Insurance-palooza! All You Need to Know to Protect Your Income and Wealth

**Robert Brokamp** (0:03)
You spend your adult life growing your income and net worth. Here's how to protect them from calamity and tragedy. This week on the Saturday, personal finance edition of the Motley Fool, Hidden Gems Investing podcast.
I'm Robert Brokamp and it's the first Saturday of the month, which means it's time for the next installment of our 2026 financial planning challenge, which we're calling a year well planned.
We spent most of this year discussing how to accumulate and manage your wealth. This month, we're going to talk about how to protect it. Yes, we're going to talk about insurance, and yes, we know it's among the least exciting topics in all of personal finance, but it can also be among the most important. I promise that if you stick with us for this episode, you will learn a thing or two about insurance that you didn't know beforehand. Here to help me talk through this safety net audit is certified financial planner and chartered financial analyst, Amanda Kish. Welcome back, Amanda.

**Amanda Kish** (1:00)
Thank you so much. I'm glad to be back.

**Robert Brokamp** (1:02)
So let's start off with health insurance. And while I think folks might consider it the most important type of insurance, it's actually the one we'll probably talk the least about today, since most people get it through their employer or maybe the government via Medicare, and you generally can't make any changes to it except during certain times of the year, like open enrollment, and that's generally not in August.
That said, we do want to plant some seeds for folks to think about the next time they have to make a decision about their health insurance. Amanda, what should people be thinking about?

**Amanda Kish** (1:31)
You're right. Most of us are probably stuck on the sidelines right now until that open enrollment period. But that's actually the perfect reason to start thinking about it now instead of waiting until November when we're frantically clicking through that benefits portal under threat of a deadline.
The big decision that most people wrestle with is, do I want a high deductible health plan versus that traditional PPO or preferred provider award? So the high deductible health plan has a much higher and then quite frankly scarier looking deductible, but that usually comes with lower premiums. And importantly, that's your ticket to opening a health savings account or HSA, which is the only triple taxed advantage to count in the entire tax code. And that means money goes in tax free, it grows tax free, and then comes out tax free for medical expenses. So if you've got a high deductible health plan, max out that HSA if you can.
And here's potentially a smart move. You can pay those medical bills out of pocket now if your budget will allow it, but save those receipts and let that HSA principle grow untouched for years, possibly even decades. And then you can reimburse yourself for that, you know, that decades old co-pay anytime you want as there's no expiration date. So and with that in mind, that HSA can quickly become one of the best retirement accounts that you'll ever have. But ultimately, the seed I want to plant here is don't just default to whatever health plan you picked five years ago. Make sure you run the numbers on premiums versus deductible risk versus HSA eligibility every single open enrollment.

**Robert Brokamp** (3:10)
Those are actual points about the HSA, and I'll add that it can also be used to pay for Medicare premiums, not Medigap insurance premiums, but the main Medicare premiums. And withdrawals can also be used to pay for long-term care and long-term care insurance premiums. So it's a very powerful retirement account.
All right, let's move on to life insurance. And this is meant to replace the income that is lost when a breadwinner passes away. So Amanda, who needs it and how much do they need?

**Amanda Kish** (3:36)
So one way to think about life insurance is that it really is just a form of income replacement. So if people depend on your paycheck, whether that's a spouse, kids, maybe an aging parent, you probably need it in some form. If there's no one that's financially dependent on you, then life insurance may be less of a priority. So for most working age folks, I think term life insurance is probably going to be your best bet as opposed to something like whole life that retains that cash value. So term life is cheap, it's simple, and it has exactly one job that it does, and that it pays out if you die during that term, but the policy is in effect. So a common rule of thumb is that you're going to want 10 to 15 times your annual income in coverage. That's just a starting point. I think the more precise method is to actually do the math. So add up what you're trying to cover, whether that's replacing income until retirement, paying off the mortgage, funding college for your kids, and then back out whatever you've already got, like existing savings or 401k. And then that gap is your target coverage number.