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Ask Dave

"Must Haves" In Insurance

Donald has a nice, broad question about insurance ... what all types do you need?

QUESTION: Donald wants to know what types of insurance he should get.

ANSWER: The concept of insurance is to transfer risk that you can’t accept. Get homeowners or renters insurance to protect the contents of your home. Carry a $1,000 deductible on your homeowners insurance, because you have an emergency fund to cover the deductible, and getting one will drastically lower your monthly premium. On the homeowner’s insurance, they do not have guaranteed replacement cost anymore. They don’t guarantee to replace your home; they’ll give you the cost of your goods plus 25% or so.

You need long term disability insurance. You don’t need short term disability because you have an emergency fund. You don’t need cancer insurance because you’ve got your health insurance. You need a health savings account, which is by far the best buy in the health insurance industry. Get liability umbrella coverage for your car or homeowner insurance.

Never buy any kind of life insurance except for term life insurance. Don’t save money for retirement inside life insurance policies because the returns stink. Get level term life insurance to the amount of 8 to 10 times your income.