← Back to Blog
PlanningOctober 4, 2026·6 min read
The Only Insurance Policies You Actually Need
Health, auto, renters/homeowners, term life, disability — and which add-ons are a waste of money.
Insurance exists to protect against catastrophic, unlikely events — not to cover small, predictable expenses. Here's which policies are essential and which are wasting your money.
Essential Insurance
- Health insurance: Non-negotiable. A single hospitalization can cost $30,000+. Even a high-deductible plan with an HSA is infinitely better than nothing.
- Auto insurance: Legally required and financially critical. Carry enough liability to cover your assets.
- Renters/Homeowners: Renters insurance costs $15-30/month and covers theft, fire, and liability. Homeowners insurance is required by mortgage lenders.
- Term life insurance: If anyone depends on your income (spouse, kids), get 10-12x your annual income in coverage. Term only — skip whole life.
- Disability insurance: Protects your ability to earn. More important than life insurance if you're young and single.
Probably a Waste
- Extended warranties on electronics
- Credit card payment protection insurance
- Rental car insurance (your auto policy or credit card likely covers this)
- Specific disease insurance (cancer, accident)
- Whole life insurance (buy term, invest the difference)
The Self-Insurance Principle
If you can afford to replace it, don't insure it. Your $200 headphones don't need a protection plan. That's what your emergency fund is for. Insurance should only cover expenses that would be financially devastating.
TB
TrendingBudget Team
Practical financial advice from people who actually budget.