As you roll happily through life, saving for the future and doing your best to build a happy family, the right insurance policies can make all of the difference. There are four policies that are critical to maintaining the financial health of your family.
Auto Insurance
States require that you have insurance if you have a car, so it is likely that you have an auto policy. Most states, however, do not require that you have enough - if you only have the minimum required by your state, you may not be adequately covered. Your policy will likely cover the risk of totaling a shiny new Chevrolet, but it may not cover the possibility that your bad luck has you totaling a Lexus or a Lamborghini instead. Check with your agent.
Homeowners or Renters Insurance
Your mortgage lender will require you to have and maintain a homeowner's policy, but your landlord won't. If you rent you still need a policy, typically called a renter's policy, to cover the value of your belongings and the cost of being displaced. Both policies will also cover theft and other losses that may occur in or around your home.
Health Insurance
While this topic has become politically charged in recent years, the fact remains that the cost of health care is beyond anyone who is not listed on the Forbes 400 when things really go wrong. Many employers make insurance for spouse and children very expensive. (In the olden days, insurance was so cheap that two working spouses often maintained dual coverage through both employers just so that every single penny of health care expense would be covered. This rarely happens today because employers share so much of the cost with their employees.) Even if your employer makes health insurance expensive for you, it is likely cheaper than anything you can find on your own. That said, it may be worth checking for a policy at a site like ehealthinsurance.com where you can shop for individual policies.
Life Insurance
Life insurance is necessary as soon as you have dependents. Both parents should have a policy, even if one of you isn't working outside the home. That said, the policy on the primary wage earner should be larger, providing enough money to provide income through the balance of your kids' education. If you are saving for your kids' college education, your life insurance should probably include enough to cover that. For households where one spouse doesn't work outside the home, spouses should talk about whether or not to buy enough insurance to allow a spouse to stay home with the kids or if, in the alternative, part of the plan would be for the surviving spouse to enter the workforce. Remember, even if you decide that a stay-at-home spouse would return to work, he or she may not earn as much as the primary breadwinner has been. Life insurance will be needed to close the gap. Every day you wait, life insurance becomes more expensive.
In addition to these policies, families with high incomes should also consider "umbrella" policies that provide significantly expanded liability coverage and "disability" policies that insure income if you can't work (social security provides modest protection for disability but it isn't adequate for high wage earners).
Don't expose your family to risks that others are willing to take on for a reasonable fee. You owe it to your family to protect them.
