I know it’s not pleasant to think about illness, disease, death, disability, floods, fires, accidents, and other awful events, but catastrophes can happen and you need to be equipped with the right insurance to get you through difficult times. The last thing you need to worry about if your spouse dies or you get into a major car accident are money problems. Trust me; it’s worth getting your coverage properly organized now, so you can rest easy in the event something terrible happens to you or your family.
The trick with insurance is to insure for the major things and people in your life such as your house, vehicle, loans (such as your mortgage), future earnings and life. All you have to do is picture the worst catastrophes that could happen to you, and that should help you to determine what the most important coverage should be for you. So, for example, you got into an accident at work and could never work again, you’ll want to protect your income with disability insurance. Or, if you own a home and it burns down, you’ll want home insurance that covers fire damage. When I had reconstructive jaw surgery and was unable to work for two months, I was very thankful to have short-term disability insurance. It protected my income. Another way to think about what to insure is if your survival depends on it, you should insure it.
Avoid insuring for petty things – it’s generally a ridiculous waste of money. Things like extended warranties on computers, cars, repairs and maintenance programs. Avoid pet insurance as your financial survival doesn’t depend on the survival of your pets. Adult life and disability coverage is often sufficient for a family, but always ensure you have adequate medical insurance for you and your family.
Unless you’re sending something astronomically valuable in the mail (you should probably avoid doing this anyways), don’t insure your packages. Avoid gimmicks like identity theft, bicycle, eye-wear, or extended travel cancellation insurance. Think of it this way, if something isn’t going to cause you financial catastrophe (bankruptcy), don’t buy insurance for it. You should have emergency savings to tend to these smaller items.
When you avoid insuring for the small things, it allows you to focus on insuring for lar
ger, more important things like your life or disability. What you don’t want to have happen is to be paying insurance premiums on your mail package when you don’t have adequate medical insurance.
Work with an insurance broker in your community to understand your needs and select the best products for your situation. If they try pressuring you into buying petty insurance, fire them! Similar to your investment advisor, only work with something that is reputable and has many years of experience.