We all know someone who didn’t have health insurance, got hurt, and now is dealing with the tremendous burden of huge medical bills. Insurance is a boring subject. This is not going to be a hugely entertaining article, but it’s a very important subject. Insurance can either rip you off or save your financial life. There’s not much middle ground. I hear about so many people that get burned by insurance products that are as worthless as the paper they are written on. But, there are many insurance products out there that are necessary to protect you and your family. Here is my list.

Health Insurance: This one is obvious. I’m not going to get into the whole political sound byte about how so many Americans don’t have health insurance. This isn’t a political blog. But, I know that many of those Americans that are part of that statistic, CHOOSE not to have it. If you choose not to buy it, you’re putting all of your chips on black in roulette. If you are struggling with your finances, figure out a way to pay for health insurance. I know that it sounds insensitive, but you can’t afford NOT to have health insurance. If something happens and you don’t have it, you’ll be swimming in debt for a very long time.

Long-Term/Short-Term Disability Insurance: Long-term disability insurance protects you if you are disabled for longer than a year from your current means of employment. If you are unable to perform the tasks of your current occupation, then long-term disability will kick in and pay you a portion of your yearly income. This is huge for people who work in high-risk industries such as construction. Short-Term disability helps out when you have a sickness that puts you in bed for an extended period of time or for women that have a complicated birth. Many large companies will package these insurance policies into your benefits package. These insurance products are often overlooked, but they are extremely important, because you just never know what might happen to you. What if a surgeon lost his or her arm?

Life Insurance: You don’t always need this insurance. If you are single and have no dependents, then you don’t need life insurance. If you are married and/or you have underage children, then you need to have life insurance. Choose level term insurance. You can typically 10, 20, or 30 years of life insurance for a specified amount of money. At the end of the term, if you haven’t died, the policy expires. The great thing about term insurance is that it is VERY cheap. Whole life and universal life insurance package together an investment product with a life insurance policy. The investment product almost always gets a horrible rate of return and there are so many fees associated with these types of insurance products. Agents love whole life and universal life, because they get a bigger commission. Stay away from it.

Homeowner’s/Renter’s Insurance: This one seems obvious, but you would be surprised at how many people don’t have it. If you have a mortgage on a house, which is most Americans, then you are forced to have homeowner’s insurance. If you don’t buy it, the mortgage company will buy it for you, because they want their collateral to be protected. Homeowner’s insurance can be expensive, but if you have ever spoken with someone who had a fire or heavy wind damage to their home, the insurance company ponies up a bunch of money. Renter’s insurance is essential when you are renting. If a pipe breaks and floods your apartment, your stuff isn’t covered under the landlord’s insurance policy. Plus, if your apartment is ever deemed unlivable and you need to move out, a renter’s policy will help pay for temporary housing.

I could go into the insurance products that I don’t think you need, but I think that’s for another day. But, please go ahead and discuss it in the comments section. Are there any other essential insurance products you feel are necessary?