Insurance policy check-up – do you have what you need?

It is important to review all of your insurance periodically to assure that they are in place and up-to-date. Honestly, reading this post will not be tortuous.

Homeowner’s Insurance:You should review your policy to determine if it has enough coverage to rebuild your property and replace its contents. Guaranteed replacement cost is not terribly expensive, and it should be considered in this type of situation. If you simply buy coverage equal to what you paid for your home or current market value, then your insurance coverage might be significantly less than it should be. In the event of a total or catastrophic loss, you will not receive what you need to rebuild your home.

In addition, be sure that you have at least $300,000 of liability insurance in case somebody slips and falls on your property. And if you have any domestic animals, you should check with your carrier to be sure that a dog bite or similar issue will be covered by your policy.

Life Insurance: Life insurance is purchased to fulfill a need, such as paying off a mortgage, educating children, creating funds to pay taxes, etc. Often businesses with multiple owners buy life insurance so that if one dies, his or her partner will not have to be forced to sell the business or obtain a loan to buy-out the other owner’s heirs.

Term Life Insurance: There are many types of life insurance, but the most popular for a younger person is a term insurance policy, which produces no cash value. It is straight insurance that provides only a death benefit. It is estimated that over 95% of these policies never pay off, as a person either cancels the policy prior to his family receiving the death benefit, or an increasing premium becomes too high, or the policy merely lapses.

Whole Life Insurance: Whole life insurance provides for a cash value to be built up in the policy and is usually more expensive than term. This permanent insurance policy provides a death benefit as long as the insured has paid the premium. Usually, this policy’s premium remains constant.

Long-term Care Insurance (nursing home insurance): You may wish to remain home and never be institutionalized, or if you are institutionalized, you may not wish to have your own funds spent on your care. This type of insurance policy will provide for in-home as well as nursing home care, and if you are over the age of 50, you should consider buying it.

At the time that this is being written, I would suggest you own nothing less than a five-year policy, since there is a five-year waiting period to qualify for Medicaid benefits if any gifts are transferred. This means that you will have a 5-year timeframe, from the time of the institutionalization or illness, to transfer your assets to family, friends, etc. Then, when the policy stops paying at the end of five years, you will be impoverished, and Medicaid will cover the cost of your care.

Naturally, if yours is a husband/wife situation, or you’re part of an unmarried or same-sex couple, a policy should be taken out on each party to cover the cost of care so that the other person will not have to spend their money for long-term care expenses.

Disability Insurance: Unfortunately, there is a fairly high possibility that you may be disabled and be unable to work. In this case, your ability to provide for your family and pay your mortgage, health insurance premiums and other necessities might be quite difficult. In order to alleviate this situation, you should consider disability insurance to cover a portion of your lost wages. Many companies provide a short-term disability benefit, but may not provide a long-term benefit.

Auto Insurance: You should review your auto insurance policy to determine if your accident coverage is sufficient, especially if the other driver is an uninsured motorist. Also, the other driver may not have good limits of liability, so you may want to have your policy provide supplemental coverage. There are lots of “bells and whistles” in all insurances, especially in car insurance, so it is important to have your agent explain the exact amount of coverage that you have so you can make a decision if it’s enough. In order to try and save money by increasing the coverage in other areas on your policy, also consider increasing the deductible, you may offset the additional premium caused by increasing coverage by also increasing your deductible.

Umbrella Policy: An umbrella policy, usually within a minimum coverage of $1 million, will cover you in the event of a significant claim. This is in addition to all other policies. This will provide enough assurance that if you are sued, (and liable,) you will have enough coverage to take care of the claim. This is relatively inexpensive for what you receive, but you may have to obtain minimum thresholds on your other policies before obtaining an umbrella policy.