Financial Adulting

CHAPTER 10Insurance

Insurance is painfully important – painful in that it's confusing and there's a lot to know and understand. And also painful in that not protecting yourself can be financially disastrous. I'm going to break down the different types of insurance with some expert help (as painlessly as possible).

I sat down with Jennifer Fitzgerald, the CEO of Policygenius, a platform where customers can compare and buy insurance policies (you'll find lots of their amazing resources in the Financial Adulting toolkit), and she ranked the types of insurance in order of priority. Only some may apply to your financial situation.

1. Health insurance. Medical costs are one of the biggest drivers of personal bankruptcy and home foreclosure. Everyone should be covered.
2. Homeowners and car insurance (if you own your home and own or lease a car). These are typically your biggest financial assets.
3. Life insurance (if you are a parent or someone depends on your income).
4. Disability insurance (to replace your income if something were to happen to you).

We're going to start with the most important and work our way down the list from there.

Health Insurance: What You Need to Know

You pay a monthly amount (a premium) to your health insurance company and in return they agree to pay for some or all of your medical bills.

Because health insurance companies pay for lots of people's medical bills they negotiate discounted rates with doctors and hospitals (which helps keep costs down). These doctors ...