Dave Ramsey Says these are the 8 Types of Insurance You Must Have!
Insurance can feel overwhelming—so many policies, so many options, and so many opinions on what’s necessary. But according to Dave Ramsey, there are eight types of insurance everyone should have.
Are they really must-haves? Let’s break them down, explore real-life examples, and see where I agree—and where I might challenge Dave’s advice just a little.
1. Auto Insurance – Absolutely Essential
If you own a car, auto insurance isn’t just important—it’s legally required. But the right policy is about more than just compliance; it’s about financial protection.
Here’s what you need to consider:
- Collision Coverage – Pays for damages to your car if you’re at fault in an accident.
- Comprehensive Coverage – Covers non-collision damages like theft, fire, or storms.
- Liability Coverage – Protects you if you cause injury or damage to others.
- Personal Injury Protection (PIP) or Medical Payments (MedPay) – Covers medical expenses for you and your passengers.
- Uninsured/Underinsured Motorist Coverage – Protects you if someone hits you and doesn’t have enough insurance.
At Trailstone Insurance Group, we shop over 40 carriers to find the best coverage at the best price—and our service is completely free.
Tia’s Verdict: Yes, 100% Agree!
2. Health Insurance – Non-Negotiable
Medical debt is one of the leading causes of bankruptcy. Health insurance isn’t just about check-ups—it’s about protecting yourself from financial catastrophe.
Best options include:
- Employer-Sponsored Plans – Usually the most affordable.
- High-Deductible Plans + HSA – Great for lower premiums and tax savings.
Example: You’re hiking and break your leg. Without insurance, the hospital bill could be $15,000+. With insurance, your out-of-pocket cost is manageable.
Tia’s Verdict: Absolutely, Dave is right again.
3. Life Insurance – Term vs. Whole Life
Dave Ramsey is a big fan of term life insurance and advises against whole or universal life policies.
- Term Life Insurance – Affordable, simple, and provides coverage for a set period.
- Whole Life Insurance – More expensive and often marketed as an investment (which Dave opposes).
Dave’s Recommendation: Get a term policy worth 10-12 times your annual income.
My Take: While term life is the best fit for most people, whole life insurance can make sense in some cases.
Tia’s Verdict: 7.5/8 Agreement—Mostly Yes, But Sometimes Whole Life is Worth It.
4. Homeowners or Renters Insurance – Protect Your Biggest Investment
If you own a home, homeowners insurance is non-negotiable. If you rent, renters insurance is essential because your landlord’s policy won’t cover your personal belongings.
Key Coverages to Include:
- Dwelling Coverage – Pays to rebuild your home if disaster strikes.
- Personal Property Coverage – Covers stolen or damaged belongings.
- Liability Coverage – Protects you if someone gets injured on your property.
- Additional Living Expenses – Covers hotel stays if your home becomes uninhabitable.
Example: A storm damages your home, and you need $50,000 in repairs. Without coverage, you’re on your own.
Tia’s Verdict: Yes, completely agree.
5. Long-Term Disability Insurance – Overlooked but Crucial
Disability insurance replaces 60-70% of your income if an injury or illness prevents you from working.
Reality check: 1 in 4 people will experience a disability before retirement.
Types:
- Short-Term Disability – Usually covered by emergency savings.
- Long-Term Disability – Covers lost income for years, which is why Dave and I agree—this is a must-have.
Tia’s Verdict: Strong Yes.
6. Long-Term Care Insurance – Important, But Not Yet
Long-term care insurance covers assisted living, in-home care, and nursing home expenses—which Medicare does not cover.
Dave’s Rule: Get it at age 60+ when the risk of needing care rises.
Example: A private nursing home can cost $110,000 per year. Without long-term care insurance, this could drain your retirement savings.
Tia’s Verdict: Yes, but only after age 60.
7. Identity Theft Protection – More Necessary Than Ever
With 1.1 million reports of identity theft in 2022, protecting your financial identity is crucial.
What to Look For:
- Credit Monitoring – Alerts you of suspicious activity.
- Restoration Services – Helps clean up fraud if your identity is stolen.
Example: Someone takes out a loan in your name. Identity theft protection provides expert help to fix the mess quickly.
Tia’s Verdict: Yes, definitely worth having.
8. Umbrella Insurance – Extra Liability Protection
If you have a net worth over $500,000, an umbrella policy adds extra protection beyond your homeowners and auto insurance.
Why You Need It:
- Covers lawsuits and legal fees if you’re sued.
- Protects assets beyond standard policy limits.
Example: You cause an accident, and the damages exceed your auto policy limits. An umbrella policy covers the excess, protecting your savings and property.
Tia’s Verdict: Yes, a smart move for high-net-worth individuals.
Final Verdict: Dave Ramsey’s 8 Must-Have Insurance Policies
| Insurance Type | Dave’s Take | Tia’s Take |
|---|---|---|
| Auto Insurance | ✅ Must-have | ✅ 100% agree |
| Health Insurance | ✅ Must-have | ✅ 100% agree |
| Life Insurance | ✅ Term only | ⚠ Term mostly, but whole life can make sense |
| Homeowners/Renters | ✅ Must-have | ✅ 100% agree |
| Long-Term Disability | ✅ Must-have | ✅ 100% agree |
| Long-Term Care | ✅ After age 60 | ✅ Yes, but not before 60 |
| Identity Theft Protection | ✅ Must-have | ✅ 100% agree |
| Umbrella Policy | ✅ If net worth $500K+ | ✅ 100% agree |
Tia’s Score: 7.5/8 Agreement – Dave’s Almost Always Right!
What Should You Do Next?
At Trailstone Insurance Group, we make insurance simple and affordable.
- We shop over 40 top-tier insurance companies to find you the best coverage at the best price.
- There’s no cost for our service.
- We have over 2,400 five-star reviews—just Google us.
Have questions about your insurance coverage? Give us a call, and we’ll help you find the best policies for your needs.
Until next time, stay safe and protected.