Are you prepared for the worst case financial scenarios in your life? Do you have adequate life insurance? Do you have money set aside in case you lose your job? Do you currently have health insurance? Would you be able to care for your family if one spouse had to stop working or passed away?
Although these are difficult questions to think about, it is important to address them. Although you may think that you are better off saving the money rather than purchasing life or health insurance, it is a risky gamble. One skiing accident or attack of appendicitis can cost nearly as much as you make in a year. It is important to have planned for these expenses.
Similarly, it is important to plan to care for your family if one of you becomes disabled or passes away. It can be a huge strain to deal with this, not just financially, but emotionally as well. If you have planned ahead, you can remove part of the burden from your spouse or yourself. If you know that the financial needs are taken care of it is easier to deal with the additional problems that come your way.
It is important to be prepared for the possibility of a job loss. If you are self-employed it is important to prepare for a slow down in income as well. One example of this is the mortgage business is slowing down, and if you were a mortgage broker, your income is taking a hit. It is not uncommon for companies to layoff people, and so it is best to be prepared for this.
While it is important to have the necessary insurance (term life, health, and disability), there are other ways to prepare and protect your family. You can do this by having a large emergency fund set aside to cover expenses. If you are debt free you do not have as many obligations and burdens to deal with. By managing your money now you will be preparing for any problems that your family might face.