Choosing what to get insurance on isn’t about buying everything, it’s about protecting the few things that could financially wreck you if they go wrong. Use this simple framework to insure what matters, skip what doesn’t, and save money without risking disaster.
The Rule of Thumb: Insure What You Can’t Afford to Replace
Insurance makes sense when a loss would be catastrophic (hospital bills, house fire, liability lawsuit), not just inconvenient (a lost hoodie). Start here:
- Catastrophic risk: Always insure.
- Moderate risk: Consider, depending on your assets and income.
- Low risk: Usually self-insure (save an emergency fund instead).
1) Health (or Medical) Insurance
Why: Medical emergencies are unpredictable and expensive.
What to get: A plan that covers inpatient care, emergency surgery, diagnostics, and prescriptions.
Tips:
- Prioritize hospitalisation limits and emergency coverage over extras.
- Check provider networks near your home/work.
- Keep an emergency fund to handle deductibles and exclusions.
2) Life Insurance
Why: Replaces your income for dependents if you pass away.
Best option: Term life (not cash value) for 10–20 years.
How much: 10–15× your annual income or enough to cover debts + children’s schooling + 5–10 years of living costs.
Skip if: No dependents and no major co-signed debts.
3) Disability (Income Protection)
Why: You’re more likely to suffer a disabling illness/injury than die early.
What to get: A policy that pays 60–70% of income if you can’t work.
Key features: Definition of disability, waiting period (30–90 days), benefit period (2 years to age 65).
4) Homeowners or Renters Insurance
Why: Fire, theft, burst pipes, storms, and liability from accidents on your property.
Homeowners: Choose rebuild cost coverage, not market price; add flood or earthquake riders if needed.
Renters: Cheap and essential—covers personal belongings and liability even outside your apartment.
5) Auto (or Motor) Insurance
Why: Car accidents can trigger huge liability claims.
Must-have: Third-party liability at minimum (often required by law).
Consider: Comprehensive + collision if your car is new, financed, or hard to replace.
Savings: Higher deductibles, safe-driver telematics, and bundling with home/renters.
6) Personal Liability (Umbrella)
Why: Shields your assets if you’re sued for injuries or property damage.
Who needs it: Homeowners, high earners, landlords, anyone hosting events.
How much: Start at $1M (or local equivalent) and stack if your net worth is higher.
7) Travel Insurance
Why: Health plans often don’t cover you abroad; cancellations are costly.
Buy when: International travel or trips with non-refundable bookings.
Musts: Emergency medical, evacuation, trip cancellation/interruption, baggage loss.
Nice-to-have: “Cancel for any reason” if plans are uncertain.
8) Business & Freelance Insurance — Protect Your Work and Clients
Why: Clients, projects, and equipment carry liability and income risk.
Essentials:
- Professional indemnity / E&O (mistakes in your work)
- General liability (injury/property damage)
- Business property (gear, laptops, inventory)
- Cyber insurance (data breaches, phishing losses)
Pro tip: Some clients require proof before hiring you.
9) Health Adjacent: Dental & Vision
Why: Predictable maintenance; catastrophic events are rare.
Consider if: Employer subsidises, or you expect major work (braces, implants).
Otherwise: Self-insure with savings; pay cash for routine checkups.
10) Phone, Laptop & Gadget Insurance
Why: Theft and drops happen; premiums can be high.
Get it if: Your device is new, expensive, critical for work, and not well covered by home/renters.
Check first: Your credit card or home/renters policy might already cover theft or damage.
11) Pet Insurance
Why: Emergencies can cost thousands.
Consider: Accident & illness plans for breeds prone to issues.
Skip/modify: Older pets may face exclusions—look for wellness add-ons if they still save you money.
12) Specialty Policies
- Flood or earthquake: Often not included in standard home policies.
- Jewelry, art, collectibles: Schedule high-value items separately with appraisals.
- Event insurance: Weddings, concerts, exhibitions with large deposits or liability exposure.
- Landlord insurance: If you rent out property (covers building + liability + loss of rent).
What to Skip (Most of the Time)
- Extended warranties on cheap appliances. Self-insure via an emergency fund.
- Flight delay-only policies. Limited benefit; go full travel cover instead.
- Credit life insurance on loans/cards. Often overpriced vs a term life policy.
- Single-disease policies (unless family risk is high). Broad health cover is better.
How Much Coverage Should You Buy?
- Deductible: Pick the highest you could comfortably pay in cash; premiums drop.
- Limits:
- Home: Rebuild cost + contents inventory.
- Auto: Liability high enough to cover your assets + future earnings.
- Life: 10–15× income (or needs-based calculation).
- Umbrella: At least $1M (local equivalent) over your auto/home limits.
- Home: Rebuild cost + contents inventory.
- Exclusions: Flood, earthquakes, wear-and-tear, business use add riders if needed.
Money-Saving Tips (Without Cutting Real Protection)
- Bundle: Combine home + auto + umbrella.
- Pay annually: Many insurers discount non-monthly payments.
- Improve risk profile: Smoke detectors, security systems, safe driving, healthy habits.
- Shop every 12–24 months: Markets change; loyalty doesn’t always pay.
- Keep good records: Photos, serial numbers, appraisals, proof of purchase.
International & Local Considerations
Insurance names and rules differ by country. Before buying:
- Check legal minimums (e.g., auto liability).
- Confirm network hospitals and claim processes in your city.
- Understand currency limits, inflation protection, and timelines for claims.
Quick FAQ: What to Get Insurance On
Q: What are the absolute essentials?
A: Health (medical), auto liability, home/renters, and life if you have dependents. Add disability and umbrella for stronger protection.
Q: I’m young with no dependents—what do I need?
A: Health, renters, auto liability, and possibly disability (protects your future income).
Q: Is phone insurance worth it?
A: Only if replacing the device would strain your budget and it isn’t covered elsewhere.
Q: How often should I review policies?
A: Annually or after major life changes: new job, marriage, baby, home purchase, business launch.
Conclusion
When deciding what to get insurance on, insure the big, rare, expensive risks first (health, liability, home, income, life). Consider add-ons that match your lifestyle (travel, business, pets). Skip small risks you can pay from savings. Review yearly, raise deductibles to lower premiums, and keep proof of your stuff. That’s smart coverage—no regrets, no waste.