Insurance is primarily a **wealth protector**, not a wealth builder. Its main purpose is to shield you from unexpected financial losses that could otherwise derail your long-term financial goals.
That said, it’s important not to become overinsured. Paying high premiums for coverage you don’t truly need can reduce the amount of money available for investing, where your wealth has greater potential to grow over time.
A practical approach is to first identify the financial risks that could significantly impact you—such as health issues, disability, liability, or the loss of income—and insure against those. Once you have appropriate coverage and a healthy emergency fund, direct any remaining surplus toward investments aligned with your goals and risk tolerance.
In my view, insurance and investing shouldn’t compete with each other. Insurance protects the foundation of your financial plan, while investing is what helps build wealth over the long run. Finding the right balance between the two is usually more effective than prioritizing one at the expense of the other.
