DON'T SKIMP ON THIS
- Treavor Dodsworth CFP®, CPA, CKA®
- Dec 19, 2024
- 1 min read
When you are trying to eliminate expenses, it can be tempting to just start frantically hacking away at the budget. One category that you shouldn't skimp on is insurance.
The primary purpose of insurance (in my opinion) from the perspective of the purchaser is to transfer the risk and liability for catastrophic loss to a third party. There are four primary categories of insurance people should almost never be without:
Property and casualty - for example home and auto.
Medical insurance
Life insurance
Long-term disability insurance
Now there are other types of insurance that may help with catastrophic loss (for example umbrella or E&O depending on job) and there are times where even the above four are not always necessary but you should think twice (or three times) before going without. I cannot think of a situation where someone would go without medical coverage or liability coverage on home/auto.
You don't have to buy the most comprehensive coverage or the most expensive. If you haven't gotten quotes on your home and auto recently, it probably makes sense to talk with an independent broker and see if there is a more cost effective solution out there.
I strongly support an individual trying to maintain financial margin but that margin shouldn't come at the cost of opening up yourself to a catastrophic loss.