Everyone needs insurance. It is one of the key pillars of a successful financial plan. The less money you have in savings, the more insurance you require. This article starts the first part of a series of articles on the topic of insurance. How much should you buy? What kinds of insurance? These questions and more will be explored in this series of insurance essentials.
What is insurance, and do I really need it?
Insurance allows you to lower your financial risk by paying premiums for coverage. Life has all kinds of unforeseen circumstances just waiting to test your foundation. Some insurance is state required (like car insurance in most states), and other insurance is completely optional. Not all insurance is worth your dollar, especially when insurance parades itself as an investment. Insurance is NOT an investment. You should invest in investments, not in insurance policies. We’ll get to that later on in this series.
You need the right insurance just like you need an emergency fund, investment portfolio, and budget. It is just as important and necessary. Whether you are young or old, healthy or crippled, you need insurance!
What types of insurance do I need?
Here we’ll give you the big picture so you can get a bird’s eye view of insurance as a whole. Later in the series, we’ll explore each of these types in greater detail so you can create an action plan for yourself on each type. If you bookmark this page, you can come back here later and click on each type of insurance to navigate to the related articles once they’ve been posted.
- Health Insurance: A must have. Health insurance protects you from high medical service fees and unforeseen medical emergency costs. There are a great deal of plans offered from employers and private companies that you’ll have to wade through, but spending the time to research what type of health insurance is right for you will protect you and your family.
- Auto Insurance: Required by law in many states, auto insurance can be one of the best buys in the insurance world. We’ll define each type of auto insurance so you can make a sound financial decision while keeping your premiums down.
- Life Insurance: Sounds morbid, but you need it! We’ll teach you what to stay away from and how you can buy reasonable life insurance for less than it costs to eat out once a month. The last thing you want to do when you lose a loved one is worry about money.
- Disability Insurance: One of the most overlooked types of insurance is disability. You are more likely to become disabled than die by retirement age, so disability insurance is a must!
- Long-term Care Insurance: Younger folks don’t need to purchase long-term care insurance, but once you hit 60 years of age, you better start shopping!
- Homeowners or Renters Insurance: If your home, the biggest investment you have, goes up in flames . . . what are you to do? Protect one of your most valuable assets by purchasing a great deal of homeowners or renters insurance.
- Identity Theft Insurance: Yes, that’s right! Identity theft is becoming more and more prevalent in today’s technological age. Learn how to protect your identity and retain your financial standing.
There’s a lot of ground to cover here. We’ll get though it together, piece by piece! Create an action plan for putting all of these types of insurance in place so that you can have greater financial health. Write down some deadlines on each and try to stick to them! Insurance can turn a panicked situation into a mere inconvenience.
! John wrote two articles for the book: "Budgeting for Groceries" and "How Grocery Stores Work."
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