A while back Tom did an interesting list of “insurance you can do without” where he pointed out several insurance products you can do without. I thought we should take a look at a few insurance that you CAN’T do without.
Many either ignore life insurance in their financial planning or think it is not important. If you have dependents, life insurance is vital to your family, it is not there to increase your net worth or benefit you directly, and the purpose of life insurance is to protect your family! Not having sufficient life insurance is leaving your family very vulnerable, just imagine you have a mortgage and other loans over $300,000 and something were to happen to you, what will happen to your loved ones? They have to either down seize and fire sell the home or use retirement savings, either your family will not only be in emotional stress but also financial stress.
Critical Illness Insurance
Tom has pointed out that you can do without Cancer insurance, but you can NOT do without critical illness insurance. Unlike life insurance, critical illness insurance is known as living benefit and is there to protect YOU AND your family. Critical illness insurance gives you a lump sum when you are diagnosed with any of the covered illnesses (heart attack, stroke, cancer …and more). It is tax-free and can be used for anything, most often it is used to seek treatment outside of the country.
Disability insurance is another insurance you can not do without. Take a minute and think about what is the most important asset you have? It is your ability to generate income, if you are making say $40,000/year and you are 30 years old, you will be making over $1.4 Million over the next 35 years not including any raises. If you owned something that was worth $1.4 Million would you insure it? You can even get disability insurance for the self employed.
I may sound like an insurance sales agent (which I was a few years ago), but this is to protect yourself. You do not need expensive products, just purchase enough insurance to cover your needs, you can follow these 14 tips when purchasing insurance. Your financial pyramid will be very unstable if you ignore insurance products and only focus on investments. There is some insurance you can do without, but you can NOT do without these three insurance products.