Insurance – Step 4

In the world of necessary evils I can think of nothing more annoying than having to always request no mayo whenever you’re in Canada. However, in the realm of money related necessary annoyances none is more necessary or annoying then insurance.
Insurance is necessary due to the fact that accidents do indeed happen to the innocent and unsuspecting, and while they can never be predicted, one such accident could single handedly destroy your family’s financial future for a generation.
Whether it’s a bout with a fatal disease, a car accident where you hurt someone else, a work-ending disability, or your reinforced barrel doesn’t hold up against the tumultuousness of Niagara falls, any day any accident could have you dead, liable in someone’s injury, or crippled.
So while insurance is a necessity I have a pretty simple view on it – Find out exactly how much your family needs, pay as little as possible for it, and get rid of it as soon as you don’t need it anymore. (The one exception is permanent life insurance, which we’ll address in another column)
You absolutely need to have these insurances:
Health – High Deductible if you’re healthy
Disability – Most HR dept’s provide 60% coverage – Could you live on 60% of your paycheck? If not find a policy.
Life – Term is appropriate for 95% of people – cheap and efficient- Permanent is acceptable for those with high incomes and good cash flow
Car Insurance – The law says you must and so do I – talk to your carrier about adjusting the benefit amount to save money on premiums.
Umbrella – Necessary for Business Owners, and those in litigious industries
Long Term Care – Once you hit 50, you need to take a look, unless you like the thought of your daughter changing your pampers.
Having adequate insurance is an essential part of a financial plan.
Think about your life after we’ve gone this far: You have positive cash flow, you’ve paid off your debt, and you have a cash reserve of at least 6 months. Feels good doesn’t it???? Now we’re really solidifying that foundation by making sure no accident comes up that can tear out that foundation.
And just like that we’re into the fun stuff – getting rich!

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