For many, the world of insurance can be difficult to understand. There are so many different types of insurance, as well as different policies. How do you know which options are right for you? Or, just as importantly, when should you obtain or increase coverage?

These are all questions that I’ve pondered over the years. At first, I thought of insurance as an expense or necessary evil. Today, I see insurance as a form of asset protection, or even as a strategic, wealth-building opportunity in my overall plan.

It seemed that the more I accumulated or the further I was in life, the more insurance I needed. It’s funny looking back, though. When I was young, I balked at most insurances and pretty much avoided thinking about them. I was naïve and had this “I’m going to live forever” attitude. Even when I really needed something, I figured “I’ll get to it later.”

Required Insurances

This “I’ll get to it tomorrow” attitude is very common, and it’s probably why the government steps in and makes it mandatory for people to have auto insurance coverage. Now we’re even seeing mandatory medical coverage.

I remember when I was just married, I thought I couldn’t afford life insurance, but after my children were born, I quickly realized that I couldn’t afford not to have at least some coverage (i.e. enough term insurance to replace about five years’ worth of income).

Today, I see many of my colleagues use insurance not as income replacement but more as an asset protection tool or as a family or business bank. That said, these strategies are completely different than the those used by most folks who buy or sell insurance.

A lot depends on your income level, how you make your money, and what your long-term goals are. In other words, how much protection and what type of protection do you really need?

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This article first appeared on BiggerPockets.com.