What insurance do I actually need?

Insurance exists to cover losses you could not absorb yourself. That single principle determines what you need: insure the catastrophic, self-insure the small, and be sceptical of anything that mixes insurance with investment. **What most people genuinely need:** 1. **Health insurance.** The most important one. A serious illness or accident can produce costs that wipe out a lifetime of savings. Get adequate cover even if your employer provides some — employer cover disappears the day you leave, and often has low limits. A separate personal policy, bought while you're young and healthy, is worth the premium. 2. **Term life insurance — but only if someone depends on your income.** If you're single with no dependants, you likely don't need it. If you have a spouse, children or dependent parents, you do. Cover of roughly 10-15 times annual income is a common guide. 3. **Vehicle insurance** where legally required, with adequate third-party liability. 4. **Disability or income protection**, which is chronically overlooked. You're statistically more likely to be unable to work for an extended period than to die during your working years, and it's the risk least often covered. 5. **Renters' or home insurance** for the contents and, if you own, the structure. **What to be sceptical about:** - **Insurance-cum-investment products** (endowment, money-back, ULIPs, whole life). They typically deliver poor insurance cover *and* poor investment returns, with high charges — and they're pushed hard because commissions are large. The standard alternative is 'buy term insurance and invest the difference', which almost always produces a better outcome. - **Extended warranties on gadgets and appliances.** The expected value is poor; the manufacturer is selling you a bet they've priced to win. - **Small-loss policies** — mobile phone insurance, travel gadget cover. If you could replace the item from savings without pain, self-insure. **Practical points**: buy health and term cover while young, since premiums are set by age and health at purchase; read exclusions and waiting periods carefully, because that's where claims fail; disclose everything honestly, since non-disclosure is the most common reason claims are rejected; and review cover after major life events. **The test for any policy being sold to you**: what specific catastrophic loss does this protect against, and could I absorb that loss myself? If there isn't a clear answer, you're probably being sold something that benefits the seller more than you.