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Insurance

What Types of Insurance Are Necessary?

Life is a risk, and insurance companies sell protection for all situations. You can insure everything from wedding cancellation insurance and cancer insurance to contracts for washing machines and dryers. But in many cases, it doesn’t make sense. What Types of Insurance Are Necessary?

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Keeping liability and health insurance is a smart choice. A couple additional kinds of insurance might be helpful, depending on your circumstances. A great deal more is unnecessary. 

1. These policies are mandatory.

The legislation mandates a minimum level of insurance coverage. Health insurance, auto liability, and, for many people, statutory pension insurance are all part of these kinds of policies.

Health insurance

It is mandatory for all citizens to have health insurance, whether it is public or private. It is the state that decides. For most people, the best option is statutory health insurance. Costs for individual health insurance policies often rise sharply as people enter their advanced years. Consider again if you have doubts about your future financial capacity to pay for private health insurance. In the absence of health insurance, access to medical treatment becomes limited to times of extreme urgency. 

For vehicle owners: Motor vehicle liability insurance

Any car or truck needs to have third-party liability insurance. You don’t have to get comprehensive and partly incidental damage insurance, but it’s a good idea to. When you buy a used car, get auto insurance right away. If you don’t, get ready to pay some money. 

For salaried employees, it’s statutory pension insurance.

The majority of individuals consider statutory pension insurance to be their primary retirement savings vehicle. Every month, workers’ paychecks automatically deduct the pension insurance premium. While all self-employed individuals have the option to make voluntary contributions, certain professions, like craftspeople and midwives, are required to participate in the statutory pension insurance program. Supplemental private pension coverage is a smart option because the statutory pension is frequently insufficient. 

2. These policies are really important.

You should have some plans in addition to the mandatory insurance, as they protect you from significant financial risks. Important health insurance doesn’t have to break the bank, which is great news. Monthly premiums as low as 5 euros can cover reasonable liability insurance, whereas annual premiums for travel health insurance are less than 10 euros. 

Personal liability insurance

Among the many types of insurance, personal liability stands out. If you are at fault in an accident, it can shield you from financial hardship and legal complications. Everyone should get auto insurance. Check to see if an additional policy is necessary. You may already have your parents or spouse included in your family plan. 

For Homeowners: Homeowners Insurance

You should have homeowner’s insurance if you own a home. Damage from storms, hail, fires, or lightning strikes is covered by this policy. Many times, it’s a good idea to add natural hazard protection to your plan. 

You will need foreign travel health insurance.

It is still a good idea to have foreign travel health insurance, even if you are only traveling within the European Union. We will cover your medical care and any necessary trips back home. If you are going somewhere legal, you may need health insurance. Health insurance at home is fine, but you should still check to see if you need it while you’re away. These days, you need a new contract if you’re going to be away for more than eight weeks. 

For Professionals: Disability Insurance and Alternatives

Disability insurance is a must-have for practically everyone, from roofers to clerks. After all, mental illness is just as likely as shattered bones to render someone unable to work. In many cases, the statutory disability payout is insufficient. Individuals, especially those who are young or self-employed, should obtain insurance policies as soon as possible. There are other options besides disability insurance if you are unable to receive one due to financial constraints or health issues. 

For dog owners: dog liability insurance.

Some federal states already require dog liability insurance by law. It’s a good idea for all dog owners to have a contract in place. The insurance will cover any damage your dog causes. Private liability insurance won’t cover your four-legged friend.

Term life insurance for people with a home loan

If one parent dies, the other has to support the family. Being a single parent is one of the biggest poverty risks. Term life insurance provides financial security for your dependents. If you have not yet paid off a property loan, insurance is a must. Even if your family lives on one salary, such a policy makes sense.

Daily sickness benefits are available for the self-employed and high-earners.

When you’re sick and unable to work, the daily sickness allowance can help make ends meet. If your health insurance does not cover daily illness benefits, you should claim them. You might also get assistance from the insurer if your sickness benefits aren’t sufficient to pay your expenses. This is due to the difference between your net wage and your illness benefits. 

3. You should consider these insurances.

You might say that certain policies are more of an “optional insurance” kind. While not required, they may enhance your insurance coverage in certain situations. You should only think about them if you have the money for extra coverage and have all the essential insurance in place. 

Supplemental Long-Term Care Insurance

The cost of long-term care is high. Public long-term care insurance typically does not cover enough to mitigate the substantial financial burden of care and medical treatment. Costly private long-term care insurance can fill the void. The hefty premiums and potential premium hikes make this type of policy financially viable only in the long run. 

For parents: child disability insurance

In the event that your child sustains long-term physical or mental impairment as a result of an accident or disease, child disability insurance can help safeguard their financial future. Even though few insurance firms provide them now, good plans still pay out a monthly annuity for life. Occupational disability insurance, rather than child disability insurance, will be necessary once the youngster completes their education.

Homeowners Insurance

In the event that a fire destroys your home, homeowners insurance will replace your clothing, furniture, and other important possessions. This is a lifesaver if your furniture is very pricey or if you just do not have the funds to buy a new, comparable piece. 

Collision/comprehensive insurance for car owners 

Car liability insurance pays for any harm you cause to other people on the road. Full or partial coverage can cover damage to your own car. We recommend comprehensive insurance for brand-new cars, while accident insurance suffices for older, well-maintained cars. Any kind of insurance will do for old, rusty things. 

For the self-employed: basic coverage

Building your firm takes up the first several years of self-employment. Retirement planning, however, should begin once your company is up and functioning successfully. You have the option of contributing to a conventional pension plan or the obligatory state pension plan. It is also possible to have a mix of unit-linked pension insurance and optional statutory pension insurance. 

For employees: Company Pension Plan

Company Pension Plan is something to think about if you’re an employee who plans to stick around for a while. Your employer must set up a private pension plan for you. Direct insurance is another name for this in the context of workplace pensions. Your direct insurance payments are tax-free and do not count toward social security, which is an advantage. It will be worthwhile if your employer matches some of your donation. Starting in 2019, employers are required to contribute 15%, although you can try to negotiate a higher percentage. 

 Extra dental insurance

Statutory health insurance covers a portion of the cost of dentures. As a result, your individual contribution is sometimes several hundred or even several thousand euros. If you need costly dentures on a regular basis, your supplemental dental insurance will pay for them. This is the case because decent policies are expensive and people often don’t pay for procedures suggested by dentists before purchasing insurance. 

Legal protection insurance is something you can get to protect yourself from the costs of a court case. But this only covers some parts of life, and it costs a lot to cover everything. Members of trade unions and tenants’ groups already have cheap insurance to protect them in case of a rental dispute or a labor law case. Also, liability insurance is helpful if someone wrongly sues you for damages.

Hospital insurance.

Additional hospital insurance can be bought so that you can get private medical care. It covers more doctors and other private services, like private rooms for one or two people. 

Accident insurance

Your accident insurance will compensate you in the event that an accident causes you to sustain a permanent physical handicap. Nothing will happen financially if your injuries go away on their own. It’s critical to note that diseases far outnumber accidents, which only account for 2% of people with severe disability. Consequently, the coverage provided by private accident insurance is somewhat restricted. If getting disability or incapacity insurance via your job is not an option, this could be a last resort. This is due to the fact that they provide financial assistance in the event that you are unable to work due to an accident or illness, irrespective of the cause. 

For seniors and families, travel cancellation insurance is a good idea.

If you’ve saved up for a pricey vacation or find yourself frequently forced to postpone travel due to illness, travel cancellation insurance might be a lifesaver. In the event that you or a close relative suffer an unanticipated illness or pass away, your coverage will continue. However, if you already have health issues, it could be difficult to prove to the insurance company that a recent illness was truly unexpected. 

4. You don’t need these policies

You might feel more at ease with a large binder containing all of your insurance plans. Of course, insurance isn’t cheap, and it doesn’t necessarily cover everything you need. That is why it is crucial to carefully consider the necessity of each policy before purchasing it, and not to get insurance on the side.

Consider the expenses that could arise from a claim; this will help you budget accordingly. No insurance would be necessary if you had enough money saved up.

Consider the following example: It is frustrating when your treasured cell phone breaks. However, buying a new smartphone won’t limit you. Insurance for cell phones is so superfluous. Things will change if your home burns down. You are inviting financial disaster if you do not have homeowner’s insurance.

You can opt not to get these insurances: 

Endowment or unit-linked life insurance

It’s not worth it to get new endowment or unit-linked life insurance plans because the rates are so low and the costs are so high. Additionally, new policies linked to an index do not offer the same benefits. You don’t have to get insurance to plan for your old age. For instance, you can put money into an ETF savings plan and then set up a way to get your money back when you leave. 

Pension insurance

Now is not a good time to get a new classic or unit-linked health insurance policy because the rates are too low, and the costs are too high. Only by netting out costs and saving on inexpensive stock index funds (ETFs) can it be worthwhile. The most flexible pension plan, nevertheless, is available through an ETF savings structure.

Education insurance

Insurance for a child’s education is essentially a form of life insurance. It is expensive and has little adaptability. The optimal course of action is typically to invest one’s own money. 

Ambulance Insurance

Getting extra outpatient insurance might be a good idea if you plan to use alternative treatments frequently. Alternate medical practices such as osteopathy, homeopathy, and alternative medicine generally receive minimal annual remuneration, and many health insurance policies now offer substantial supplementary benefits for these fields. 

Residual Debt Insurance/Credit Default Insurance

It is not worthwhile to pay for residual debt insurance, especially for smaller installment loans. Worst-case scenario: it’s too pricey and won’t cover you if you can’t pay the premiums. 

Death Benefit Insurance

If the policyholder passes away, the beneficiary can use the death benefit to pay for burial costs. It is more prudent to put aside funds for a funeral for oneself. Because insurance premiums are so expensive, beneficiaries frequently end up with less than what they paid for. 

Mobile phone insurance

Cell phone insurance can be quite costly and may not cover all types of damage. Furthermore, it’s worth noting that your cell phone might have some coverage under other insurance policies, like homeowners or personal liability insurance. Alternatively, you could opt to forego insurance and bear the repair costs directly. 

Pet health insurance

Pet health insurance is prohibitively expensive, and many expenses are either partially or completely uninsured. You won’t go bankrupt paying for most veterinary care for your pets. Instead of spending money on pet health insurance, it’s better to put aside a little every month for future medical visits. Those who own horses may want to look into equestrian surgical insurance. Equine health insurance is expensive; therefore, it’s not worth it to have a policy that just pays for surgery. 

Glass Breakage Insurance

Your personal liability, homeowner’s, or renter’s insurance already covers the majority of glass breakages.

Eyeglass Insurance

It is common to buy eyeglass insurance along with other insurance plans that aren’t very strong. However, individual glasses insurance is also not necessary. Reimbursements are usually small; every two years, they’re generally around 100 to 300 euros. It is better to wait to buy new glasses until you have more money.

Daily hospital allowance insurance

For every day that you spend in the hospital, your daily hospital allowance insurance will pay a certain sum. Daily sickness benefit insurance is a better choice because it covers you even when you’re unwell at home.

Home contents insurance

Your home insurance can protect your vacation bags from a variety of perils, including robbery and theft from your hotel room. The airline or tour operator, depending on the type of vacation you’re having, would be liable if something happened to your bags while in transit to your destination. Hence, we don’t think it’s important to have baggage insurance.

Child Accident Insurance

If an accident permanently disabled a child, their parents would receive financial protection. However, accidents rarely cause major disabilities in children. Illness is the most common cause. When this happens, child disability insurance kicks in. Nevertheless, because of its high cost, very few insurers currently provide such insurance.

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Conclusion

Insurance helps manage life’s hazards. Think carefully about your insurance needs. Health, auto liability, and salaried worker pension insurance are essential for everyone. Legally mandated insurance safeguards you. Foreign health insurance, disability insurance, house insurance, and personal liability should also be considered. These strategies reduce major financial risks. Supplemental insurance packages include legal protection, long-term care, and child disability. These policies offer customized security based on financial status. Cell phone, pet, and school insurance may not be worth it. Budgeting for possible expenses is best. People must understand insurance types and how to choose coverage. This provides security without costing much.

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