• Disadvantages of not paying your insurance premium can be severe.paying image by Albert Lozano from Fotolia.com
  
  Insurance is an important part of a personal finance plan because it protects valuable items, including your life and health, against monetary loss from damage. Because insurance is the purchase of a promise you hope you never have to claim, paying your premiums can feel like an unnecessary expense, especially when money is tight. However, the disadvantages of not having proper insurance coverage far outweigh the short-term benefits of saving money on premiums.
  
  

Cannot Pay Death Expenses

• Life insurance is unlike other types of insurance because you never see the benefit of the policy since it is paid after your death. Despite this, it is very important to your family's financial health. When you die, there will be considerable expenses involved with burial or cremation, as well as dealing with your estate and outstanding debts you may leave behind. Without life insurance, your family must pay these expenses out of pocket. This can throw them into debt or force them to downgrade the standard of living you worked hard to achieve in life.
  
  

Cannot Afford Medical Care

• Medical care in the United States is quite expensive, and the cost seems to increase each year. Health insurance pays for emergency medical care, as well as routine office visits so your family does not have to bear the burden of full medical costs. Without health insurance, you'll need to pay the full costs for the medical attention you and your family need, or choose to go without it.
  
  

Legal Problems and Costs

• Auto insurance is required in most states in the United States. Since it is illegal to drive without insurance, you can be cited, fined or worse depending on your area, if you're caught. In addition, you are liable for the cost of any medical and physical damages you cause, so without an auto insurance policy you may be forced to pay thousands, tens and even hundreds of thousands of dollars to compensate parties you injure with your vehicle.
  
  

Unsecured Mortgage and Loss of Property

• Homeowner's insurance is typically required by your lender, so if you carry a mortgage on your home you must usually have this coverage. If you fail to maintain a valid homeowner's insurance policy, the lender is able to force the placement of one they choose and require you to pay for it. The cost of these lender-placed policies is typically much higher than a standard policy. Further, if your home is damaged or destroyed without adequate coverage, no one will compensate you for the loss of your dwelling or belongings, and any loan on the house will remain despite the lack of collateral.