Insurance is paying someone to take on risk you can't afford. It's boring—until the day you desperately need it.
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 |
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
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
(If You Have Dependents)
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.