Insurance protects you not just from having bad things happen, but from losing everything you have because of bad things.

Let's look at an example:

A man retires from his job, he has a nice retirement savings, his home is paid off, and he has some cash in the bank. He plans to travel, spend time with grandchildren, and catch up on his reading. When he retires he finds out his new medical insurance will not kick in for about eighteen months (as he retired at an early age). He has the option to pay for a gap insurance coverage, but it costs almost $1000 a month. Instead of spending that amount, he decides he will just do his best to not get sick for that year and a half. Against the advice of many, he declines gap insurance. He did not visit the doctor in the last year and half, he is moderately healthy, exercises, etc. Well, about six months later, his wife is diagnosed with a very aggressive cancer. In an attempt to prolong her life, and make it more comfortable he empties his bank account, retirement accounts, and mortgages his home. What took him 40 years to build was wiped out in 18 months. Having insurance would not have stopped his wife from getting cancer, but it would have protected his home and retirement savings from being depleted.

What kinds of insurance you should have:

• Life: This helps your children and those who receive your estate protect it from loss. If you have life insurance your children can use some of that money to pay estate taxes, death taxes, and even funeral costs, which protects them from loss.
• Disability: More people get hurt and require long term assistance or care than actually die from accidents, etc. this insurance protects you when you get stuck with the expenses of care, the lost income, etc.
• Long term care: This is the same idea as disability. When you get to the point where you can not take care of yourself, you can piss away your life savings paying the ten grand or more a month for care, or protect yourself with long term care insurance.
• Property casualty: This protects you home, etc. and the large investment you made in them so that you do not lose them because of a natural forest fire, etc.
• Health: As you could see from the example above, there are many ways that health insurance protects your assets.