Insurance could arguably be one of the most important steps toward managing your personal finances. Consider this situation: You are involved in an accident or have some major illness that prevents you from working for several weeks. How will you continue to pay your bills? Will you lose your car or home? Will your credit rating suffer?

Did you know that many families are only six weeks from bankruptcy? That means that if the family’s income were interrupted for a period of six weeks, they’d likely be forced into bankruptcy. An illness or accident could be just the catalyst to this end. Insurance is a way to protect your family against such an eventuality.

You can purchase insurance – sometimes on your existing health insurance policy – that will pay a set amount to your family during a time when you cannot work. While the income is typically only a fraction of the normal income amount, it will help keep the wolf at bay for that time frame. Even if you weren’t faced with bankruptcy by the time you were ready to return to work, insurance could mean that you’re not spending the next few months trying to catch up on bills.

Insurance – especially insurance of this type – is sometimes considered a luxury. You might feel that your budget won’t stretch to cover a policy like this, but is it responsible management of your personal finances to be without it?