Insurance is Part of a Larger Picture
Some parts of life are important, but not exciting. Insurance is one of those areas. Few of us enjoy thinking about insurance, but having proper insurance coverage is very important. Insurance protects you and any dependents from suffering financial ruin if there is a health crisis or a loss in income. Insurance isn't the only way to protect yourself from financial harm, but it is a cornerstone of protecting you and any dependents. Financial planning and insurance go hand in hand
When you buy your auto insurance, home insurance, life insurance, or health insurance policies, you hope that you never have to use them to their full extent. But, unforeseen events can and do happen, and having insurance protects you from serious financial harm.
Even though you need insurance, shopping for it can be a tedious task.
Insurance isn’t an exciting or fun topic. Insurance salespeople are the butt of jokes for a reason (and Groundhog Day with Bill Murray had a doozy of an insurance salesman caricature. Don't let encountering a Ned Ryerson stop you from getting the right insurance coverage!
Prioritize Your Coverage Needs
You may want to spend money on different types of insurance, to provide comprehensive protection for your family, but can't afford to pay for all of them. It could be that life insurance is your biggest priority because people are dependent on your income to support them.
Maybe you work in a dangerous job and having long-term disability insurance is a reasonable expense.
Insurance is not the only way to protect yourself from financial harm. You also want to build an emergency fund to cover the unexpected expenses that arise that can be burdensome but are not catastrophic.
Whatever your insurance needs are, think about your need for the insurance and the other beneficial ways you can spend your money, build savings in a type of savings account, put money into a retirement fund, or open an investment account.
Where Does Insurance Fit Into Your Overall Financial Plan?
You want to be thoughtful about the kind of coverage you need and how you prioritize your needs. When you choose to buy insurance, you place the need for the protection the insurance provides over other uses of your money. That can be a very smart choice, but you don’t want to pay attention to your insurance needs without thinking about the other ways to protect yourself from financial shocks, and from how you could use your money best to build good financial health.
There are a lot of different types of insurance you can buy. Choosing the right kinds of coverage and prioritizing them takes time and thought.
It turns out that people who take the time to think about and plan their insurance needs, and how they may change over time, set a strong example of how you will benefit, in two distinct ways.
- They increase their chances of buying the right mix of insurance
- The process of taking time to review their insurance options reinforces the value of financial planning and increases their chances for looking at not just their insurance needs, but at all the different parts that determine their overall financial health.