Insurance – not a very sexy financial topic to talk about. In fact, it can seem downright boring and can cause anxiety. Why? Because it deals with the probability of something negative happening in your life – an accident, a life-altering injury, or death. Yes, clearly this is an uplifting topic! However, making sure you have the appropriate insurance is essential so that if and when a negative event occurs, the financial aspect will not increase the stress and anxiety of whatever else you are dealing with at the moment.

This tip will address both life insurance and disability insurance. Why? Most other insurances are mandated by law in the US, including health care and auto insurances. Instead, we will focus on two types of insurance that are optional to carry but vitally important should you ever have to use the coverage.

First up is life insurance. There is a lot of confusion about who needs life insurance and how much coverage is needed. There are a few questions that you need to ask yourself when determining life insurance needs. Is there anyone who is dependent on my income if I pass away? Do you have financial resources outside of life insurance to pay for your burial and take of final costs? If you do have money and assets but also have outstanding debt, do you have enough money to cover those outstanding debts and have money left over for burial and final costs? For example, I don’t have any dependents, I am debt free, and I have enough money in the bank and financial assets to cover my final costs; therefore, I don’t have life insurance.

The only type of life insurance I recommend is term life insurance. You take out a policy for a specific term (10, 20 or 30 years, typically) which will pay out the value of the policy during that term if you should pass away during that time. Term life insurance is relatively inexpensive to pay for coverage. Most employers provide a basic life insurance policy at no charge to the employee, but you want to check with a financial advisor or insurance agent to determine the amount of coverage that is right for you.

The other big, super important, insurance is disability insurance. There are two kinds of disability insurance – short-term and long-term. Short-term disability insurance is exactly what it says it covers – short-term disabilities, such as sickness or injury. Some companies offer it as a company-paid benefit while other companies offer it as a benefit employees can pay for. However, if you have a fully funded emergency fund, there is no need for you to pay for short-term disability.

The other type of disability insurance is long-term disability. This is the insurance that I think EVERYONE should have – no exceptions! Why? Because if you become permanently disabled from your job, who is going to take care of you, any medical expenses that may come along with being disabled, and any dependents you may have? It sounds harsh but dying without life insurance would be easier to handle financially than trying to figure out how to care for dependents and a disabled family member with added medical expenses. Even as a single person, I would not want to put the financial burden on any of my family to take care of me and any medical needs I would have. You owe it to your family to be prepared in case of a life-altering injury. It happened to a former co-worker of mine who was single and had permanent brain trauma that caused her to never return to her former career again. Thankfully her long-term disability was able to take care of her needs.

There are a few more notes I want to touch on when it comes to long-term disability insurance. Many employers provide this coverage to employees for a monthly premium. Getting long-term disability coverage is the cheapest done through an employer so take advantage of the plan they are offering. Also, there is usually a waiting period before a long-term disability policy kicks in. This is why you either need to have an emergency fund or a short-term insurance policy in place to bridge you from your loss of income until the long-term disability insurance policy becomes effective.

We’ve laid out the types of insurance you need to consider to protect your income and your assets as well as family members. However, you need to be the one who determines what insurance is right for your situation and how much coverage you will need. Each person’s situation will be different. The main point is to make sure you are adequately covered should one of these life-altering events occur. You and your family deserve to have that kind of peace of mind.