an Insurance Strategy
protection. As simple as that sounds, many individuals spend little time
considering all their insurance options to make sure they have the insurance
they need at the most reasonable price.
Here is a checklist
of types of insurance and some items to consider:
Insuring your home and its contents is very prudent. If disaster strikes,
you want to be protected. Choose a policy that will pay for the cost of
rebuilding your home if it is totally destroyed. Examine the amount regularly
to take inflation into account. Also make sure the "contents"
part of your policy is adequate. A policy that covers the cost of replacing
items is better than one the just covers the "cash value" of
an item. A six year old dishwasher may only have a $200 cash value, but
will cost $800 to replace. Keep an-up-to-date inventory of your belongings
with a copy in your safe deposit box.
Auto policies are usually comprised of three parts:
- Collision coverage
covers the cost of repairs to your car after an accident. Choose an
amount of collision coverage that reflects the value of your car. If
your car is old or has little value, you may even want to drop the collision
part of your policy.
coverage covers damage to your car from random acts like fire, theft,
hail and vandalism. This part of the policy is usually the cheapest
and should be based on the value of the car. Remember that insurance
companies will not pay more than the car is worth.
- Auto liability
is absolutely essential. This covers damages caused by your car. If
you cause an accident with your car and injure someone or damage their
property, your auto liability insurance will pay the injured person's
medical and repair expenses. This is usually the most expensive part
of the policy and most states require it.
Most homeowners and auto policies provide some level of coverage for damages
caused to others and their property. In an era of large jury awards and
rising medical costs, you may want to consider an umbrella policy. These
policies are usually inexpensive (a few hundred dollars for over a million
dollars coverage) and are available from most insurance companies.
Be sure you have adequate health insurance. Most large employers provide
it as part of their benefits program. While you may be required to share
in the cost, a company provided plan is usually cheaper and has fewer
restrictions than a policy bought individually. Choose the level of coverage
you need, but make sure you are covered for major medical expenses.
Most employee benefit programs provide some form of disability coverage.
Check your program to make sure the amount is adequate for your needs.
Also, look at the details (definition of disability, waiting period and
any total limits) to ensure your policy will provide all that you need.
If you need more, talk to an insurance professional or consider policies
offered by any professional organization you belong to.
Some estimate that over one half of individuals will spend some time in
a nursing home or other care facility before they die. The costs of this
type of care can be very high and the federal Medicaid program will not
cover all the expenses you may incur. Usually, age 50 is about when to
consider a long-term care insurance policy. Premiums will be higher for
older buyers. Examine any policy before buying to fully understand what
will be covered and for how long.
Three questions - how much do you need, what type of policy, where should
you buy it?
For most people, life
insurance is simply a way to ensure that a surviving spouse and children
can continue to have a decent lifestyle. Many experts suggest that a primary
breadwinner should have insurance equal to 6 to 10 times their annual
income. In most cases, this will provide enough money for the survivors
to be at least reasonably comfortable. If you have young children or other
special needs, additional amounts should be considered.
Deciding whether to
buy a term policy or a cash value whole life policy should be carefully
considered. Term policies are usually much cheaper, but whole life policies
provide for a "cash build up" for the duration of the policy.
Reviewing the options with a qualified advisor is essential.
Luckily, life insurance
is available from many sources. Start with your employer. Many employee
benefit programs provide inexpensive coverage. Term and whole life policies
are available from hundreds of companies.
The insurance company.
Be sure to investigate the company offering any policy you are considering.
Quality customer service and financial stability are essential. When you
end up needing the insurance, the last thing you want to discover is that
the company is hard to deal with or that their financial condition prevents
them from providing the benefits you paid for. Check with the Better Business
Bureau and examine the insurance rating reports found in many libraries
and on the Internet.
Choosing a homeowners, auto or health policy will usually involve deciding
on a level of deductible. The deductible is what you pay before the insurance
starts paying. The higher the deductible, the lower the premium. Before
buying, ask for the premium levels at different levels of deductibles.
Then evaluate the level of "risk" you are willing to assume.
You may find that your premium can be up to 25% less.