Insurance is essential part of our financial planning
We considered insurance as essential part of our financial planning. Since we own a home, we have home insurance to cover losses due to damage, theft or injury within our home.
We have no child yet, so “What will happen if I die?” helps us to determine how much life insurance we need. The only debt we have is the mortgage, if one of us died, the other one will need to continue to repay the mortgage. Since we are a couple with double income and no children, we have very little need for life insurance right now.
In future when we start to have kids, we would need to take out a term life insurance policy that is 10 times our annual take-home pay. The point is to have enough money to replace the income of the deceased spouse. It’s going to be even more true if I end up become stay-at-home mom.
We also have health insurance to cover the medical care. You could easily accumulate several hundred thousand dollars in medical debt…and medical bills are the number one cause of bankruptcy! On top of that, if your illness or injury is serious enough, you’ll be out of work, which means you will have a huge debt to pay and no money coming in. Insurance is an absolutely vital part of any sound financial plan.
Of course as car owner, we need to have Insurance to protect us in the event of an accident or damage to the vehicle. We make sure we have adequate liability with car insurance! As smart consumers, we do compare car insurance to get the best deal.
