The Types of Insurance You Need

Here are some thoughts from the wonderful book The Bogleheads' Guide to Investing (I LOVED the book -- see my rating for details) on the types of insurance you need:

You need to consider the following types of insurance:

• Life insurance for anyone in your family on whom others depend for financial support.
• Health care coverage for everyone in your family.
• Disability insurance on any breadwinner whose future income is vital.
• Property insurance in case of fire, theft, or other disasters.
• Auto insurance.
• Liability protection against expensive lawsuits.
• Long-term care for older family members to prevent nest-egg erosion.

Here's where I stand on each of these:

• We have life insurance on me as well as on my wife. Mine is bigger, of course, due to the fact that it's designed to replace my income. The policies are 20-year term policies. By the time they expire, our kids will be out of college and we should have enough saved not to need them.

• Our health care coverage is through my employer.

• We have a disability policy on me since we'd be in a tough place financially if we didn't have my income.

• We have policies on both our home and car. Both policies have high deductibles since we only plan to use them in case of a major claim (we'll pay for minor claims ourselves.) Of course, we have saved extra money in our emergency fund to cover this potential expense.

• We have an umbrella insurance policy that's a cheap, but needed, addition to our homeowner's policy.

• We don't have long-term care policies and neither do my parents (my wife's parents are deceased), but we need to talk to them about considering one.

For more tips on getting and saving on insurance, see Best of Free Money Finance: Insurance Posts.