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What is insurance? Insurance is basically a financial net that shields or protects the things that are very important to you. This protection is needed if you want a sound and secure financial plan.

Insurance works many different ways as far as your financial plan is concerned. It is a financial blanket for your healthcare; it protects your assets and investments from sudden loss or damage; it aids your heirs when you die so they are not burdened by your debts; it can protect your financial plan so if there is a serious problem, you can quickly recover and move on with very little change required.

Of course, there is a twist with insurance. It costs you money! For some people, especially those in the lower income classes, it costs too much money to even consider it, though you know you should have it. Yet people still drive around in their vehicles with minimum coverage insurance never expecting the worst to happen.

What is insurance? Here's a real life example of something that has happened that can happen if you don't have the proper insurance coverage. A friend of mine had a fairly new car and only have liability insurance on it. One day he walked out of his apartment and his car is gone. He assumed it was towed and call the towing yard, but they didn't have his car. He lost a day of work talking to police and his insurance company. His insurance company says, "We can't help you. You only had liability insurance on your vehicle."

Not only did he lose his car, he won't get reimbursed for the loss of his car from his insurance company simply because liability insurance only covers things that you are personally liable for, such as hitting someone else's car. He also must continue making car payments because insurance didn't pay off the loan. The loan doesn't go away just because the car does. Now he's having a difficult time buying another car and has to worry about getting another loan for this car and possibly higher insurance rates since he had his car stolen.

In this example - and yes, it did happen to a junior sailor of mine in the Navy - this unfortunate theft is going to cost a lot more in the long run than just the car.

What is insurance? Insurance is your way out of a financial bind that can cause a ripple affect throughout your financial plan if you don't have the right type or coverage of insurance for what you require.

The answer to what is insurance is covered a little more in depth on the next page about insurance planning.

Updates and Information

01/28/09  - Things are picking up. I've updated the content for the Budget Planning and Future Planning Areas. With a little more research, the rest of the site will come together. Keep checking back. This spring I will have a lot more time, so there will be some big updates then.

07/13/08 - Welcome to Learn Financial Planning. Today is launch day. If you can't find the information you are looking for, it will be added soon. I'm constantly writing and adding content for the site, so please be patient.