Not long ago, one of my children asked me a question that I suspect many adults have wondered about.
"Dad, why do we have so many different kinds of insurance?"
It was an honest question, and one that made me smile. From the perspective of a teenager, insurance probably looks like a collection of boring papers and monthly bills that nobody enjoys paying. Yet as I thought about how to answer, I realized the lesson had very little to do with insurance and much more to do with stewardship.
I explained that we do not purchase insurance because we expect something terrible to happen. We purchase insurance to protect what would financially devastate us, not to protect what would inconvenience us. Insurance exists to transfer risks that would fundamentally change our financial future, allowing us to focus on living our lives instead of living in fear.
Over the years, I have come to believe that one of the biggest mistakes people make is assuming they need every type of insurance immediately. The truth is that insurance should evolve as life evolves. Different seasons bring different responsibilities, and the protection you need at twenty-five is often very different from the protection you need at sixty-five.
Health insurance is one of the few coverages that nearly everyone needs. None of us plans on unexpected illnesses or accidents, and the cost of medical care can quickly overwhelm even financially responsible families. Whether through an employer, a private plan, or a government program, having health insurance protects some of the largest financial risks most families will ever face.
Life insurance enters the picture when someone else depends on your income. I remember the years when we were raising young children and trying to balance all the responsibilities that come with building a family. Like most parents, we spent plenty of nights worrying about whether we were making the right decisions. One question I found myself asking was, "What would happen to my wife and kids financially if something happened to me?" That question changed my perspective on life insurance. It no longer felt like another expense. It became an expression of love and responsibility. When someone depends on your ability to earn an income, life insurance becomes one of the greatest gifts you can leave behind. For most families, term life insurance provides exactly what is needed during those years of responsibility.
Another form of protection that is often overlooked is disability insurance. Ironically, many people spend far more time preparing for the possibility of death than they do for the possibility of losing their ability to work. Yet for most families, the paycheck is the engine that makes everything else possible. It funds the mortgage, pays for groceries, allows children to participate in sports and activities, and creates opportunities for the future. Protecting your income is every bit as important as protecting your life.
Homeowners insurance and renters insurance are equally important, although they are often viewed simply as requirements rather than valuable protections. Whether you own a home or rent an apartment, the policy provides not only protection for your possessions, but also liability protection that can protect your financial future. For many renters, the cost of coverage is surprisingly affordable, making it one of the best values available.
Auto insurance follows a similar principle. Every driver needs coverage, but there is a significant difference between purchasing insurance to satisfy a legal requirement and purchasing insurance with the intention of protecting your family and your future. The cheapest policy available is rarely the best value if an accident leaves you underinsured.
As people accumulate assets and responsibilities, umbrella insurance becomes increasingly important. I remember when I first learned about umbrella coverage years ago. Like many people, I assumed it was something reserved for the ultra-wealthy. Over time, I realized that the purpose of an umbrella policy is not necessarily to protect wealth, but rather to protect everything you have worked so hard to build. Parents of teenage drivers, business owners, rental property owners, nonprofit board members, and families with growing assets often discover that an umbrella policy provides tremendous peace of mind at a surprisingly reasonable cost.
Long-term care insurance is another conversation that tends to arrive later in life. Unfortunately, many people begin asking questions only after health concerns have already appeared. In many cases, the best time to discuss long-term care planning is in your early sixties, when options are generally more plentiful and more affordable. The objective is not to plan for the worst but to preserve independence, choices, and retirement assets later in life.
Finally, age sixty-five introduces an entirely new chapter through Medicare. While Medicare eligibility begins at sixty-five, the decisions surrounding enrollment depend heavily on individual circumstances. Some people are retiring and need coverage immediately, while others continue working and maintain employer-sponsored plans. Because Medicare carries important timelines and potential penalties, it is wise to seek guidance well before reaching those milestones.
Perhaps the most important lesson I have learned after spending two decades in the insurance industry is that insurance should never be driven by fear. It should be driven by wisdom. Insurance is not about buying every product available. It is about identifying the risks that would financially devastate your family and making thoughtful decisions to protect against them.
At Glidewell, we often say, "Insurance is the tool. Health is the goal."
I would add one more thought.
The goal is not to accumulate policies. The goal is to build a life worth protecting and to make sure that the people you love are cared for, no matter what season of life you find yourself in.