Written by Rachel Bennett
Insurance protects you from financial disasters, but insurance companies also sell products you don't need. Here's what matters:
Medical bankruptcy is real. Even if you're young and healthy, one accident can cost $100,000+. Get it through your employer, a spouse, the marketplace, or your parents (until 26).
Legally required in most states. Get liability coverage at minimum (covers damage you cause to others). If your car is worth under $3,000, skip collision/comprehensive - they're not worth it.
Renters insurance is $15-$30/month and covers all your belongings if there's a fire, theft, etc. Homeowners insurance is required by mortgage lenders and protects your biggest asset.
If you rely on your income, this is crucial. Disability is more common than death before 65. Replaces 50-70% of income if you can't work. Often available through employers.
If you have kids, a spouse, or anyone who'd be financially screwed if you died, get term life insurance. It's cheap ($30-$50/month for $500,000 coverage for a healthy 30-year-old).
Extra liability coverage beyond your auto/home policy. $1-2 million in coverage costs only $200-400/year. Great if you have assets to protect.
Expensive, complex, and combines insurance with a terrible investment. Just buy cheap term life and invest the difference.
Electronics, appliances, cars - these are profit centers for stores. Self-insure by saving the warranty cost instead.
Overpriced and rarely pays out.
Your auto policy and credit card likely already cover this.
Do the math - usually not worth it.
Insure catastrophic risks you can't afford to cover yourself. Skip insurance for things you could pay out of pocket.
Calculate your emergency fund needs with our Savings Goal Calculator!