The most important insurance coverage you need to have is your state's minimum liability and property damage coverage. This is because it is mandatory to have car insurance in order to drive legally. If you don't have it, you risk losing your driver's license and being fined. There are a lot of different types of car insurance, but the three most important are liability, comprehensive and collision coverage.
When you have all three, it is known as full coverage. Homeowners insurance is another type of coverage that is usually mandatory if you have a mortgage. Health insurance is also an essential part of any financial plan. If you have health insurance through your employer, that's the best place to start.
If not, you can look for subsidies that can make health insurance more affordable. You can also choose tiered coverage that fits your needs and open a health savings account (HSA) if you choose a high-deductible health insurance plan (HDHP). Life insurance is also important, especially if you have a family or dependents. It is recommended to buy at least 10 times your income in term life insurance coverage, but you may want to buy more than that.
You can also purchase tiered policies that offer more coverage when you're younger and decrease as children leave home and you approach retirement age. In addition to the three big basic car insurance coverages, it is also recommended to purchase additional liability coverage and disability insurance. Disability insurance is especially important if you are just starting out in the workforce. With a disability insurance policy, you could receive between 60 and 80% of the amount you previously earned if you become disabled.
Finally, some financial advisors may try to sell expensive and complicated insurance products such as full life insurance or indexed annuities. These aim to protect against losses in your portfolio, but they may not be worth the cost. You should also consider getting personal injury protection (PIP) coverage and glass coverage for your car.
