| Insurance Type | Insure Against | Don’t Insure |
|---|---|---|
| Health | Major illness ($100K+ hospital bills) — see pf-9 for full premium / deductible / coinsurance / OOP-max mechanics and HDHP+HSA vs. PPO trade-off | Minor routine visits where your annual out-of-pocket cost is predictable and affordable (use HSA to pay these tax-free) |
| Auto | At-fault accident liability, total loss | Small dents (raise deductible) |
| Home/Renters | Fire, theft, liability lawsuits | Low-value electronics |
| Life | Income replacement for dependents | No dependents = usually unnecessary |
| Disability | Long-term inability to work (most underinsured risk) | Short-term illness (use sick leave + emergency fund) |
| Umbrella | Liability above other policy limits ($1M+) | Small claims court amounts |
Health insurance is complex enough to deserve dedicated treatment. **See pf-9** for a full breakdown of premium vs. deductible vs. coinsurance vs. out-of-pocket maximum, the HDHP+HSA vs. PPO trade-off, and how to use your HSA as a stealth retirement account. The general insurance principles in this module (insure catastrophic risks, self-insure small losses) apply to health coverage too — but the mechanics are specific enough that pf-9 covers them on their own.
The deductible principle applies across ALL insurance types — not just health. Raising your deductible on auto, renters, or home insurance reduces your premium proportionally. The trade-off is straightforward: can you absorb the higher out-of-pocket cost if a claim occurs? If your emergency fund covers the deductible gap, the premium savings are pure gain. If a claim would require you to go into debt to cover the deductible, keep the lower deductible until your emergency fund grows.
The most underinsured risk for working-age adults is long-term disability. You’re far more likely to be disabled for 90+ days than to die before 65. Employer-provided disability insurance typically covers only 60% of base salary — and may not cover bonuses or self-employment income.
Sit with the ideas.
A 30-year-old earning $100K with a spouse and one child carries no life insurance, no disability coverage, and a $500 auto deductible. What's the highest-priority action?