Proverbs 27:12 reads, “The prudent sees danger and hides himself, but the simple go on and suffer for it.”
The word “insurance” isn’t in the Bible, but it does say that it’s wise to protect your financial holdings—and insurance is one way to do that.
Understanding Essential Insurance Policies
Insurance is a fundamental aspect of financial planning. For most of us, unless we have vast wealth diversified across numerous investments, insurance serves as a critical safety net. So, what insurance policies are necessary?
- Auto and Home Insurance
Auto insurance is generally required by law if you own a vehicle. Homeowners insurance is mandatory if you have a mortgage and advisable even if you don't. Bundling these two can save money, and adding an umbrella policy provides extra liability protection for a modest cost.
- Renters Insurance
Renters insurance is often overlooked but vital for protecting personal property and covering liability. It's affordable, typically under $200 annually.
- Health Insurance
Health insurance is a must. Without insurance, the costs of medical care can be astronomical, making health coverage a crucial safeguard.
- Life Insurance
Life insurance is necessary if someone depends on your income. Consider term life insurance over whole life, especially when downsizing your policy later in life.
- Long-Term Care Insurance
Long-term care insurance is vital for those in their 50s and beyond. With most seniors needing some form of long-term care, this insurance can prevent financial ruin.
- Long-Term Disability Insurance
This insurance protects your income if you're incapacitated. Premiums are typically a small percentage of your annual salary.
Insurance to Avoid
Title theft insurance and identity theft insurance can be redundant. Instead, monitor your credit through free services like Credit Karma, Credit Sesame, or AnnualCreditReport.com and freeze it if needed. Title insurance, on the other hand, is crucial when purchasing a home.
By strategically selecting the right insurance policies, you can protect yourself and your family against unforeseen events while avoiding unnecessary expenses.
On Today’s Program, Rob Answers Listener Questions:
- My wife and I sold our house in 2018 before the pandemic and we were living overseas for a while. Now that we're back, we're renting a home from some friends at a below-market price of $1100 a month. We have four kids, and it's a bit cramped in the three-bedroom, one-bath house. With the rising housing prices and interest rates, we're not sure if we should keep saving for a larger down payment on a $300,000 home or buy now with the 20% down payment we have. What do you think we should do - keep renting to save more or buy now, even with the high interest rates?
- I'm 56 years old and currently receiving Social Security disability benefits. Will the monthly amount I receive now change when I turn 67 and start receiving regular Social Security retirement benefits?
- I purchased a home in Dyer, Indiana, with a balance of $310,000, and I put a substantial amount down, so now I owe $173,338. My current monthly mortgage payment is $577, with $31.92 to the principal and $101.47 to the interest. I have substantial savings to pay off the remaining balance of $173,338. Given that I have the money and the interest rate on the loan is 7%, should I pay off the mortgage now or hold on to the cash for another year?
Resources Mentioned:
- AnnualCreditReport.com
- Credit Karma
- Credit Sesame
- Rich Toward God: A Study on the Parable of the Rich Fool
- Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
- FaithFi App
Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards of God’s resources.
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