Insurance is the least exciting part of personal finance and the most important thing you can't afford to skip. One uncovered medical event, lawsuit, or disability can wipe out a decade of savings. These four guides cover the four coverage types most people need - what to buy, how much, and where to get it.
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Insurance is the least exciting part of personal finance and the most important thing you can't afford to skip. One uncovered medical event, lawsuit, or disability can wipe out a decade of savings. Buy term life if someone depends on your income. Buy disability before you buy more life insurance. Add an umbrella policy once your net worth crosses $100K. Pick a health plan by total expected cost in a bad year, not the monthly premium.
Most people are simultaneously overinsured on things that don't matter (extended warranties, credit-card fraud insurance, mortgage life insurance) and underinsured on the four that do. Fix that order and you are ahead of nearly everyone.
Not everyone needs all four at every stage. Here is the honest mapping from life situation to coverage:
| SITUATION | TERM LIFE | DISABILITY | UMBRELLA | HEALTH |
|---|---|---|---|---|
| Single, 22, no dependents | Skip | Employer | Skip | HDHP+HSA |
| Married, no kids, dual income | Optional | Employer | If NW >$100K | HDHP+HSA |
| Married, kids, mortgage | Yes, 10-12x | Individual policy | Yes | Compare PPO |
| Self-employed, high earner | Yes, if dependents | Individual, own-occ | Yes | ACA / HDHP |
| Retired, paid-off house | Let it lapse | N/A | Yes | Medicare |
Term life is time-boxed income replacement. Disability is income replacement while you are alive. Umbrella protects assets from lawsuits. Health protects you from the one event most likely to actually bankrupt you.
Buy insurance for things that would ruin you. Skip insurance on things you can comfortably self-insure. Extended warranties on a $400 blender are not in the first category.
Last updated 2026-04-14. Not financial advice. Do your own research.