What Insurance Do You Really Need?

There is insurance to cover many, many different types of issues and situations.  But do you need all of the different types that are offered?

What insurance should you decline, and what insurance should you make sure you have in place to protect yourself, your family, and your belongings?

Life Insurance

In my book, as soon as you’re married, and especially after you have a child, you MUST have life insurance.  Remember, the premiums are cheapest when you’re young and fit.  My husband and I got life insurance policies in our thirties after the birth of our first child.  The premiums for both of us combined are less than $75 a month, which is a good price for peace of mind.

If you’re children are all grown, you may no longer need life insurance, especially if you have substantial savings, investments, and retirement accounts.  However, you may consider still covering yourself for $10,000 or so to cover the cost of the funeral and burial expenses.

Disability Insurance

Many workplaces offer disability insurance as part of your benefits package, so you won’t have to pay for this privately.  However, if you’re self-employed and the main breadwinner in your family, you may want to purchase disability coverage.

Unfortunately, a disability policy can be pricey, but if your family would suffer grave economic consequences without your income, you’ll want to consider this one.  Check with your accountant because you may be able to claim this as a tax deduction as a self-employed person.

Rental Car Insurance

Most people decline rental car insurance because they want to save some money on their rental, and their own car insurance will cover any issues that may come up with the rental car.  However, calling your auto insurance company to confirm this is always wise.

I used to refuse rental insurance every time, but I have since changed my mind.  I generally refuse rental insurance if we’re only using the car locally.  However, for long, cross country trips, I always get rental car insurance.

I’ve had too many cross country trips where rocks fling up and hit the windshield, or animals cross the high way.  On long, cross-country trips you just don’t know what will happen.  I’d prefer to pay for the rental car company’s insurance rather than risk having my own insurance go up to pay for an issue or face paying for damage out of pocket so I don’t have to involve my own insurance company.

Pet Insurance

If Fido or Fifi gets sick, veterinarian costs can quickly add up.  If the pet is already older, some people simply choose to forego expensive treatment.  However, if the pet is still relatively young, the decision can be much more difficult.

If you treat your pet like a member of the family and would spare no expense to care for the pet, you may want to consider pet insurance.  However, be warned that there are many limitations on these types of policies, and you may not always recoup your investment.

“Consumer Reports compared the cost vs. payout of nine pet policies for Roxy, a healthy 10-year-old beagle who lives near the magazine’s office in Yonkers, NY.  Roxy’s lifetime vet bills have totaled $7,026 (in current dollars).  In every case, the total premiums that would have been paid to those insurance companies were higher than Roxy’s medical bills” (NBC News).

A better idea might be to create a pet fund in your budget as soon as you bring your pet into your family.  If you put aside $30 to $50 a month, in five years, you’ll have amassed $1,800 to $3,000 in savings for your pet’s treatment.  When your pet is 10 years old and more likely to need pricey treatment, you may have as much as $6,000 saved, which widens your options considerably when it comes to how much treatment you can afford.

There is insurance available for many scenarios, but as a consumer, your job is to discern what kinds of coverage you really need and which you can pass up.

What insurance do you consider to be essential and what kinds would you pass up?