No. of Recommendations: 1

I have a slightly view on insurance than some of the posts I've been reading, so I figured I toss it out there.

1. Life insurance & health insurance are NOT investment decisions.

2. All other insurance is purely a matter of comfort.

Let me briefly explain what I mean. When it comes to life & health insurance, we are talking about non-material things which can't be replaced. If you become seriously ill (or die), you do not want to be in a position where you (and your family) are devistated physically and financially. You do not want to be bargain hunting when it comes to medical care and you do not want to be choosing - Should I take the method which will allow me to walk or the method that will allow me to buy food? Making this an investment decision is very shortsighted. Choose the best cost for value insurance you can get now, but don't leave you (or your family) exposed to complete devistation.

For any other insurance (auto, home, etc.) you can afford to gamble a little bit more. If you total your car and you don't have a lot of money saved in liquid assets, it probably won't be financially devistating (although it may be a tough change to go from a BMW to a VW). The same may hold true for your home allbeit, to a lesser degree. The point is, these are material items which can be replaced. If your current financial position will not allow you purchase an identical replacement, you shouldn't be devistated by having to scale down (even if that mean cheaper furniture in a smaller home).

Just my two cents,

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.