5 Insurance Policies Everyone Should Have

Protecting your most critical assets is a key part in developing a good personal financial plan, and the correct insurance coverage can help you do so.

1. Long-Term Disability Insurance

Some people disregard the threat of long-term disability (LTD). We all think "nothing will happen to me," but optimism won't protect your future earnings. Choose a disability policy that allows you to maintain your lifestyle if you can't work.

2. Life Insurance

Life insurance protects dependents. Life insurance is a must if your parents, spouse, children, or other loved ones would suffer financially if you died. Consider how much you earn each year and how long you anticipate to work, then buy a policy to replace that income. Consider burial costs, which are a burden for many families.

3. Health Insurance

Rising medical costs make health insurance essential. A basic doctor's appointment might be expensive. Serious injuries might cost more than a week at a premium resort if they require hospitalization. Surgeries can cost five figures. Although health insurance is expensive, not having it is significantly more costly.

4. Homeowner's Insurance

Rebuilding costs don't include land since you already own it. Depending on your home's age and amenities, replacing it could cost more or less than you bought for it. To get an exact estimate, multiply local builders' per-square-foot rates by the space you need to replace. Upgrades and extras should be considered. Make sure the policy covers injuries on your property.

5. Automobile Insurance

Most places require auto insurance. Even if it's not needed and you drive a paid-off old junk, you should carry vehicle insurance. If you cause an accident that injures someone or damages their property, you could lose everything. Accidents often have devastating effects. No auto insurance or the minimal needed coverage saves you a little amount of money and puts your belongings at risk.