No one can plan for every variable in life, but a key part of financial planning is to build a safety net to prevent financial disasters caused by catastrophic illness or other personal tragedies. Below is a list of the different types of insurance coverage that should be considered, depending on your circumstances. We also discuss the importance life insurance in greater detail:
- Medical Insurance
- Homeowners and other property Insurance
- Auto Insurance
- Umbrella Liability Insurance
- Life Insurance
- Long Term Care Insurance (if appropriate)
Life insurance is necessary if you have dependents who will suffer financially if you die (children, for example). Many people also use insurance as part of their estate planning and cash accumulation regardless of their dependent status.
If you plan to buy insurance, you should educate yourself about the pros and cons of term, whole life, and other types of insurance. You may also want to talk to an adviser about how much insurance is enough.
Financial advisors suggest having enough savings in an easily accessible account to cover your living expenses for six months in the event of illness, job loss, or other serious emergency.
We protect our most important assets with insurance, like car insurance, homeowners insurance, and medical insurance. Why not insure your nest egg?