Employee Benefits

Different Types of Insurance You Can Get

4 min read Oct 18, 2022

Many people aren’t aware of the different types of insurance coverage available to them. Every insurance product comes with its own benefits and coverage options, so choosing the right products for you depends on factors like your age, lifestyle, availability of employer-sponsored benefits, and more. This guide will provide more insight into different types of insurance so you can choose the best plans for your needs.

Health insurance

Health insurance is one of the most essential types of coverage in the United States. With more than 20 million Americans carrying medical debt, adequate coverage could mean the difference between a manageable bill and major financial issues.

Even if you’re young and healthy, health insurance is important. A single car accident or serious illness could result in thousands of dollars of medical bills. If you don’t have health insurance, you may have to pay those bills out of pocket.

You can generally enroll in health insurance coverage through an employer or the federal health insurance marketplace. You may also decide to buy health insurance directly from a provider or through an insurance agent. High-deductible health plans, federal programs, and subsidized policies exist for qualifying applications as well.

Life insurance

Life insurance is a type of insurance contract that provides your beneficiaries with a lump sum of money at the time of your death.

Known as a tax-free death benefit, a life insurance payout can range from a few thousand dollars (enough to pay for your burial costs and final expenses) to millions of dollars (enough to provide for your family for years to come). 

There are two main types of life insurance: term life insurance and permanent life insurance. 

Both term and permanent life insurance are great ways to provide financial protection for you and your family. When choosing life insurance, you should consider your financial goals. Term life insurance is valuable if an individual is looking to provide their family with protection for a limited period, like when their children are dependents, or while they are paying off a mortgage. Permanent life insurance, however, may be a better fit if someone is developing an estate plan and looking to leave an inheritance for survivors after they die.

You can choose from several types of permanent life insurance, including: 

  • Whole life insurance
  • Universal life insurance
  • Burial life insurance
  • Variable Universal life insurance
  • Survivorship life insurance

Disability insurance

Disability insurance provides coverage if you’re unable to work for various reasons. Many people believe you only need disability coverage if you have a dangerous job. However, disabilities don’t always come about as the result of work-related injuries. Arthritis, back pain, diabetes, broken bones from a car accident, pregnancy, mental health and other conditions can also result in an inability to work.

With that in mind, disability insurance can play a major role in your financial plan. Disability coverage can often supplement 40% to 70% of your income. Most plans have a waiting period before coverage begins. They may also have a monthly payout cap that limits how much you can draw from your policy.

Depending on your circumstances, you may be eligible for: 

  • Social Security disability coverage
  • Employer-sponsored group disability insurance
  • Individual disability policies

In addition to disability insurance, Paid Family & Medical Leave (PFML) or Paid Family Leave (PFL) offerings are also offered in several states, which allow you to request coverage if you become unable to work due to illness, injury or due to a family matter. This includes bonding with a new child, caring for a family member who has a serious health condition or to address a qualifying military need. These programs vary state by state, so it is important to understand whether the state you live in offers such programs.  

Dental insurance

Dental insurance is used to help cover the cost of dental care. Some health insurance plans provide dental and vision coverage. However, many people need an additional plan to help offset the cost of preventive care and other treatments.

Benefits vary based on your plan but may cover everything from routine cleanings to dental surgeries. Typically, plans with more comprehensive coverage come with higher monthly premiums. Budget-friendly dental plans may have higher out-of-pocket costs.

Person reviewing insurance documents at desk with laptop

Vision insurance

Vision insurance helps cover the costs for vision exams and eyewear. Some plans even offer discounts on LASIK procedures and corrective surgeries. Even if you have perfect vision, it’s important to get yearly exams because eye doctors can help detect early signs of health problems.

The benefits vary depending on your options but typically help reduce out-of-pocket costs for eye exams, glasses, frames and contacts.

Hospital indemnity insurance

With a 3-day hospital stay costing an average of $30,000, it’s no secret that overnight visits are expensive—and not always covered by health insurance.

Unfortunately, you can’t always avoid an overnight stay at the hospital. But you can help protect yourself with hospital indemnity insurance.

Hospital indemnity insurance is a supplemental form of health insurance used to cover costs associated with hospital admission, inpatient rehabilitation, and overnight inpatient stays. Typically, a hospital indemnity plan provides cash payments directly to enrollees. You can use the cash payments for virtually any purpose, including:

  • Copay and coinsurance charges
  • Deductibles
  • Living expenses, like food or mortgage payments

Critical illness insurance and cancer insurance

Critical illness coverage and cancer insurance are types of insurance policies created for acute illnesses like a heart attack, chronic illnesses, and cancer diagnosis and treatment.

In many cases, they offer policyholders a large cash payout, which they can then use to cover treatment costs or living expenses. Your employer may also offer benefits such as dependent coverage for your spouse and children, annual health screenings, and coverage for recurring illnesses. 

Accident insurance

Accident insurance provides coverage for injuries caused by an accident. Most accident insurance plans provide benefits to help cover a range of expenses from emergency room visits to insurance deductibles and copays. Many accident insurance plans provide enrollees with a lump-sum payout. You can use the money to pay for costs directly related to medical treatment, like a hospital bill, or indirect expenses like food, hotel stays, or transportation.

Legal insurance

Legal insurance, or legal protection insurance, is a type of insurance that provides access to attorneys for legal help, including drafting and reviewing documents, consultation or representation in court. Legal insurance is used to help policyholders afford the cost of an attorney for many common personal legal matters.

For a monthly premium, you get access to network of attorneys, making it easier to find a trusted advisor to get—and keep—your affairs in order. For instance, you could use legal insurance to create and manage your estate plan or get help with a traffic ticket.

Pet insurance

Pet insurance is a type of insurance that can help cover costs related to your pet’s health care, including emergencies, overnight vet stays and unexpected illnesses. It works a bit like car insurance. Your car insurance helps you pay for damage to your car. However, there is still general maintenance you pay for out of pocket, such as expected expenses like gasoline or new tires. Pet insurance is similar. It helps reimburse veterinary costs for accidents and illnesses like ear infections, broken bones and cancer, however, expected expenses like grooming or vaccinations (all expected costs of pet ownership) aren’t generally covered.

Typically, you can buy pet insurance online through a commercial provider. Your employer may also offer coverage as part of your benefits package. 

Homeowners insurance

Homeowner insurance isn’t required by law, unlike auto insurance. However, if you used a mortgage to finance your home, your lender may require you to purchase coverage. homeowners insurance essentially protects the lender’s investment in your home—and your own—from damage and destruction.

When you buy a homeowners insurance policy, your insurance company agrees to pay for certain costs to restore or rebuild your home. Most home insurance policies encompass multiple types of coverage, including:

  • Dwelling coverage: Dwelling coverage protects your entire home—from foundation to rooftop—against damage from vandalism, theft, or natural disaster. Dwelling coverage may also pay to repair additional structures on your property, like garages or porches. As a general rule, your dwelling coverage should equal the cost of rebuilding your home.
  • Personal property coverage: Personal property insurance protects your belongings from damage and theft. Typically, personality property coverage is set at 50% to 70% of your dwelling coverage, but you can increase your coverage if needed.
  • Additional living expenses coverage: Additional living expenses coverage pays for expenses related to lodging and meals if you’ve been displaced from your home due to damage.

You can also purchase additional coverage for natural disasters like floods, hurricanes, and earthquakes. Some homeowners insurance policies cover damage or destruction from natural disasters like these, but others don’t. Check with your insurance agent to understand exactly what your policy covers and where you may need supplemental coverage to fill in the gaps.

Renter’s insurance

Typically, landlord’s insurance covers any structural damage to your rental home or apartment, like roof repairs or fire damage. But if you don’t have renter’s insurance, you’ll be responsible for replacing any damaged or destroyed personal belongings.

Most rental insurance also provides liability and additional living expenses coverage, though it’s a good idea to check with your agent to understand exactly what your policy offers.

Long-term care insurance

According to the Department of Health & Human Services, adults over the age of 65 have a 70% chance of requiring long-term care at some point. And no matter what type of long-term care you may need, it can get costly.

Long-term care insurance (LTC) helps pay for costs related to a variety of long-term care services, including:

  • In-home assistance
  • Short- or long-term nursing home stays
  • Adult daycare

As a general rule, plan to invest in LTC in your 50s or 60s. The cost to purchase LTC increases with age, making it more cost-effective to purchase at a younger age.

Some life insurance policies allow you to add an LTC rider, so get in touch with your insurance agent or human resources representative to learn more about your options.

Auto insurance

Almost every state requires drivers to have auto insurance. Getting auto insurance is about more than following the law, though. Car insurance helps cover costs related to accidents, car theft, or damage to your vehicle from natural disasters. It may also help protect you against lawsuits related to an accident.

Different types of auto insurance policies exist depending on your needs. Some of the most common car insurance types include:

  1. Comprehensive coverage: Comprehensive coverage pays for car theft or damage due to natural disasters, animal strikes, vandalism, falling objects, and other bumps in the road you may encounter while driving. Comprehensive coverage is often bundled with collision coverage, which pays to fix or replace your car after an accident—even if you caused the crash.
  2. Uninsured or underinsured motorist coverage (UM): UM coverage pays for medical expenses following a crash with an uninsured or underinsured driver. It can also cover lost wages and provide compensation for pain and suffering.
  3. Liability coverage: Liability coverage pays for injuries or property damage you cause during an accident with another driver. Liability insurance may also cover legal defense costs, judgments, and settlements if someone files a lawsuit against you after an accident. Most states require drivers to carry a minimum amount of liability insurance.
  4. Personal injury protection coverage (PIP): Also known as no-fault insurance, PIP insurance covers injuries to you and any passengers in your car, no matter who is at fault for the accident. Some plans may also reimburse you for rehabilitation fees, childcare expenses, and lost wages related to injuries.
  5. Medical payment coverage: Medical payment insurance, or MedPay, offers a small amount of financial support for medical expenses following an accident. MedPay isn’t fault-based, which means you can use it even if you caused the crash. However, coverage is usually low, with most plans totaling $5,000 or less.

Knowing the Different Types of Insurance Helps Prepare You for Life’s Curveballs

Now that you know the many types of insurance that are out there, you can decide which sound most relevant to you and your family’s needs and investigate further.

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This article is intended to provide general information about insurance. It does not describe any Metropolitan Life Insurance company product or feature.