Insurance isn’t fun. In fact, it can be downright boring. However, it is absolutely necessary to understand the basics and spend some time setting up your policies. You can spend decades earning your freedom, but if you don’t have the right types and amount of insurance, it can all be erased in a second by an unforeseen catastrophe. Therefore, you need to take a deep breath, focus for a few hours, and learn about insurance.
This is the first post in a series about insurance. In this post, we’ll give a brief overview of the types of insurance you need, as well as the types of insurance you do NOT need.
It is important to understand that insurance is used to protect against unlikely but potentially disastrous events. This would include death, disability, a legal judgment against you, or a serious medical illness. It would NOT include loss of your iPhone, a cancelled flight, or routine maintenance on your car. Those are all manageable expenses that you should have an emergency fund for, not insurance.
Without further ado, here is a table showing the types of insurance you need, and the types of insurance you most likely do NOT.
In subsequent posts in this series, we’ll go over each type of necessary insurance in greater detail and explain why you don’t need the insurances listed on the right. For now, just make sure you have all of the insurance on the left. If you don’t, then you have work to do. Your freedom is in peril!
This is great. I have never thought about insurance this way but it strikes me that I have all of the insurances on the left column and none of those on the right. It seems that everyone I know has several of those on the right and not all of those on the left. I also recall hundreds of conversations or arguments with sales people about what insurance I do or do not need. I especially hate buying electronics or renting a car for this reason.
Hi WealthyDoc. I’m glad you found this helpful. In future posts I hope to lay it all out in greater detail, explaining exactly why you need the stuff on the left and not the right, so that no one is confused.
Nice blog, keep it up. Fellow Alaskan here on the path to freedom….
Do you carry rescue and/or travel insurance? I’ve been using Global Rescue through the American Alpine Club, but I haven’t taken an honest look at whether or not this is the ideal strategy. I also haven’t looked closely into whether my health insurance will always cover accidents from skiing, climbing, kayaking, etc. Based on your photos, it seems you may have similar interests so I’d love to hear your thoughts.
Hi Ken. Thanks for visiting, and great question.
To my knowledge, your usual health insurance will cover your medical care, regardless of activity and regardless of locale (such as overseas), according to the usual stipulations (deductible, coinsurance, etc.). However, it would probably make sense to contact your health insurer to confirm.
In comparison, your health insurance will NOT cover expensive evacuations from remote locales, which could run up to $100,000.
Therefore, if you are planning to be on a trip in a very remote area where the possibility of injury and/or need for evacuation is high, I think it would make sense to look into evacuation insurance. According to globalrescue.com, a 30-day evacuation insurance policy runs $229, which is probably reasonable for peace of mind and avoiding a potential $100,000 evacuation bill!
I hope this helps. There are probably many nuances here that I am missing. But the main point is that you want to buy insurance for potentially catastrophic events. A $100,000 evacuation would qualify, but the cost of treating a fractured ankle (which is most likely covered by your usual health insurance) would not.