They say insurance isn’t purchased, it’s sold. Within the insurance industry are some of the best salespeople you may ever come across. I’ve seen countless people jump straight into buying policies without understanding what they truly need. Because insurance is complicated, it is easy to confuse what’s essential, what’s optional, and how to avoid being sold something you don’t need. Our goal is to help you make confident decisions that protect your financial future and bring peace of mind.

Understanding Insurance: Why It Matters

Insurance is a tool for managing risk. It’s not about chasing every policy out there or bells and whistles, it’s about protecting yourself and your loved ones from financial shocks that could derail your plans. Before you buy anything, you need to know what you’re trying to protect, what you already have, and what gaps exist in your coverage. Too often, people focus on buying insurance because they are guilted into it, not because it’s what they actually need. Let’s rethink that approach and build a foundation that makes sense for your life.

What You Need: Essential Insurance Types

• Health Insurance:
  This is non-negotiable. Medical emergencies are a leading cause of bankruptcy. Health insurance protects you from catastrophic bills and ensures you get the care you need.
• Life Insurance:
  Only necessary if someone depends on your income. If you have a spouse, children, or others who rely on you financially, life insurance is crucial. But before you buy, ask yourself: What would happen if you weren’t here? Do you already have coverage through work? How much do you actually need? Don’t let an agent talk you into more than what’s needed.
• Disability Insurance:
  If you rely on your income, disability insurance is a must. It covers you if you’re unable to work due to injury or illness. Check what your employer offers and fill in any gaps.
• Homeowners or Renters Insurance:
  Protects your property and possessions. If you own a home, homeowners insurance is essential. If you rent, renters insurance covers your belongings and liability.
• Auto Insurance:
  Required by law if you drive. Make sure you have enough coverage to protect yourself from lawsuits and major losses.

What You Don’t Need: Avoiding Unnecessary Policies

• Overpriced Life Insurance:
  Don’t buy more coverage than you need. Agents may push expensive policies, but your goal is to protect your loved ones, not to make someone else a commission. Talk to a fee-only planner first to determine the right amount and type of insurance for your situation.
• Insurance You Already Have:
  Review your existing coverage. Many people buy policies without realizing they’re already covered through work or other means.
• Products Sold for Commissions:
  Be wary of insurance agents who earn commissions based on the size of your premium. Their advice may be biased. Seek guidance from a fee-only advisor who doesn’t profit from selling you a policy.
• Unnecessary Add-Ons:
  Be warry of policies like accidental death, flight insurance, or extended warranties unless you have a specific need. These are often sold as fear-based add-ons and rarely provide meaningful value.

How to Make Smart Insurance Decisions

1. Start with a Plan:
   • Outline your financial goals and risks.
   • Identify what you’re trying to protect – your income, your family, your assets.
2. Review Existing Coverage:
   • Check what you already have through work, government programs, or other sources.
3. Consult a Fee-Only Advisor:
   • Get unbiased advice. Fee-only advisors with a defined scope of work are fiduciaries, they work for you, not for commissions. They’ll help you determine what you need and what you don’t.
4. Shop Smart:
   • Compare policies and prices.
   • Don’t let anyone rush you into a decision. Take your time and ask tough questions.

Insure Your Plan

Insurance is an important part of financial planning, but it’s easy to get lost in the weeds. Focus on what matters: protect yourself and your loved ones from real risks. Avoid being sold unnecessary policies and always seek advice from someone who puts your interests first. Remember, your money and your life deserve objective guidance and thoughtful planning. If you’re unsure about what you need, start with conversation, questions, demand clarity, and make changes if you’re not getting the service you deserve. This will help you build a financial foundation that lasts.

This blog post is provided by Ditch The Suits Podcast in support of Money Milestones’ mission of helping people get access to high-quality financial guidance no matter their income level or life stage.  

This material is for educational purposes only. It is important to seek the guidance of a licensed financial professional before making any investment or financial decisions.