Dave Ramsey Says These 8 Types of Insurance Are Crucial to Protecting Your Family and Your Finances

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How many of these types of insurance coverage do you have?

Key points

  • Complying with the laws is not the only reason to take out insurance.
  • Ramsey has provided advice on the crucial types of insurance consumers need.
  • Having coverage for home, auto, and various other types of coverage, such as long-term care, can help prevent financial disaster.

Most people know that they need certain types of insurance protection, like home insurance and car insurance. These types of coverage may be required by law or by mortgage and auto loan lenders, so few are left without them.

However, the reality is that there are many different types of insurance that could be important in providing adequate asset protection.

In fact, financial expert Dave Ramsey has identified eight crucial types of insurance that consumers shouldn’t do without. This is what they are.

1. Term life insurance

Ramsey has indicated that this type of insurance may be the most essential of all. “If there is only one type of insurance you sign up for after reading this, let it be term life insurance,” he blogs about it.

Life insurance pays a death benefit after the death of the policyholder. Without it, loved ones could end up in dire financial straits without the income or services the decedent previously provided. Ramsey recommends purchasing a policy that replaces 10 to 12 times annual income to ensure survivors can make ends meet.

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2. Car insurance

As Ramsey points out, complying with the law isn’t the only reason to buy car insurance. Even minor accidents with a fender can cost thousands of dollars and no one wants to be left unable to pay a car loan, or repair or replace a car, after something goes wrong.

On his blog, Ramsey recommends making sure you buy liability coverage to pay for losses caused to others, as well as comprehensive and collision coverage that will pay if something goes wrong with the policyholder’s own vehicle.

3. Homeowners or renters insurance

Home and renters insurance pays for the physical structure of a property (for homeowners), as well as the possessions within it (for both homeowners and renters). This type of policy also pays if someone is injured on the property and the policyholder is responsible. Ramsey has indicated that these safeguards are crucial to protecting assets and avoiding financial disaster if something happens to the home.

On his blog, the finance guru also suggests looking into insurance against floods, hurricanes and earthquakes, as sometimes the damage caused by these losses is not covered by a standard policy.

4. Health insurance

Ramsey has described health insurance as “another super-important type of insurance you can’t do without,” and for obvious reasons. A single medical emergency could result in huge medical bills that are difficult or impossible to pay. Nobody wants to be forced to choose between their physical and financial health, and the right coverage can help ensure that doesn’t happen.

5. Long-term disability insurance

Long-term disability insurance kicks in and replaces income if a disabling condition makes work impossible. As Ramsey explains, one in four of today’s 20-year-olds will be disabled before the age of 67. Long-term disability insurance could be a crucial source of income if that happens.

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6. Long-term care insurance

Long-term care insurance pays for nursing home and home care if needed. Ramsey recommends implementing this protection at age 60 to ensure huge care bills don’t result in financial devastation in retirement.

7. Protection against identity theft

Identity theft insurance is another type of coverage Ramsey says should be purchased. This type of policy helps consumers clean up fraud situations if necessary. However, there is more controversy about whether this policy is really worth buying, so make sure that any policy purchased is actually worth the premiums.

8. General Policy

Finally, an umbrella policy supplements other coverage and pays for additional losses after a home or auto policy is exhausted. Purchasing this type of protection is important for those who have significant assets to protect.

Consumers should research each of these eight types of coverage and carefully consider whether it is wise to follow Ramsey’s advice and put it into practice.

Provide peace of mind for life’s moments

Insurance isn’t something we often think about until we need it, and that usually means you don’t spend a lot of time researching what’s best for you and your personal situation. Taking the time to learn the basics of insurance, whether it’s how to get discounts on your homeowners insurance policy or the best way to get an auto insurance quote, will help you save money and ensure you have the adequate insurance coverage for your needs. .