When you think about financial planning, odds are, you’re more focused on creating budgets and researching savings accounts. You’re probably thinking of how to invest, maybe for the first time ever, while feathering your financial nest and securing that egg through a robust retirement plan.
You might not be thinking of insurance — and nobody could blame you. Finding the right insurance plans may be an under-discussed aspect of financial planning, but it’s no less important than any of the other aspects that typically take the spotlight.
To help guide you through an understanding of how — and why — you should factor insurance into your financial plans, GOBankingRates caught up with some experts.
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Insurance Can Serve as a Buffer Against Financial Catastrophe
As senior vice president of operations at SmartFinancial, an insurance-comparison company, Michael Orefice thinks a lot about why people need good insurance. While acknowledging that insurance premiums do add up every month, he encouraged people to think of health insurance as a preventative tool for lowering medical costs in the long-run.
He said that many healthy people skip buying health insurance because they regard it as betting against themselves. However, even paragons of perfect health can be hit hard by a sudden accident or illness that lands them in the hospital or needing more long-term care.
“Without health insurance, one health setback can cause financial ruin in the form of medical bankruptcy,” he added.
Health insurance can make life-saving screenings for prostate cancer and mammograms more affordable; without insurance, these screenings can cost hundreds of dollars. But those hundreds of dollars are nothing compared to your life — or to the hundreds of thousands of dollars in medical costs.
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Having Insurance Can Support You as You Age
It’s no secret that a major component of financial planning involves thinking about the kind of life you want as you grow older. As your retirement years approach, health insurance becomes even more critical-especially if you’re forced to retire before you’re eligible for Medicare, according to Orefice.
“Not only are premiums more expensive as one ages, but health insurance becomes more critical to have because the alternative is to pay much more in out-of-pocket costs for care and prescription drugs-at staggering prices,” he said.
Car Insurance Can Potentially Save You From Bankruptcy
Car insurance isn’t only a legal requirement in nearly every state, it’s also essential to your financial security, Orefice said. While everyone wants to imagine that they’re a good driver, not everyone on the road can say the same — and whether you want to admit it or not, you have your own bad days.
“To take on the risk of having a collision with a newer car without car insurance in place is to gamble everything you have, especially if the accident is your fault,” he added.
Even if the accident isn’t your fault, you can get in some hot water if you’re caught driving while uninsured. Orefice warned that you’ll immediately be categorized as a high-risk driver, regardless of how pristine your driving record may be otherwise.
However, the blow to your wallet may be even worse than the rear-ending of your ego.
“If you get sued for the cost of an uninsured accident and the injuries to the driver and passengers, you may be forced to liquidate all your assets and your wages may be garnished. Consider the fact that a new car on the market may easily cost over $40,000,” Orefice said.
Term Life Insurance Can Help You During a Big Stage in Life
If there’s another seminal life moment that requires some financial planning, it’s becoming a new parent. That’s why Melanie Musson, insurance industry expert with InsuranceProviders.com, said that term life insurance is ideal for people who have significant debt and dependents.
“For example, most people have the most amount of debt when they’re new parents because they have recently purchased a house,” she said. “They will have children depending on them for at least 18 more years. You can purchase a term life insurance policy that will provide for those expenses.”
Nursing Home and Long-Term Care Insurance Can Protect Assets
For many people, a huge part of successful financial planning means having assets to pass on to your family when you’re gone. Unfortunately, if you should find yourself needing long-term care or skilled nursing care, you can lose those assets — especially if you end up with an extended nursing home stay.
Musson shared that getting nursing home insurance can help provide a way of paying for your care while maintaining your assets. With proper planning and the right insurance, you’ll be able to achieve a life-long financial dream of making sure your loved ones are cared for, even when you’re not there.
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This article originally appeared on GOBankingRates.com: 5 Reasons Insurance Is Important When Financial Planning, According to Experts