I'm not a big insurance guy. For example, I don't think annuities offer great appeal. And whole life insurance - which combines insurance and investing - provides neither a great insurance vehicle nor a great investment vehicle, in my opinion.

Bottom line - if you want insurance, buy insurance. If you want to invest, buy an investment. Don't try to mix the two. I don't think it works very well.

Having said that, I think there are insurance products that make sense. One of these products is what's called an "umbrella" policy.

An umbrella insurance policy picks up where your traditional homeowner's and auto insurance policies end. Umbrella insurance is cheap. You should be able to purchase a $1 million umbrella policy for about $20-$40 per month.

Here's why an umbrella policy makes sense. Let's say you've been a diligent investor for a long time. You've invested monthly (hopefully via BUYandHOLD). You've bought quality stocks. You've let time work its magic on them. For your efforts, you now have a portfolio of dividend reinvestment plans and other investments exceeding $1 million.

Congratulations. Along with your net worth, your chances of a lawsuit probably have grown, too. The unfortunate truth is that the more wealth you create, the more prone you are to a lawsuit. Don't think it can't happen to you. Your life could change in an instant. Accidents happen. Unfortunately, someone often pays dearly when accidents occur. That person could be you.

A major judgment against you could undo decades of wealth building. That's where an umbrella policy can help. This form of insurance can help protect you to some extent from such calamities.

If you have accumulated any wealth, you owe it to yourself to look into an umbrella insurance policy. I have an umbrella policy with the same firm that insures my auto and home. To find out about umbrella policies, check with your insurance agent.