Insurance Essentials

Insurance exists for one reason: to protect against catastrophic financial loss. Not minor inconvenience — catastrophe.

The essentials for most adults: health insurance (medical bills are a major driver of personal bankruptcy), auto liability, renters or homeowners, and term life insurance if anyone depends on your income.

The principle is simple: insure what you can't afford to lose. Self-insure what you can. Extended warranties on a $400 appliance? Skip it — you can absorb that loss. A $500,000 medical bill? That's what insurance is for.