6. Insurance: Protecting What You Have—And Will Have

Years of writing about insurance and answering readers' questions have convinced me that many people think about insurance the wrong way.

Too many view insurance not as a safety net but as a gamble or some kind of investment plan. They want their premiums to "pay off" or at least cover expenses that they don't think they should have to pay. These folks feel their premium dollars have been wasted if they don't see a check from their insurance company.

This backward thinking leads people to buy the wrong insurance, spend too much, make too many claims, leave themselves wide open to unforeseen catastrophe, and in general cost themselves small fortunes.

The better way to think of insurance is as the ultimate safety net. You want to use insurance to cover the catastrophic expenses that you couldn't easily cover on your own.