After home, auto, health and life insurance, most people don't give insurance much thought. While there's obvious value in having insurance to pay the mortgage and cover your family if you die, some of life's smaller problems are also worth insuring.
From policies that cover life-changing events, to unexpected events that pop up from time to time, here are some alternate insurance policies to consider that go beyond the basics of life, home and auto coverage:
1. Disability Insurance
"Most working adults should have long-term disability insurance," says Alan Moore, a financial planner in Milwaukee. "It can pay for medical and daily living expenses you couldn't pay if you weren't working because of a temporary or permanent disability. Short-term disability insurance, however, should be avoided by having an emergency fund," he said.
The Council for Disability Awareness reports that adults in their 20s today have a 25% chance of becoming disabled before retiring. "That should be convincing enough for most people," Stauffer said.
"Most single people with no dependents rightfully forgo life insurance, since if they were to pass no one really needs their income," Stauffer wrote in an email. "But these same individuals should be the first lined up for disability insurance because they have no one to cover the slack if they cannot work."
Also known as "umbrella" insurance, personal liability insurance protects you from a lawsuit for more than your home or auto insurance covers. "It's especially important for high net worth individuals because they have more assets to lose and the insurance is relatively cheap for the benefits it provides," said Shane Fischer, an attorney in Winter Park, Florida.
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A $1 million umbrella policy can cost about $200 or so a year, which is well worth the cost compared to the litigation involved if you were to get into a bad car accident where the other car's passengers are seriously hurt or killed.
3. Long-Term Care Insurance
This coverage pays for in-home care and other age-related expenses in old age. In general, this type of insurance is recommended as a good purchase, though it gets more expensive as people get older and is much cheaper for the young.
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4. Travel Insurance
This isn't for lost luggage or having to cancel a trip (though those are good types of insurance to have), but rather for covering you if you happen to get sick overseas and have medical bills that normal health insurance won't cover. For example, strange diseases around the world can lead to the need to be flown to a hospital for extensive tests and health care, and travel insurance can cover such costs.
The U.S. Department of State recommends checking your health insurance policy before leaving the country because in many places, doctors and hospitals "still expect payment in at the time of service. You can't simply give them your insurance card and expect it will go through. If your policy doesn't go with you when you travel, it's a very good idea to purchase a separate policy for your trip."
It also reminds senior travelers that Medicare doesn't provide coverage for hospital or medical costs outside the United States.
"Travel medical insurance can be inexpensive," said Marc Lewandowski, who sells such insurance. "For example, for a couple age 32 each with a 6-year-old child traveling outside of the U.S., $200,000 in medical benefits and zero deductible would amount to a one-time cost of $73.22," Lewandowski said.
5. Wedding Insurance
This is hopefully a one-time event for most people, and one they don't want to go wrong. Anyone who has been married knows that something can go wrong at a wedding.
Travel agent Lisa Niver Rajna bought $75,000 worth of wedding insurance for $450 through WedSafe and found it worthwhile. Her rented wedding dress was damaged during her beach wedding and she made a successful claim for $1,000 to pay for it.
The insurance company Travelers analyzed its wedding insurance claims from its Wedding Protector Plan and found that vendor and venue problems are the most frequent causes of wedding day mishaps for its customers, according to a Travelers spokeswoman. For example, a venue could go out of business before a couple's wedding day.
With the average wedding costing more than $25,000 according to Travelers' survey of customers, it's a big enough expense that it's worth covering. Travelers sells wedding insurance for as little as $160 that covers such things as rehearsal events within 48 hours of the wedding, lost deposits, perishable materials, cancellation because of weather or military leave and damaged photos and gifts.
6. Pet Insurance
For a few hundred dollars a year, pet insurance can be worthwhile if your pet ever needs an operation or other expensive medical care. Without that use, it may not be worth it for everyday vet bills. Just as it is with humans, this type of insurance is cheaper for the young and healthy.
7. Rental Insurance
Apartment renters don't have to worry about paying for repairs if their unit burns down, but their valuables can be insured for about $200 per year if they're damaged by fire or water. That's a small price to pay for any electronics you have at home.
8. Antiques Insurance
If you own antiques and they get damaged in a flood or fire, homeowner's or renter's insurance may not fully cover them or the cost of restoration. Extra insurance for antiques can be bought, but make sure it doesn't cost more than the value of the items.
As a few financial experts told us, insuring for every possible ill turn in life can leave you paying premiums that you'll never see again if you don't make a claim. Be careful what you buy and only buy it for the specific time you need it -- such as a wedding or a pet's expected lifetime.
Other alternative insurance types are worth considering, such as long-term disability, if you don't have a big enough emergency fund to pay your family's expenses if you're out of work for a while.
And as is the case with all insurance, shop around with different companies for the best policies and prices. This is one area of your finances that you can control with comparison shopping.
More great reading on Insurance:
- 7 Great Home Insurance Discounts Your Agent Won't Tell You About
- Burglarized! 4 Home Insurance Tips I Wish I Had Known
- 9 Overlooked Car Insurance Discounts That Can Save You Hundreds
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