When it comes to building wealth and financial security, it’s not just about budgeting, saving, and investing—protecting what you have is just as important. That’s where insurance comes in. Financial expert Dave Ramsey is a big believer in preparing for the unexpected, and he recommends eight essential types of insurance to keep your finances safe from disaster.

If you’re serious about living debt-free and staying financially secure, here’s what Dave says you must have:

1. 

Term Life Insurance

If someone depends on your income—spouse, kids, aging parents—you need term life insurance. Dave Ramsey recommends getting 15-20 times your annual income in coverage. Why term and not whole life? Because term insurance is much more affordable, and you can invest the difference.

💡 Pro Tip: Avoid policies with cash value or investment components. They’re expensive and not worth it.

2. 

Health Insurance

Medical bills are the #1 cause of bankruptcy in America. Even if you’re healthy, an accident or illness can wipe you out financially. Dave is clear on this: health insurance is non-negotiable. Whether it’s through an employer, the marketplace, or a private plan, make sure you’re covered.

✅ Minimum: High-deductible plan with an HSA (Health Savings Account) if you’re young and healthy.

3. 

Disability Insurance

If you’re unable to work due to illness or injury, disability insurance replaces part of your income. Ramsey advises getting long-term disability insurance that covers 60-70% of your income, especially if you’re the primary breadwinner.

📉 Odds of becoming disabled are much higher than most people think. Don’t skip this one.

4. 

Auto Insurance

Not only is auto insurance required by law, but it also protects you from major financial loss if you’re in an accident. Dave suggests full coverage (liability + collision + comprehensive) if your car isn’t paid off, and liability-only if you’re driving a paid-off, older car.

🚘 Increase your deductible to lower your monthly premium—just make sure you have the savings to cover it.

5. 

Homeowners or Renters Insurance

Your home is likely your biggest investment. If you own, homeowners insurance is a must. If you rent, renters insurance protects your belongings for a few dollars a month. Either way, you’re covered against theft, fire, or disasters.

🔍 Be sure to check if you’re covered for natural disasters (flood, earthquake) depending on where you live.

6. 

Long-Term Care Insurance (If You’re 60 or Older)

Healthcare costs skyrocket as we age, especially for nursing home or assisted living care. Dave recommends long-term care insurance starting at age 60 to avoid wiping out your retirement savings.

🚨 Note: This is not the same as disability or health insurance—it covers help with daily activities like dressing, bathing, etc.

7. 

Identity Theft Protection

In today’s digital world, identity theft can cost you money, time, and stress. Dave recommends ID theft protection services that offer restoration—meaning a dedicated pro does the recovery work for you.

🔐 Freezing your credit and monitoring your accounts helps, but a dedicated recovery service is ideal.

8. 

Umbrella Policy

An umbrella policy gives you extra liability coverage beyond your auto or homeowners insurance. If someone sues you for a major accident or injury, this protects your assets from being taken.

☔ Dave suggests this once you have a net worth of $500,000 or more.

Final Thoughts

Insurance isn’t glamorous, but it is essential. As Dave Ramsey says, “Insurance is about transferring risk—protecting you from things you can’t afford to pay for yourself.” Skipping coverage might save you money now, but the cost later could be devastating.

Peace of mind is worth the premium.

Your Turn:

Do you have all eight types of insurance? What’s one you need to add or update? Let’s talk about it in the comments