Which insurance policies do I really need?

Your needs for insurance depend on your situation and can't be generalized for everyone, but there are a lot of options available. Risk management options have become overwhelming and somewhat out of control. Now you can purchase policies for terrorism insurance, pre-paid legal services, and pet insurance just to name a few. How do you know what policies you really need? Well, the answer is different for each person, so let's look at some of the more common insurance options:

a) Health/Dental Insurance
Considered by many to be the most important insurance to purchase, especially if you have a family. Don't take shortcuts here. If your company offers group insurance, compare those rates with individual polices to see which is better for your situation. (For more on this type of insurance, read Intro to Insurance: Health Insurance.)

b) Property Insurance (auto, boat, motorcycle, etc…)
If you have a vehicle, you'll need to get insurance. Don't get caught driving without it, some states have severe penalties if you get busted without this coverage.

c) Mortgage Insurance/Life Insurance
If you're the main money earner in your family, what would happen to your home if you were out of the picture? Could your family still make the mortgage payments to continue to live in the home? If this is a concern of yours, then you might want to consider term-life insurance to cover your mortgage loan. (Read How Much Life Insurance Should you Carry? for more depth.)


d) Disability Insurance
If you're concerned that, if you were to be injured, you would not be able to bring home a paycheck, look into short and long-term disability insurance. This insurance pays you a monthly check when you are unable to work due to a disability. (Read The Disability Insurance Policy: Now in English to learn more.)

e) Homeowner's Insurance/ Renter's Insurance
If you own a home or rent a home or apartment, you should consider this insurance to protect you and the property. It typically covers you if someone is injured at your home as well as the property inside and out.

f) Long-term Care Insurance
This insurance coverage is usually not thought much about or purchased until an individual reaches age 55 or older. This coverage provides for nursing care and other home services in the event that you are unable to care for yourself or your spouse. (Check out Long Term Care Insurance: Who Needs It? for more.)


There are many different types of unnecessary insurance coverage's available out there. While it's irresponsible to rule out any particular insurance coverage as bogus, some of those that most people could do without include those such as: Accidental Death Insurance, Credit Card Fraud protection, Appliance Insurance just to get started.

This question was answered by Steven Merkel.

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