The Insurance You Don't Need

Crucial Coverage

Even if money is tight, avoid canceling or paring back these policies.

• Health You know how expensive medical insurance is (an estimated 46 million Americans can't afford to get coverage). If you and your spouse don't have access to an employer health plan, visit healthinsurancefinders.com for the least costly coverage options in your area.
• Homeowners' or renters' If you have a mortgage, you must have protection in case your home is damaged by fire, storm, or theft or someone is injured on your property and sues you. Always buy a "replacement cost" policy, which covers the total expense of rebuilding your home or replacing your possessions. And if you rent, don't count on your landlord's insurance to protect you. His policy only covers the building itself. If there's a flood, storm damage, or a burglary, renter's insurance will cover the replacement costs of your damaged or stolen goods.
• Auto While nearly every state requires drivers to carry basic liability coverage, make sure you purchase a policy with minimum limits of at least $100,000 per person injured and $300,000 per accident, plus at least $50,000 in property-damage liability coverage (to pay for the other driver's repair bills). If your ride is less than five years old, get comprehensive auto insurance, which pays for repairs or replacement of your vehicle if it is stolen or damaged by fire, flood, or high winds.
• Life If you didn't apply when you got married, fill out the paperwork as soon as you have a baby. At-home moms need life insurance too: If something happens to you, your spouse will need extra funds to pay for childcare and additional expenses. A 20-year term-life policy -- which lasts until your kids are old enough to support themselves -- is more affordable than a whole-life or cash-value policy; the latter two have investment components that raise the annual payments.
• Disability The statistics don't lie: As a young parent, you're more likely to become disabled as a result of illness or an accident than you are to die. That's why it's critical to make sure you'll have a steady stream of income in case you're suddenly unable to work. "Even if your employer provides it as part of your benefits package, you may need a supplemental disability policy to ensure that your total payout equals 60 to 70 percent of your potential lost income," says Jane Bryant Quinn, author of Smart and Simple Financial Strategies for Busy People.

Originally published in the May 2009 issue of Parents magazine.