What Are the 5 Types of Insurance?

The five must-have insurance types include disability, life, health, homeowners/renters and auto.

Written by Jess Ullrich / June 8, 2022

Quick Bites

  • There are five must-have kinds of insurance. Why? The right insurance coverage could help you avoid financial ruin.
  • Long-term disability, life, health, homeowners or renters and auto insurance protect you in the most fundamental ways.

What do a broken leg and a car accident have in common? They’re both super inconvenient—but they’re also really expensive to fix if you don’t have insurance.

The right insurance coverage can help protect your family financially in the event of a serious illness, fender bender or natural disaster. Whether you need to cover costly medical bills, expensive car repairs, or a flood in your basement, insurance could save you thousands of dollars.

Here are the five main types of insurance coverage you might need to protect your loved ones, yourself and your finances.

Inside this article

  1. Long-term disability insurance
  2. Life insurance
  3. Health insurance
  4. Homeowners or renters insurance
  5. Auto insurance
  6. How to shop for the right policy

Long-term disability insurance

The chances you might hurt yourself or get sick are pretty high. Long-term disability coverage can replace your salary and cover essential expenses during the period in which you’re unable to work. Employers often offer this type of coverage, or you can also get a policy on your own.

“Long Term DI is used when someone is out of work due to a covered illness or injury that lasts longer than 90 days. This is the only type of insurance coverage that is actually insuring your ability to work (paycheck coverage),” says Mark Williams, chief executive officer of Brokers International. “DI is one of the most important types of policies someone should own.”

Let’s say you get COVID. Your symptoms persist for several months and seriously interfere with your ability to work. The U.S. Department of Health and Human Safety classifies certain cases of long COVID as a disability. In that case, you may be covered under long-term disability insurance.[1]

Life insurance

Death is the inevitable consequence of life, but we don’t like to acknowledge it.

But, it happens, and pretty much when we least expect it. Life insurance can help cushion the blow for your family by providing financial support when you die.

Anyone you take care of financially can be a beneficiary of your life insurance policy. The money paid out can be used for any expense at all.

While certain employers may offer this coverage, you’ll likely need to get a policy on your own.

There are two major types of life insurance coverage—whole life, which offers protection for your lifetime, and term life, which offers protection for a set number of years. Typically, term life policies are less expensive and sufficient for most people. But the peace of mind that whole life coverage offers may be what you are looking for—just expect to pay much higher premiums.

Term vs. Whole Life Insurance

Term vs. Whole Life Insurance

Which type of life insurance is best for you? Find out what the differences are and how much each might cost before you decide.

Find out more

Health insurance

According to HealthCare.gov, the average cost of a 3-day hospital stay is $30,000 if you're uninsured.[2] Fortunately, the right health coverage can help take the sting out of high medical costs. This type of insurance may pay for everything from routine doctor’s appointments to emergency surgeries, protecting your family’s finances.

Homeowners or renters insurance

A homeowners or renters insurance policy protects your home and its contents from damage and theft. These policies may also cover your costs if someone is injured in your home or you are displaced due to a natural disaster or unexpected event.

Let’s say there’s an electrical fire in your attic (no injuries). The cost to repair damage to your roof and personal belongings could be covered by insurance. Renters insurance works similarly, covering the cost of your personal property if there’s a fire or water backup in your home.

Auto insurance

Auto insurance offers financial protection if you’re in an accident, and it’s also required in all U.S. states except New Hampshire and Virginia.[3] Regardless, auto insurance is a must-have.

TIP: Note that coverage requirements vary by state. Check yours carefully.

An auto policy can help you cover the cost of car repairs, property damage and injuries to yourself and others if you’re involved in a car crash. It’s essential protection when you’re on the road.

Best Auto Insurance Companies of 2022

Best Auto Insurance Companies of 2022

How do the major auto insurance companies stack up when we compare their premiums, coverage and customer satisfaction?

Find out more

How to shop for the right policy

If you’re interested in getting insurance coverage, there are a couple of ways to shop for a policy. While you can choose to get quotes from individual insurance companies, shopping through an insurance marketplace that lets you compare policies across providers can save time—and potentially money.

Before you start getting quotes, consider your budget and coverage needs as a first step. You may also want to research different types of coverage so you know what questions to ask before you get a policy. Doing so will help ensure you get the protection you need at a price you can afford.

Article Sources
  1. “Guidance on Long COVID as a Disability Under the ADA.” The U.S. Department of Health and Human Safety. https://www.hhs.gov/civil-rights/for-providers/civil-rights-covid19/guidance-long-covid-disability/index.html
  2. “Why Health Insurance Is Important.” HealthCare.gov. https://www.healthcare.gov/why-coverage-is-important/protection-from-high-medical-costs/
  3. “Car Insurance Requirements by State.” Progressive. https://www.progressive.com/answers/state-car-insurance-information/

About the Author

Jess Ullrich

Jess Ullrich

Jess Ullrich is a personal finance writer who's been creating online content since 2009.

Full bio

Related Content