of Insurance? (2022 Guide)

In this article

— Last Updated May 27, 2022

Read Time
8 mins
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Reviewed by
Eric Berkman
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What are the Benefits of Insurance? (2022 Guide)

Stephanie Wilson

Director of Operations

Read Time

8 mins
Group-27.png

Reviewed by

Eric Berkman

In this article

With the economy the way it is and a lot of financial hardships affecting much of the population, it’s understandable that many people might not think having various insurance policies is worth the money they’re working very hard to get. Before you learn about the benefits you should also know what does disability insurance cover.

However, that may be because many people don’t understand the benefits of insurance.

The fact is, insurance can be a lifesaver; especially when life’s a little harder. Those premiums that seem to eat away at your earnings might actually be worth every penny much sooner than you think, and if you don’t have the right policies, you can come to regret it.

If you’re a little on the fence about purchasing any sort of insurance policy right now, check out this list of benefits insurance provides.

The Types of Insurance Being Covered

There are a lot of different forms of insurance. Obviously, you can get insurance for your car, home, expensive belongings, and various other things, but that’s not what this guide is going to cover. While many of those are essential or worthwhile depending on the assets you have and your financial situation, this is going to focus more on the types of insurance that are truly essential, and if you can afford them, you should have them.

This means insurance policies such as long-term care insurance, disability insurance, life insurance, and other insurance policies relevant to your health and overall ability to handle a situation in the worst-case scenario.

The General Benefits of Insurance:

Different types of insurance have their own benefits specific to the area they cover, but all forms of insurance provide some general benefits across the board. It can depend on your proffesion so if you are an accountant you can get different benefits with disability insurance for accountants.

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Here are the most pertinent general benefits you can expect from having one or more necessary insurance policies.

Financial Safety:

Your bank account is probably one of the central pillars of your life. You spend most of your time trying to build it, and it makes a lot of the things in your life possible; without it, it’s practically impossible to thrive in the modern world.

So, what happens when a medical emergency occurs and you’re stuck paying massive hospital and care bills out-of-pocket?

Well, the average price of a STANDARD ER visit is $2200 in the United States ((1)). That’s just a basic trip with minimal care. If you end up needing extensive care, such as emergency surgery after a major wreck, life-saving surgery for a stroke or heart attack, or anything else major, you can pay much, much more than that.

If you’re not a high-income earner, and you mostly live paycheck-to-paycheck struggling to put back cash each for a savings account, just the standard visit can set you back months or even years financially, and that’s an unfortunate fact for many Americans.

Even if you’re in the upper-middle class and can technically afford the expense, $2200 is nothing to scoff at, and if it’s something more serious, even you can suddenly be left with nothing.

This is the primary benefit of health-related insurance policies. They protect your finances.

Whether you’re looking at disability insurance, health insurance, or long-term care insurance, all of them are designed to either pay a portion of your normal income to you each month or pay for the medical care that is so unbelievably expensive in the United States.

So, yes. You will have to pay a premium that varies from policy to policy, and that may require you to find more income or somewhere you can cut unnecessary expenses in your daily life, but if something bad happens, it’s far cheaper than paying the bills out-of-pocket or losing your income.

If none of the other benefits convince you, this one should.

Proper Treatment and Care:

A major theme of any health-related insurance policy is that they don’t just cover finances. They also help with specific types of care.

If you’re without insurance, your assets and income are gone, and you’re out of options, you either get the bare minimum required by law such as ERs being required to provide life-saving care ((2)), or you get stuck with something like Medicare that simply isn’t on par with what an insurance company can offer ((3)).

In either case, that means you may not get the quality of treatment you really deserve. You may have to settle for a long-term care service you don’t like because of your insurance coverage, see doctors who treat their patients like cookie-cutter cases they just want to get in and out in a rush, and various other things that are horrible to go through when you’re already suffering.

With a good insurance policy, you can expect to get much better coverage and an overall better treatment experience when you need it the most. This can be the difference between maintaining a high quality of life with plenty of years ahead of you and just sort of managing the problem.

Peace of Mind:

Some people think of this a lot, and some don’t think about it until it sneaks up on them all of a sudden, but life is unpredictable.

Yes, you may be living perfectly fine now with a home, well-fed children, a nice car, and may a luxury here and there, but out of nowhere, your entire life can change. You may become one of the 8-million people permanently disabled and out of work in the USA ((4)), become physically dependent on the help of others for basic needs, or perhaps even suddenly pass.

Those are all parts of life and try as you might, things happen that you can’t prevent.

However, with the right insurance policies, you can be prepared for all of those things. You can protect your monthly income even when you can’t work, get top-notch 24/7 care or train a family member for the at-home care that pays them for their sacrifice, or even ensure that your family is taken care of if the worst happens and you’re no longer around to put bread on the table.

You cannot underestimate the peace of mind you will have just by knowing that, while you can’t stop every horrible thing that might happen in life, you can be prepared for it in case it happens.

Unique Benefits of Disability Insurance:

Disability insurance has a couple of unique benefits, and both of them can be life-changing.

Flexibility:

You’re not locked into buying one type of policy that only covers a specific type of situation. Instead, it comes in two forms. You can protect yourself against short-term disabilities that can ruin you financially very rapidly to make recovering from the issue a lot simpler, or you can get long-term disability insurance to protect against the very serious events that can put you out of work permanently without requiring long-term care.

This flexibility lets you weigh your risks against the costs of each policy and pick the option most suitable for you.

Unconventional Uses:

Most health-related insurance policies require something horrible to happen before they become useful. Disability insurance, or short-term disability insurance to be specific, can actually be used for a very positive reason.

Let’s say you’re a solopreneur. You’re your own boss, and if you’re not working, you’re not making any sort of money. Now, what if you get pregnant without planning, or you want to get pregnant, but don’t know how you’re going to handle possibly not working due to the effects of pregnancy?

Well, short-term disability can cover you for much of your pregnancy and potentially even afterward((5)).

This can be the difference between struggling to push through work and potentially having an even more difficult or dangerous pregnancy, and focusing on you and your child’s health and enjoying the experience as you deserve to.

That’s why, regardless of what else you have going on, a short-term disability policy is a must-have for anyone who is looking to get pregnant or might become pregnant while also chasing their dreams. It can be a necessary reprieve without adding financial stress to the situation, and if something does become complicated, it can let you focus on treatment rather than where your money is going to come from.

Unique Long-Term Care Insurance Benefits:

Long-term care insurance is one of the more unique insurance types you can get for one reason. It’s not something you’re likely to rely on until you’re older, but it can potentially help you at any age, and you’ll be grateful you bought it if the need ever arises.

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Long-term care insurance is all about making sure you get the best care possible if you’re rendered incapable of carrying out basic daily tasks by yourself. These are things such as bathing, cooking, maneuvering through your home, dressing, and using the toilet.

In the event that happens, long-term care insurance can pay for nursing home treatment, at-home care, homemaker services, adult daycare, and more. These services are fairly extensive, and for even higher-income earners, they can be financially crippling in a very short amount of time ((6)).

Long-term care insurance can cover those costs to prevent you from losing everything you have and not having anything to pass on when you die.

Now, you may never need your long-term care insurance policy, and that makes some people afraid to purchase one, but you can always get long term care for your parents. However, you can get a “return on premium” clause that allows you to get your investment back in the event you want to cancel the policy later on.

Unique Benefits of Life Insurance:

The unique benefit of life insurance is its sole purpose. It doesn’t payout in the event you suffer a disability or something else, and you will never experience the benefits of it. However, those you love the most will.

Life insurance pays a considerable sum to your heirs in the event of your death. While that may not affect you much, it can mean the world to your spouse, children, and other loved ones. Especially if you were the breadwinner and your death comes with the unfortunate loss of income.

Beyond simply paying a lump sum to a direct heir, life insurance can also pay for your kids to go to college, pay off debts you owed to prevent them from being passed on to your family, cover the costs of estate transfers and court contests, and much more ((7)).

Life insurance policies come with varying amounts of coverage, and there’s a relatively affordable option for everyone. Considering how unpredictable life is, everyone should try to find a policy within their price range to make one final gesture to the ones they love.

The Benefits of Insurance Outweigh the Risks (Mostly)

As you can see, various types of insurance provide a ton of benefits, and those benefits usually outweigh the risks of purchasing a policy. After all, paying 3% of your annual income for complete protection against a permanent disability affecting your income isn’t a bad deal at all. Paying an annual fee to ensure that your family is well taken care of when you pass is pretty much a no-brainer.

However, that doesn’t mean that you should rush out and grab every policy possible. Different people are in different situations financially, and their circumstances are all drastically different. Where one person might be able to afford long-term care insurance and enjoy protection well before they’re likely to need it, a single mom on a limited income in her 30s might want to opt to wait. Before you decide on getting one, you should also know the reasons for long term care insurance rejection.

This is why you need a qualified insurance consultant such as Policy Solver to look over your unique circumstances, assess your situation and needs, and guide you through the various options at your disposal. Not only will it be a lot less stressful purchasing insurance this way, but you’ll get a policy that matches your needs instead of whatever an insurance agent pushed on you.

Sources:

1: Taken from Talk to Mira, 3/3/2022, https://www.talktomira.com/post/how-much-does-an-er-visit-cost

2: Taken from Legal Match, 3/3/2022, https://www.legalmatch.com/law-library/article/hospital-liability-for-refusing-to-admit-or-treat-a-patient.html

3: Taken from WP Healthcare News, 3/3/2022, https://www.wphealthcarenews.com/the-pros-and-cons-of-medicare-vs-private-insurance/

4: Taken from Simply Insurance, 3/3/2022, https://www.simplyinsurance.com/disability-statistics/

5: Taken from In Her Sight, 3/3/2022, https://www.inhersight.com/blog/working-women/short-term-disability-pregnancy

6: Taken from LTCTree, 3/3/2022, https://www.ltctree.com/what-does-long-term-care-insurance-cover/

7: Taken from Life Happens, 3/3/2022, https://lifehappens.org/life-insurance-101/what-does-life-insurance-cover/

March 9, 2022

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