Insurance is designed to provide coverage for some of life’s biggest disasters—fire, floods, car crashes, disability, and death. But when you’re on a tight budget, paying even a few extra dollars a month for an insurance policy you may or may not use might seem like a huge ask.

However, it could be penny-wise and pound-foolish to forgo insurance coverage. Here are three types of insurance that are critical to have, even on a shoestring budget.

Disability and Life Insurance

These types of insurance are designed to provide cash—either a lump sum or monthly payment—if you’re too disabled to work or unexpectedly pass away. This might be a lifeline for your loved ones, who may be wondering how to pay the bills without your regular paycheck.

Most life insurance and disability policies are relatively inexpensive, especially if you’re young and healthy. Paying a few dollars a month might be a great investment when you consider what life insurance is designed to avoid—having your loved ones scrambling to cover funeral expenses when they should instead be grieving your loss. Similarly, disability insurance might help you pay your bills, buy groceries, or avoid downsizing your home or pulling your children out of activities if you unexpectedly find yourself without a regular source of income.

Health Insurance

Health insurance is important for several reasons. First, it may provide you with financial support to help cover the high costs of medical care. Even something as straightforward as a broken limb might cost tens of thousands of dollars—without insurance, these expenses could be major burdens.

Health insurance may also increase your access to healthcare services. With insurance, you’re more likely to seek preventive care, which might help you catch health issues early and prevent them from becoming more serious and costly to treat later on.

Even if you’re healthy and rarely visit the doctor, health insurance protects against catastrophic events, such as serious accidents or illnesses, that could result in significant medical expenses.

Homeowners or Renters Insurance

These insurance policies could cover your personal belongings in theft, fire, vandalism, or other potential disasters. Even if your belongings aren’t rare or expensive, their replacement cost may be substantial, especially when you’re forced to replace multiple belongings simultaneously. Renters or homeowners insurance might help you replace and rebuild without incurring any extra debt.

These policies may also provide liability insurance to protect you against lawsuits if someone is injured on your property, such as from slips and falls or pet attacks.

Renters insurance, in particular, could be quite affordable, even for those on a tight budget. Even a bare-bones policy could provide some coverage for unexpected natural disasters, theft, and vandalism.

Important Disclosures:

The insurance content in this material is for general information and not intended to provide specific advice or recommendations for any individual.

This article was prepared by WriterAccess.

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