Do You Need Insurance?

It is one of the most basic of all financial questions - Do I really need insurance? The answer to that question depends on a number of factors, from the types of risks you and your family face to the specifics of your financial life. You cannot simply assume that? your insurance needs are the same as everyone else's. Everyone has different insurance needs, and it is important to evaluate your own circumstances carefully.

Life Insurance

You may think that everyone needs life insurance, but that is not necessarily the case. Some people need a lot of life insurance, even a million dollars or more, while others do not need any life insurance at all. Determining where you fall on the spectrum should be your first step.

Keep in mind that the main goal of life insurance is to protect your family in the event of an untimely death. If you are living alone and have no family to support, there is little justification for having life insurance. Once you get married and start supporting a family, you will need to factor life insurance coverage into your overall financial planning.

Car Insurance

If you live in the big city and rely on public transportation, you obviously do not need car insurance. If you do own a car, however, you need to protect yourself from the liability that driving inherently brings. The main purpose of car insurance is not to fix your car - it is to shield you from liability if another driver or passenger is injured in an accident.

Every state sets a minimum level of liability coverage for their drivers. If you are caught driving without insurance, you could face substantial fines and even the loss of your driving privileges. You will need to look at the mandatory minimum coverage levels and determine if it provides enough protection for you. If you have substantial assets to protect, you may need more than the minimum your state requires.

Travel Insurance

Travel insurance can seem like a good buy, but it is important to look at it carefully. Some travel insurance policies only pay off if the trip is cancelled altogether, while others provide coverage if you have to call off the trip due to an emergency or illness. Other travel insurance policies will pay to put you up in a hotel if your trip is interrupted by circumstances outside your control.

It is important to read the fine print of the policy carefully to determine what it does and does not cover. It is also important to determine if you are already covered through your credit card issuer. Some credit cards provide a limited amount of insurance for trips booked on their cards.

Identity Theft Insurance

Identity theft is a growing problem, and that has led to a cottage industry in identity theft insurance. Many major insurers are no offering identity theft insurance to their customers, while other stand-alone companies are selling the same type of protection.

While identity theft insurance can give you peace of mind, it is important to note that you can do many of the same things on your own. You can monitor your credit report for free, and you can even put a freeze on your credit file if you are concerned about unauthorized access. Before you spend money on an expensive identity theft insurance policy, you should explore the subject and take steps to protect yourself.