Even if you’re able to budget really well, invest money regularly, and even have funds for long-term investments, if something terrible occurs at the worst possible time, all your hard work can vanish overnight. While it may appear to be “bad luck,” the fact of the matter is that the risk went unmanaged. Insurance may be mundane; however, it is the insurance policy that acts as a shield around everything you are trying to create and/or accomplish.
Picture yourself at age 30. You have momentum. Your earnings are increasing. Your life is stable. Typically, people at this age believe they are “safe.” Nevertheless, this is the same time when just one accident, illness, and/or legal matter can disrupt everything.
Before discussing which type of insurance is important, let’s discuss a paradigm shift in your way of thinking.
Insurance is not based on an expectancy that bad things occur; insurance is based on the belief of not allowing bad events to destroy the life you are going to lead.
Once you come to this understanding, you will begin to see value in the various types of insurance you should be considering.
Although long-term disability insurance (LTDI) doesn’t get the attention it deserves, it’s actually one of the most important types of insurance you can have since your ability to earn an income is your most significant financial asset. If you become unable to work for months or years due to injury or illness, bills don’t just stop; they continue to pile up, and this type of policy provides a source of income replacement to allow you to maintain some form of financial stability while you recover and adapt. For young adults, LTDI is offer at surprisingly low rates compared to what it will cost you; therefore, skipping this coverage could be a large financial risk for you.
While you may believe that term life insurance is not necessary for you, it really is necessary for those who depend upon your income. In the event that you were to become deceased tomorrow, your family would have no means of supporting themselves. Therefore, this type of life insurance is intended to protect your family from losing their home and financial stability in the event of your death; therefore, it is imperative to purchase this type of policy while you are young and healthy, as it will likely be the cheapest form of insurance available to an individual. In addition, this type of insurance can be considered as priceless in terms of protecting your family’s future.
Your home is significantly more vulnerable than it appears. Fires, floods, theft, guest accidents, etc. do not wait for you to be prepared. Renters insurance and homeowners insurance provide financial protection in the form of property coverage, liability coverage, and temporary relocation expenses in the event that your home becomes uninhabitable. The cost for renters insurance and homeowners insurance is significantly lower than the amount of financial protection offered by each type of policy.
Health insurance has become a necessity due to the exorbitant costs associated with an emergency room visit (more than most cars) and a severe illness (more than most houses). Health insurance also helps with routine medical expenses and limits your financial exposure to health-related issues.
Automobile insurance is not only required, but is also essential to your overall financial security. In addition to damaging a vehicle in an accident, you run the risk of seriously injuring the other driver(s) and/or causing a lawsuit for damages. Even if you do not own a vehicle, you will still benefit from having non-owner automobile insurance if you plan to drive a rental car or borrow a friend’s car, and it allows you to maintain your insurability should you need permanent coverage in the future.
Winning with money is not just about growing your money; it is also about protecting your financial future from unforeseen financial disasters. The five types of insurance listed above act as a safety net for you, and can help prevent you from experiencing a major financial setback because of a single unfortunate event.
The reason you purchase these types of insurance is not out of fear, but rather a commitment to your future. This is the difference between relying on luck to help you succeed and having the resources available to support you should you face an unexpected setback.
