Insurance is paying someone to take on risk you can't afford. It's boring—until the day you desperately need it.
"I thought renters insurance was a scam. Then my apartment flooded and I lost $8,000 in electronics and furniture. Without insurance, I would have been starting over from zero."
The Insurance You Need
| Type | Who Needs It | Why |
|---|---|---|
| Health | Everyone | Medical bills are the #1 cause of bankruptcy |
| Auto | Car owners | Required by law, protects against lawsuits |
| Renters | Renters | Covers your stuff, liability, temporary housing |
| Homeowners | Homeowners | Protects your biggest asset |
| Life | People with dependents | Replaces your income if you die |
| Disability | Workers | Replaces income if you can't work |
Watch Out
Medical debt is the leading cause of bankruptcy in America. This isn't optional.
Key terms:
- : What you pay monthly
- : What you pay before insurance kicks in
- Copay: Fixed amount per visit
- Out-of-pocket max: Most you'll pay in a year
Pro Tip
If you're healthy, a high-deductible plan + often saves money. The HSA is triple tax-advantaged.
Renters Insurance
Costs about $15-20/month and covers:
- Your belongings (theft, , water damage)
- Liability if someone gets hurt in your apartment
- Temporary housing if your place becomes unlivable
Quick Win
Get renters insurance today. It takes 10 minutes and costs less than Netflix.
(If You Have Dependents)
Do This
Get insurance if people depend on your income. Aim for 10-12x your annual salary.
Avoid This
Skip and universal life insurance. They're expensive and the "investment" component has terrible returns. Buy term and invest the difference.
What You Probably Don't Need
- Extended warranties on electronics
- Phone insurance (unless you break phones constantly)
- Credit card payment protection
- Identity theft insurance (your already has this)
The Bottom Line
Insurance is about protecting against catastrophic loss—things that would devastate you financially. Don't insure things you can afford to replace.