What Insurance Do You Actually Need?
Insurance can be confusing. With so many different policies available, it’s easy to wonder whether you’re adequately protected or simply paying for coverage you don’t need. The truth is that insurance isn’t about buying every policy that’s available. It’s about protecting yourself from the financial risks that could have the greatest impact on your life.
A simple way to think about insurance is this: insure what would financially devastate you. Minor inconveniences can often be handled through savings, but major events such as losing your income, being involved in a significant lawsuit, or experiencing a catastrophic loss can completely change your financial future. Insurance exists to help protect against those life-altering risks.
One of the most overlooked forms of protection is disability insurance. While many people prioritize life insurance, your ability to earn an income is often your greatest financial asset during your working years. Statistics show you’re more likely to experience a disability than pass away during your career. A quality disability insurance policy, especially one with own-occupation coverage, can replace a significant portion of your income if you’re unable to work in your chosen profession.
Another valuable layer of protection is umbrella liability insurance. As your income and net worth grow, so does your financial exposure. Umbrella coverage provides additional liability protection above your homeowners and auto insurance policies, often adding $1 million to $5 million in coverage for a relatively modest annual premium. For many households, it’s one of the most cost-effective ways to help safeguard the assets they’ve worked hard to build.
The right insurance strategy isn’t about purchasing the most coverage possible. It’s about understanding which risks have the potential to significantly impact your financial future and making informed decisions that align with your overall financial plan.
If you’re unsure whether your current insurance coverage fits your needs, reviewing your policies periodically can help ensure you’re protecting the areas of your life that matter most while avoiding unnecessary expenses.
Listen to the Full Episode
Want to dive deeper into this topic? Listen to What Insurance You Must Have and What You Can Skip on the CAPitalize Your Finances podcast, where Christopher Panagiotu, CFP®, breaks down practical financial strategies designed to help you build and protect long-term wealth. New episodes are released every week.
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