Advice

The 6 Types Of Insurance Freelancers Need | Freelancer's Guide

Ethos Life · Aug 9, 2018
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Insurance is complicated. It’s filled with confusing terms, tons of options, and can be expensive. While W2 workers are generally handed their insurance plans, most freelancers are left to wade through hundreds of confusing insurance policies on their own. And that is usually just for health insurance! You can’t forget about all the other types of insurance out there. You are probably left wondering what types you actually need to provide economic security to yourself and your loved ones. These six types of insurance should be on your radar if you are aiming to build financial stability.

Health Insurance

You’re probably familiar with health insurance. By keeping yourself healthy, you are able to continue working, bring home money, and get the most out of life. While choosing a health insurance plan can be complicated (what is the difference between an HMO and a PPO? what are metal tiers?), don’t let this deter you from getting health insurance. Health insurance doesn’t only protect you and your family in the event of an accident or disease; it also keeps you healthy throughout the year with things like preventative check-ups and annual wellness visits.

So, how do you wade through the hundreds of options to find the plan that best fits your life? When choosing a health insurance plan, be sure to keep in mind:

  • Your preferred doctors
  • Any medications you take
  • Your income (this determines if you qualify for government aid in the form of subsidies that can significantly lower your monthly payment)
  • Current medical conditions
  • Your budget as it relates to copayments, deductibles, and premiums

As you buy health insurance, don’t forget that adult dental and vision coverage is usually not included. It’s a great idea to buy dental and vision insurance as a form of supplemental insurance. It can keep you and your family health, both physically and financially!

Dental Insurance

Dental insurance is designed to reduce your costs associated with routine preventive care, as well as other necessary care that might arise throughout the year. While paying for routine preventative care like a cleaning isn’t usually too expensive without dental insurance, paying for more extensive procedures that are unpredictable like root canals and crowns can cost thousands of dollars out of pocket. Most people choose to buy dental insurance to protect themselves from these types of costs.

Most plans tend to cover three levels of care: preventative and diagnostic care, basic restorative care, and major restorative care.

  • Preventative and diagnostic care: This is the least expensive and least time intensive of the three types of care. Wondering what preventative care includes? It generally includes things like cleanings and oral exams two times per year. In addition, it includes x-rays, as well as fluoride treatment for a specific subset of the population. This care is usually covered at 100 percent by your carrier, meaning these services are free to you.
  • Basic restorative care: This includes procedures like fillings, extractions, root canals, and emergency palliative care, as well as other basic procedures. These types of procedures generally require a bit more time on the provider’s part and are more costly. An average dental plan will cover 80 percent of these costs, leaving you to pay the remaining 20 percent.
  • Major restorative care: Major restorative care includes crowns, bridges, implants, dentures, and other major procedures. These kinds of procedures generally require the largest time investment on your dentist’s part and cost the most. A common dental plan will cover 50 percent of these costs, leaving you to cover the remaining 50 percent.

Be sure to keep in mind that most plans don’t cover cosmetic dental procedures. Cosmetic dental procedures include things like veneers, teeth whitening, and, usually, orthodontia. You will be required to cover all of these procedures out of your own pocket.

Vision Insurance

Vision insurance is designed to reduce your costs associated with routine eye exams and prescription eye-wear, as well as other necessary care that might come up. Vision insurance helps make it affordable to schedule regular eye exams. Not only can this help you identify vision correction needs, but it can also help diagnose eye diseases while they are in their early stages. Considering 66 percent of American adults need vision correction, this can really pay off.

Most plans cover preventative care, as well as prescription eye-wear. You can also choose plans that offer additional options for coverage.

  • Preventative care: Preventative care includes eye exams, vision tests, and glaucoma testing. Eye exams help identify vision problems, as well as signs of serious medical conditions like glaucoma and cataracts. Preventative care is typically covered at 100 percent, up to a specific amount, by your vision insurance company.
  • Prescription eye-wear: Prescription eye-wear includes eyeglass frames, eyeglass lenses, and contact lenses. It also typically includes lens protection and enhancements to keep your lenses safe. Prescription eye-wear is usually covered at 100 percent up to a certain dollar amount.
  • Additional care: Additional coverage might include things like daily disposable contact lenses and corrective eye surgery like Lasik.

Renter’s Insurance

If you live in a rental, whether it’s a house, apartment, studio, or duplex, the building itself is most likely insured. That means losses sustained to the structure itself are covered. However, this does not cover your belongings (even though many people think it does)! Most people severely underestimate the value of their belongings. Once you start adding up the value of your electronics, furniture, clothes, and products, it quickly becomes evident that they are worth more than you expected. In fact, the average renter owns approximately $20,000 in personal property.

So what can you do to protect yourself in the event of a fire, theft, or one of the many catastrophes or incidents that can happen? Buy renter’s insurance. While many factors impact the cost of renter’s insurance (location, pets, type of residence), the average plan price is only $12 per month. Additionally, renter’s insurance doesn’t just cover your personal property. Most policies also include liability coverage. Liability coverage protects you if someone gets injured at your house by paying legal expenses and medical payments.

Disability Insurance

Research shows that 1 in 4 people will experience a disabling condition that results in missing at least a year of work before normal retirement age. Most people don’t have enough money saved to live without income for an extended period of time. Disability insurance can help provide you and your family with income security in an instance of illness or injury. With disability insurance, you will receive a percentage of your income if you are disabled and incapable of working. Disability insurance is particularly important if you are the breadwinner in your family or don’t have a significant amount of money in savings.

You should ask yourself a few questions while you shop around for a plan:

  • Is this a short-term or long-term policy? Long-term policies are considered to be much more comprehensive than short-term policies. However, they require you wait longer for the insurance company to begin paying benefits after your injury.
  • Is this policy non-cancellable or guaranteed renewable? With a non-cancellable plan, your premium won’t change over the life of the policy. With a guaranteed renewable plan, your policy can’t be canceled. The best plans are both non-cancellable and guaranteed renewable.
  • Is this policy own occupation or any occupation? If it is an own occupation plan, you will be paid the benefit even if you can work another job. With any occupation plans, you will not be paid the benefit if you are able to work in another occupation. Own occupation plans are preferable.

Life Insurance

Most people don’t think about death in their 20s, 30s, or even 40s but ironically, your 20s, 30s, and 40s are exactly the right time to start thinking about life insurance. When you have someone in your life who relies on you - a spouse, child, or other dependent - which can happen pretty early on in life, you should begin considering life insurance. When you buy life insurance, you are guaranteeing that those left behind are able to cover final expenses, remaining debts, and lost income without having to deal with a financial burden during a time of mourning.

As you begin researching life insurance, you need to understand the difference between the two primary types of life insurance: term and permanent. Term life insurance lasts for a predetermined amount of time. Once that time is up, you can renew the policy, but it will likely be more expensive. Term policies are less expensive than permanent policies. Permanent life insurance lasts for the entire life of the insured person. It also has a cash accumulation value and death benefit. Permanent life insurance plans are usually much more expensive. Furthermore, most people don’t end up keeping their policy because of the high cost.

Insurance can be daunting, especially when it seems like you need insurance to cover almost every aspect of your life. However, by investing a little time into researching and understanding the different types of insurance, you can begin to provide economic security to yourself and your loved ones.

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