What is the Most Important Insurance in Georgia?
Insurance provides the peace of mind that everyone needs when securing their valuables, both tangible (e.g., buildings, auto vehicles, businesses, gadgets, personal belongings) and intangible (e.g., health, life). People are often tempted to avoid buying insurance. Still, with insurance, they can feel safe and protected against financial hardship even when an accidental loss occurs because their insurance policy will provide a safety net for them. When seeking to obtain any form of insurance in Georgia, you should answer the following insurance questions:
Why do I need insurance for this? Before purchasing insurance, you must understand your needs and the risks you want to cover. This is the driving factor that will determine the type of policy you should purchase, because each policy is designed to fulfill a specific need.
What insurance products are available on the local market to fulfill my insurance needs? Familiarizing yourself with the various insurance market products will give you an idea of what policies will suit your needs.
What riders and exclusions do these policies have? Even when it seems like you have gotten the perfect insurance policy to suit your needs, you still need to find out what the riders and exclusions are, because, in some cases, this may be a deal breaker.
How much will the insurance coverage cost? And what factors affect the cost over time? It is essential to understand the insurance cost in relation to what the policy offers. You should also get multiple insurance quotes with the help of an agent to compare these factors.
Navigating the insurance market in the state is easier when you seek advice from a Georgia-licensed insurance agent with an extensive portfolio of options.
While there are different types of insurance policies in Georgia that cater to different needs, according to the Hierarchy of Insurance Needs, Health Insurance is the most important insurance for everyone.
The Most Important Insurance in Georgia:
HEALTH INSURANCE
Why Do you Need Health Insurance?
In Georgia, you need health insurance because of the following reasons:
It ensures you have access to quality healthcare every time you need it. With health insurance, you are confident that you can get quality healthcare whenever the need arises, and you won't have to bother about paying high medical costs that you did not budget for. Illnesses like diabetes, cancer, kidney disease, and heart disease are among the leading causes of death in Georgia. Health insurance provides coverage for these.
It protects against heavy financial burdens associated with both planned and unplanned medical bills. Sometimes, people get seriously sick, leading to unexpected medical expenses that can wreck one’s finances if they do not have a health insurance policy. Health insurance covers medical bills partially or entirely, depending on the individual’s health coverage.
It helps beat the burden of medical inflation. As medical technology advances, it affects the cost of treatment, diagnosis tests, surgery expenses, and medications. These costs may be too expensive to bear in some cases, but with health insurance, you can access quality treatment, even when medical costs increase.
It provides access to preventative care: Typically, health insurance provides individuals with access to regular medical checkups to ensure that they are in a good state medically. These regular medical checkups help detect any asymptomatic disease early enough before it becomes serious. Most health plans in Georgia provide 100% coverage for specific in-network preventive care options.
It is an integral part of financial planning: Medical bills can quickly eat up one’s savings if adequate plans are not in place. Hence, as you plan your way into financial security, consider getting health insurance for yourself and your family to avoid tampering with your savings because you need to offset medical bills.
The most common health insurance in Georgia falls into 3 categories:
Affordable Care Act compliant coverage
Non-ACA Compliant Coverage and Supplemental coverages
Additional health protections
ACA
The Affordable Care Act (ACA) requires all citizens, including Georgians, to obtain basic health insurance coverage, even though as of 2019 non-compliance is no longer penalized. The ACA operates in Georgia with other state consumer protection laws to help protect state residents from the high cost of healthcare. Approximately 1.4 million Georgians did not have health insurance as of 2019, making the state’s uninsured rate 13.7 percent, the third highest in the country. In 2020, over 19% of Georgia’s adults under the age of 65 did not have proper health coverage. In rural Georgia, the uninsured rate is predicted to become over 25 percent by 2026, which will disproportionately affect Georgians who suffer from chronic diseases like asthma, cancer, cardiovascular disease, diabetes, and obesity.
There were different health plan options in Georgia in 2022, each of which catered to different needs:
Health Reimbursement Arrangement (HRA)
High Deductible Health Plans (HDHP)
Health Maintenance Organization (HMO)
Regional Health Maintenance Organization (HMO) by Kaiser Permanente (KP)
Short Term Health Insurance
Short term health insurance is a popular and affordable health insurance option for Georgia residents who do not have significant preexisting conditions, rarely visit the doctor, and need the basic health coverage, which will provide most of its protections in case of a health emergency.
Short term health plans in Georgia, unlike ACA-compliant insurance, can be purchased for up to 1 year at a time, and can be renewed up to 3 times, for a combined term of no longer than 36 months.
Note: If short term health insurance is purchased as the major medical coverage, the insured is typically advised to combine it with a supplementary policy which can help pay the high deductible and copays in case of a medical emergency and/or hospitalization. Short term medical is typically bundled with Hospital Indemnity and/or Critical Illness insurance. Make sure to discuss your options with a Georgia-licensed health insurance agent who is proficient in both ACA and non-ACA compliant options.
Disability Insurance
Disability insurance is a form of health insurance that offers financial protection for your income so that if you suffer an injury or illness that affects your ability to work, your insurer will pay you a monthly benefit amount until you can get back to work. Disability insurance helps you to continue to fulfill your financial responsibilities while you’re unable to work. Short disability insurance and long term disability insurance are available to every worker in Georgia. Short term disability insurance coverage works with other income benefits to replace 60% of your benefit salary, up to $1,000 per week. However, If you receive other benefits, like social security, that amount to 60% of your Benefit Salary, the short-term disability plan will not pay for this disability. In contrast, long term disability insurance coverage works with other benefits you qualify for, including workers’ compensation, Social Security, and other disability plans and programs (including the State retirement systems). With this plan, you are guaranteed that your combined disability benefits from all sources will equal 60% of your benefit salary up to $4,000 a month.
Getting health insurance ensures that you stay healthy. It also saves you from unexpected and expected financial expenses and reduces out-of-pocket costs for doctor and hospital visits, prescription drugs, medical procedures, and preventive care. This is so you can have better control of your personal finances. Even if you are healthy and do not have any history of illness, health insurance remains essential for you to stay healthy. It bears the cost of your annual check-up, flu shots, and other preventive care when you stay in-network (for ACA-compliant plans). Suppose you consider yourself healthy and rarely visit the hospital. In that case, you can get a High-Deductible Health Plan (HDHP), which has a high deductible for medical expenses (costlier than a typical health plan) but charges lower monthly premiums.
Consult with a knowledgeable Georgia-licensed health insurance agent to know what health insurance plan you qualify for and which ones suit your particular needs. Better still, you can tell your insurance agent to let you know when better plan options that are more suitable for your health needs are created.
According to the Hierarchy of Insurance Needs, the second most important type of insurance in Texas is Property and Liability. This insurance requires that you own or temporarily use the property you are trying to insure.
The 2nd Most-Important Insurance
PROPERTY and LIABILITY Insurance: Personal and Business
The first thing you need to do after acquiring a property in Georgia (whether for personal and/or business use) is to insure it with a reputable insurance company. Properties are exposed to various risks like fire, hail, windstorms, vandalism, theft, etc. Unfortunately, most of these perils cannot be predicted. When they eventually occur, they cause serious damage and incur large sums of money for repair and replacement. This can, in turn, cause a financial strain on the property owner if the properties are not insured, but if the properties are adequately insured, the owner will not be solely responsible for the repair or replacement cost. Depending on the policy agreement, the insurer will bear most of the repair or replacement costs. Likewise, purchasing liability coverage alongside your property insurance ensures the third party involved in an accident or damage where you are at fault is covered. Property and liability coverage complement each other and are usually purchased through a Property & Casualty (P&C) insurance agent.
AUTO INSURANCE
Auto insurance is mandatory in Georgia. The state mandates that all vehicles registered and driven within Georgia have property damage insurance and bodily injury liability insurance that meets the state’s minimum limits in case of a car wreck. The required minimum coverage of liability insurance under Georgia law is:
Bodily Injury Liability – $25,000 per person and $50,000 per incident
Property Damage Liability – $25,000 per incident
Vehicle owners can also choose to purchase more coverage than the state’s limits to protect themselves and their families against financial losses associated with vehicle-related accidents and incidents.
Why Do you Need Auto Insurance in Georgia?
Suppose you intend to drive in Georgia as a motor vehicle owner or lessee. In that case, you will be required by state law to maintain continuous auto liability insurance coverage on the state-registered vehicles you are driving. Maintaining continuous auto insurance means avoiding a coverage lapse, which occurs when there are up to 10 days between the effective date of new insurance and the termination date of the previous insurance policy. Driving without auto liability insurance or with lapsed coverage may attract insurance fines and suspended or revoked vehicle registration under the Georgia Department of Revenue guidelines. In some cases, even after you pay the fine, your registration may still not be reinstated, and driving while the registration is suspended, revoked, or canceled is considered a criminal offense in the state. In such a case, additional penalties will apply. Despite this, up to 12.4% of all vehicles in Georgia are uninsured.
As of 2022, approximately 10.5 million vehicles registered in Georgia needed auto insurance policies to protect themselves from the financial burdens that auto crashes may cause. In 2021, the state recorded approximately 387,444 total auto crashes. Auto crashes can result in expensive damages to the vehicle and the body of the vehicle driver/passenger.
In Georgia, you need car insurance because:
It is a state requirement: Being a legal requirement, you cannot drive without auto insurance in the state.
You need to provide financial protection for your car: You need to protect your vehicle from the financial expenses that may be caused by events like vandalism, collision, thefts, etc. Georgia is among the top 10 states with the highest rates of motor vehicle thefts, with a motor vehicle theft occurring on average every 33 minutes (>43 per day and nearly 16 thousand per year), in 2020. If you are involved in an accident or your car is stolen, and you do not have auto insurance, you will have to bear the loss. Some financial expenses your car insurance can cover include legal fees, injured third parties’ medical bills, or lost income due to the accident.
Your lien holder may require it if your car is financed: Generally, you will be required to have collision insurance and comprehensive insurance if your car is financed so that if the car is damaged or stolen, your insurance will cover the repair or replacement cost. Likewise, your gap insurance coverage on your auto insurance will pay off your car loan if your vehicle is totaled or stolen and you owe more than its depreciated value. However, note that gap insurance is optional.
It helps provide medical payments coverage and personal injury protection (PIP) for you and your passengers: If you are injured in an accident, your PIP coverage will bear the cost of your medical bills. Your medical payments coverage will also bear the cost of your passengers' expenses in an at-fault accident.
It bears repair and replacement costs: Depending on your coverage, your auto insurance policy can cover the cost of repair and replacement for covered perils. If you have collision insurance coverage, it will cover repairs that may arise from a collision with other vehicles and objects, while if you have comprehensive coverage, it will bear the cost of damages caused by natural disasters, theft, fire, riots, etc.
It protects you when an uninsured or underinsured driver hits you: If you have uninsured/underinsured motorist coverage on your auto insurance, you will be protected if you are hit by an uninsured or underinsured driver or a hit-and-run driver.
There are several auto insurance coverage types in Georgia (e.g., collision coverage, comprehensive coverage, PIP), but it is important to get the right one to ensure you are protected in the event of covered perils. Before purchasing auto insurance, ensure you consult with a knowledgeable Georgia-licensed auto insurance agent to get an auto insurance policy that is designed to meet your specific needs.
RESIDENTIAL INSURANCE
There were over 4.4 million housing units in Georgia as of July 2021. Approximately 2.9 million housing units were owner-occupied, and over 1.6 million were available for rent. Owners and renters of these residential properties need homeowners or renters insurance policies to cover losses or damages that might affect their structures or personal belongings within the structures. The residential insurance policies available in Georgia are homeowners, condos, renters, and landlord insurance policies.
Residential insurance in Georgia is important for the protection of residential buildings and personal belongings contained in and on the insured buildings. Residential insurance comprises homeowners insurance, renters insurance, landlords insurance, and condo insurance. It includes dwelling coverage as well as coverage for detached structures, personal property, loss of use, personal liability, and medical payments. With residential insurance, you will be confident that your home and your personal belongings within the insured home are secured. Even when a covered peril causes extensive damage to your home, your residential insurance covers most or all of the expenses.
Residential insurance can cover damages caused by vandalism, riots, theft, fire, hail, windstorms, and hurricanes. You may get a home insurance policy either as a homeowner or a renter.
HOMEOWNERS INSURANCE
Homeowners insurance in Georgia falls under residential insurance (available types are: HO-1, HO-2, HO-3, and HO-5). It provides financial security for your home in the event of covered perils that may cause damage to your insured home. Homeowners insurance is only available to homeowners who live in their personally owned buildings and covers the building itself and the contents of the building. The different types of homeowners coverage are actual value, replacement cost, and extended replacement cost. Actual value covers the cost of the house and its contents after deducting depreciation. Replacement cost covers the actual cash value of the home and its contents without deducting depreciation. Extended replacement cost covers the increased replacement costs even if it exceeds the policy limits in the event of inflation. There are approximately 2.9 million housing units that are owner-occupied in Georgia, each of which needs homeowners insurance.
Homeowner’s insurance mostly covers:
Damage to the building’s interior
Damage to the building’s exterior and other detached buildings
Bodily injury to an individual due to an accident on the insured property
Damage or loss of valuables and personal belongings
Additional living expenses if the property becomes uninhabitable due to a covered loss
You need Homeowners Insurance because:
It protects your home: Your home is exposed to several risks like winds (hurricanes and tornadoes), hail damage, home fires, burglary, and vandalism. These perils can cause serious damages to your home that may be expensive to cover out of pocket. However, with home insurance, your property is safeguarded, and even when the exterior or interior of your home is damaged, your homeowners insurance will bear a large part of the cost of repairing it and restoring it to its initial state.
It protects you from liability: When an accident occurs in your home involving third parties, you will be liable for the resulting expenses, which may include lawsuits and medical bills. Your homeowners insurance protects you from such liabilities. It provides additional liability coverage for injuries that anyone sustains on your property.
Your mortgage lender may require it: When financing a home with a mortgage plan in Georgia, you will be required to get homeowners insurance. Mortgage lenders use homeowners insurance to protect their investments, so if any unforeseen event occurs without the mortgagor completing payment, their investment will remain protected.
RENTERS INSURANCE
Renters insurance (also known as HO-4) is not mandatory in Georgia, but it is highly recommended that you get renters insurance if you reside in a rental unit. This is because the property owner’s landlord insurance only covers the structure of the building and not the contents of the building. Over 1.6 million housing units in Georgia are rentals, and they all need renters insurance. Renters insurance covers liabilities, damages, and losses that the property owner’s landlords insurance does not cover. So if a thief breaks into your house and carts away with your furniture or other valuables in your house, you will have to bear the cost of replacing the stolen items if you do not have renters insurance. Likewise, if that same thief or anyone else visiting your property gets hurt by, let's say slipping on the wet floor, the liability portion of rental insurance will help pay for the damages and the resulting medical and legal expenses. While renters insurance is generally not a requirement for renting a property in Georgia, some landlords may require it as a condition for leasing out their properties.
Renters insurance provides coverage for:
Damage or loss of valuables and personal belongings
Personal and third-party liability
Additional living expenses if the property becomes uninhabitable due to a covered loss
You need Renters Insurance because:
Your landlord may require it: Some landlords and property management companies require that their tenants get renters insurance.
It protects your personal properties: With renters insurance, your rented home is secured in the event of damages caused by covered perils. Landlords insurance typically only covers the building structure and not the tenant’s personal property contained in the building.
It protects you from liability: Renters insurance covers you in the event of an accident involving third parties in your home. For example, if a guest gets injured in your house after slipping and falling from tripping over a door threshold, your renters insurance company will cover their medical expenses.
CONDO INSURANCE
Condo insurance (also known as Georgia HO6 Insurance) is designed to offer coverage to residents who own condominiums. It is not mandatory to get condo insurance in the state, but it is important to get one to protect your condo unit against losses and repair expenses. A standard condo insurance policy also provides additional living expenses if the condo becomes uninhabitable. Likewise, condo insurance can help cover liability costs if you are sued for negligence or need to pay the medical bills of someone injured inside your unit. Condo insurance only covers the owner’s unit. It does not cover areas of the property that are shared with other condo owners, such as roofs, elevators, and hallways; the Condo Association’s insurance coverage covers those.
Standard HO-6 condo insurance in Georgia provides coverage for:
Personal liability costs when you are at fault, including both legal (if you are sued for negligence) and medical fees
Damage to building properties within the insured condo unit, such as the structure, walls, and fixtures
Personal belongings include the owner’s gadgets, clothing, furniture, and other valuables within the condo unit.
Additional living expenses if the condo becomes uninhabitable due to a covered loss
Loss assessment
You need condo insurance because:
It protects your condo unit: Unfortunate perils sometimes cause a lot of damage to your unit. However, condo insurance provides financial relief by reducing out-of-pocket costs for property damage.
Your mortgage lender may require it: When financing a condo unit with a mortgage in Georgia, your mortgage lender will most likely require you to get mortgage insurance to protect their investment.
LANDLORD INSURANCE
Landlord insurance falls under residential property insurance in Georgia and is meant for owners of rental properties (landlords). As a landlord, you aim to continue to profit from your rental property and not run into losses caused by unforeseen events like fire outbreaks, vandalism, bad weather (storms, winds, hail, tornadoes), etc. However, this can barely be achieved without landlord insurance. Landlord insurance helps provide coverage for financial losses connected with your rental home
Landlord insurance covers:
Damage to the building and other detached structures like a garage or fence
Loss of rental income if the rental property cannot be rented out due to a covered loss
You need Landlord insurance because:
Homeowners insurance will not cover your home if you decide to let tenants live in it. If the home gets listed for rent, the insured homeowner must notify the insurer and switch to landlord coverage before the tenants move in.
It covers your rental unit from possible liability claims arising from the tenants and their guests.
It protects your rental unit from unfortunate events that may cause you to run at a loss and also restores rental income if your rental unit becomes uninhabitable due to a covered loss.
COMMERCIAL INSURANCE
Commercial insurance in Georgia is also referred to as business insurance. As of 2021, the state had over 1.1 million active businesses, with about 99.6% of these businesses considered small businesses. These businesses are exposed to liability claims that may cost them their business. Hence, all these businesses need commercial insurance to help protect against financial losses caused by theft, employee and non-employee crimes, data breaches, property damage, lawsuits, and employee injuries, sickness, or death while on the job.
Your business needs commercial insurance because:
The law requires it: The US Small Business Administration (SBA) requires businesses in the US, including Georgia, to have specific types of insurance, including workers’ compensation, unemployment, and disability. If the business operates vehicles, they must be insured with at least the state-required minimum auto liability. Likewise, Georgia requires businesses with three or more employees (both full-time and part-time workers) to carry workers’ compensation insurance. Failure to do this may attract fines, civil, or criminal penalties.
It protects your business from lawsuits: Businesses are prone to lawsuits for various reasons like a broken contract, employee harassment, discrimination, wage disputes, property accidents and injuries, product malfunction, or negligence. Any of these lawsuits could cause a major loss to the business if the other party wins the case. However, with business insurance, your business is protected from losses arising from lawsuits.
It increases your business’s credibility: Most clients would only transact business with companies that are adequately insured because that way, they are assured of the safety net of insurance in case anything goes wrong.
It preserves your business: Many things can go wrong with a business, resulting in losses running to thousands or millions of dollars. For instance, if your business property is damaged by a fire causing you to lose vital equipment, the loss incurred may be too much to bear, causing the business to shut down. But if you purchase the right business insurance policy that matches your business’s risks, you will be assured that in the event of a serious disaster, your business will be preserved. It covers accidents that may occur while working. For instance, Business Owners Insurance compensates for typical operating expenses, which protects against income loss.
Your contractor or business property landlord may require it: Your landlord’s insurance will typically not cover your business facility and your property; so, they will require that you get relevant commercial coverage and list them as the additional insured before leasing out their property to you. Commercial insurance may also be required when you want to finance a business property or equipment. Once the financed item is paid off coverage becomes optional.
It protects your employees: Business insurance, through group health workers’ compensation insurance, ensures your employees are protected in the event of an accident that occurs on or off the job. You can also purchase “key person insurance” to cover the disability or death of a valued employee.
It provides financial security for the business: Commercial insurance protects your business from financial losses that can result in bankruptcy. As of 2021, Georgia had the 7th most bankruptcies per capita, with 45 business bankruptcies per million residents.
Commercial insurance in Georgia works by providing:
Commercial property coverage: This protects the company's physical assets from fire, explosions, vandalism, burst pipes, windstorms, theft, and vandalism. However, it typically does not cover damage caused by earthquakes and floods; those are covered by disaster insurance.
Commercial liability coverage: It protects your business from financial losses arising from third-party claims like bodily injuries or damages sustained by others (employees or clients) during business operations. It includes premises liability, product liability, and completed operations liability.
Commercial health coverage: This is a medical insurance plan that an organization gets for its employees. An important feature of all group health plans is that they are ACA-compliant. Commercial health insurance offers medical coverage like group health medical, group life insurance, and disability income coverage (long term/short term).
Commercial life coverage: Besides the health insurance options, businesses in Georgia frequently offer low-cost life insurance coverage to employees as an additional employment perk. Alternatively, key person insurance acts as life insurance to protect the company’s recovery in case of a death by a key employee.
The types of business insurance policies available in Georgia include:
General liability insurance
Commercial property insurance
Business income insurance
Workers’ compensation insurance
Product liability insurance
Professional liability insurance
Commercial umbrella insurance
Employment practices liability insurance
Errors and omissions insurance
Cyber liability insurance (also known as Cyber Risk insurance)
Business identity insurance
Commercial auto insurance
Commercial fleet insurance
Employer-sponsored group health insurance
Employer-sponsored group life insurance
Key person insurance, and many more.
You should get business insurance if you own a business or a commercial property and if you have employees. Consult with a Georgia-licensed commercial insurance agent before getting any business insurance policy so they can assess your business needs and help you determine the policies you need to fully protect your business.
DISASTER INSURANCE
Georgia often experiences natural disasters like floods, tornadoes, severe storms, hurricanes, wildfires, and floods, each of which incurs huge financial losses. The types of disaster insurance policies available in Georgia include:
- Tornadoes, windstorms, hail, hurricanes, and wildfire coverages fall under a homeowners policy: In 2022, about 4,470 multi-family structures in the Georgia metropolitan area were at risk for storm surge and hurricane wind, with an expected reconstruction cost value of nearly $2.2 billion. Standard home insurance policies typically cover tornadoes, windstorms, hail, hurricanes, and wildfires. However, depending on how much home insurance coverage you have, you may need to purchase additional coverage if you reside in an area where any of these disasters are prevalent.
Note: The main damage caused by a hurricane is from flood, so if your home is in an area that may flood easily, your homeowners insurance will be of little help.
Flood insurance: Flood insurance is purchased as a separate policy in Georgia. Flood insurance is administered by the National Flood Insurance Program (NFIP) and the Georgia Emergency Management and Homeland Security Agency (GEMA/HS).
Earthquake insurance: While earthquakes are scarce in Georgia, it is advisable to stay prepared because earthquake damage can be financially draining. Between 2000 and 2022, the state experienced over 250 earthquakes, destroying commercial and residential properties and casualties.
You need disaster insurance because:
It protects your residential and business properties from the destruction caused by covered natural disasters.
It protects your personal belongings and valuables from disaster damage.
It ensures peace of mind during seasons when certain natural disasters are more likely to occur. For instance, the Atlantic Hurricane Season runs from June 1st through November 30th each year, and the flood season typically runs from April through September. With sufficient disaster insurance that meets your specific needs, you will be unbothered during such seasons.
Note that the type of disaster insurance you purchase determines the type of natural disaster for which you will receive coverage. Hence, it is important to speak with a knowledgeable Georgia-licensed insurance agent to determine the prevalent disasters in your locality and the type of disaster insurance you should purchase. An insurance agent can also help you save money on your premiums.
3rd Most-Important Insurance - Life Insurance:
LIFE INSURANCE
Life insurance in Georgia is a contract between an insured individual or and business entity and an insurance company, wherein the insurer promises to pay a specified amount of money to the policy beneficiary(s) upon the insured person’s death. Over 10 million people reside in Georgia with about 14.7% of this population being seniors (65 years and older) and dealing with serious health challenges like heart disease, type 2 diabetes, arthritis, dementia, and cancer. Most of these seniors have dependents, and if they die without life insurance, their dependents may suffer not only emotionally but also financially - having to cover the cost of the final expenses and possible left-behind debts. This makes life insurance essential to provide financial protection to their loved ones after their demise. However, life insurance is not only for seniors; it is also advisable that younger persons get life insurance because it is typically less expensive for young and healthy persons. In addition, some life insurance policies have a living benefits package where you can access funds from your death benefit while still alive and even use it to bankroll your retirement savings tax-free. While term life insurance is a temporary solution, permanent life insurance covers you for your entire life.
In Georgia, one-third (32%) of Georgia residents do not have an active life insurance policy compared to the 47% of US residents who did not have life insurance in 2022.
You need life insurance because:
It helps pay off your final expenses: Final expenses like funeral service, medical bills, casket or cremation, nursing home bills, and obituary may incur significant expenses, which may be too burdensome for an individual's loved ones to cover. However, with life insurance, you will not have to bother about how your final expenses will be paid.
It provides financial security for dependents: With life insurance, your dependents’ needs will be well catered for within the limits of your policy’s coverage after your demise.
It caters to your children’s education: Universal and whole life insurance policies can help provide cash to pay for your children’s education, be it a kindergarden or college tuition.
It helps with business planning: Life insurance ensures the continuity of the business owners and provides financial protection for a company in the event of the owner's death.
It can be used as an investment: Through cash value life insurance, a form of permanent life insurance, your life insurance policy can serve two purposes; investment and payout to policy beneficiaries. This policy accrues cash value that can earn capital gains as an investment.
You can leave a legacy through inheritance or donation: If you have ever wanted to leave a legacy for your children or a charity organization, a good way to achieve it is through life insurance.
You can use it to grow tax-free retirement income: You can purchase a cash value life insurance policy and discuss with your insurer to have it produce a yearly income for your retirement that is not subject to tax while saving a part of it for your beneficiaries as a death benefit.
It can be used as a debt repayment strategy: To avoid passing on your debts to your dependents, you can use your life insurance policy to pay off your debt after your demise.
When deciding on the best life insurance policy to fit your needs, speak with a knowledgeable Georgia-licensed life insurance professional who has experience in all types of life insurance coverage and has access to multiple life insurance companies for comparison.
Basic Life Insurance to Cover Final Expenses and Burial
In the United States, one in every two seniors dies with savings of less than $10,000, leaving their families with the financial burden of trying to raise money for the funeral, which is additional emotional stress coupled with the grief they have experienced. In Georgia, the average life expectancy at birth was 75.6 years in 2020, while in 2022, seniors (aged 65 or older) represented about 14.7% of the state’s population. Many uncertainties come with the thought of what will happen after death, especially when you are the main provider in your home or have people who depend on you. A good way to deal with these uncertainties is by ensuring your dependents do not lack the necessities of life after your demise. You can do this by purchasing life insurance to prepare your family for when you pass away.
Why Do I Need a Basic Life Insurance Policy for Final Expenses?
Basic life insurance is any type of whole life or term life insurance policy with a low death benefit, designed to cover funeral costs and other end-of-life expenses after an insured’s demise, and not much more. It is purchased mainly to cover final expenses like funeral service, medical bills, casket or cremation, nursing home bills, obituary, etc.
The earlier you purchase the coverage in life, the cheaper the premium will be. If you wait to buy life insurance until after 65 years old, you may have to buy the basic coverage due to the high cost and impossible to pass medical requirements anywhere else.
If you waited for too long, you may need to get Final Expense burial life insurance, which is a permanent life insurance with low death benefit that typically does not require a medical exam before it is activated. Final expense insurance is often considered the last resort coverage since it costs drastically more than other types of insurance that require qualifying, while providing less coverage.
You need basic life insurance when:
You have dependents that may be unable to handle the cost of your final expenses.
You just want your family and loved ones to be free of your final expenses.
You cannot get permanent coverage due to your medical history. Considering the rising prices of funeral and medical care, term life insurance or final expense insurance are good insurance options for seniors who are not buoyant enough to purchase whole life insurance but want to protect their relatives and friends from worrying.
You have debts that you may be unable to finish paying before you die. Without settling your debts, your estate will be used to offset the debts you incurred while alive.
Some options for basic final expense coverage in order of cost increase are:
Term Life
Final Expense Simplified issue
Final Expense Guaranteed Issue
These three options have death benefits. However, they are relatively low compared to the death benefits of whole or universal life insurance coverage, but they may cost more than final expense policies. Consult with a Georgia-licensed life insurance agent to help you choose from the different life insurance coverage options that best suit your particular situation.
Cost of End of Life Expenses in Georgia
The cost of end-of-life expenses is not fixed in Georgia; it varies depending on many factors. For instance, end-of-life expenses include costs for funeral service, medical bills, casket or cremation, nursing home bills, obituary, etc. However, not all these costs are incurred every time someone dies. Some life insurance policies allow the insured to use the death benefit towards their end-of-life expenses in case of a terminal illness or long-term-care needs.
Regardless of the cost of the deceased’s end-of-life expenses and the death benefit payout, it will not be taxed as Georgia has no estate tax or inheritance tax (§ 48-12-1). Also, most final expense policies payout up to $50,000, which should cover most end-of-life expenses.
Average Cost of Funeral in Georgia
The average cost of funerals in Georgia is $5,900. However, funeral expenses vary depending on where you are in Georgia; for instance, in Fulton County, the average funeral price is around $6,200, which is higher than the State of Georgia’s average cost ($5,900). In other countries, the cost is even higher. For instance, DeKalb County’s average cost is $7,800, and the funeral cost in Cobb County averages $8,300. This is relatively high compared to other counties in the state, but the price is not as high as Jones County, which is around $11,700. In Forsyth County, the average cost of funerals is $5,500, while Jefferson County is considered the most affordable in the entire State of Georgia, with an average cost of $4,000.
Based on this, funeral costs in Georgia range between $4,000 and $12,000, although the cost may be higher or lower, depending on the type of funeral.
Most Common Types of Life Insurance in Georgia are
Term Life: Term life insurance is a type of life insurance policy that runs for a predetermined number of years, typically 10, 20, or 30 years. The policy covers the insured for that specific period and only pays a death benefit if the insured dies during this policy term. The different types of affordable term life insurance policies in Georgia are:
Level term life insurance, which maintains the same amount of premium payments and death benefits throughout the entire policy - giving your beneficiaries the set amount of money regardless of when you (as long as its during the policy term)
Decreasing term life insurance which provides a coverage amount or death benefit that decreases over a given period - typically purchased to mirror a large debt that needs to be repaid, like a mortgage. As the time goes by and the loan balance goes down, the decreasing term life insurance lowers the death benefit amount to match.
Renewable term life insurance which allows you to keep renewing your term life coverage even if you develop health issues, but as you age, your premium will increase each time you renew
Convertible term life insurance which allows you to convert your term life policy to a permanent one without going through additional medical exams
Return of Premium (ROP) which allows you to get refunds of part or all of the premiums you paid for your policy if you outlive your policy term.
Final Expense: This type of permanent life insurance offers financial support to unburden your family of your final expense when you die. You can get final expenses as part of your standard life insurance policy or purchase it as a separate policy. The top reason why someone would get final expense life insurance is if they cannot pass the medical exam, or the other policies with higher death benefit limits are too expensive. Since final expense life insurance is a permanent life policy, it has a cash value component; but it is usually so minimal that cash value is not part of consideration when picking this coverage.
Indexed Universal Life (IUL): It is a permanent life insurance policy that offers lifelong protection. The cash value component is meant to be used while the insured is still alive for investments and retirement planning, while the death benefit is what the beneficiaries will get after the death of the insured. While the insured is alive, they can benefit from the cash value component of their indexed universal life. It is more flexible than whole life insurance in that with universal life insurance, you can decide to lower or stop paying premiums for some time if you have accumulated sufficient wealth in your cash value account, which can cover your payments for you. The policy also allows you to adjust your death benefit at any time.
To get further help with insurance in Georgia, speak with a state-licensed insurance agent.
