What are the 5 Insurance Policies I need?

5-insurance-polices-i-need

What are the 5 Insurance Policies I need?

You need to protect your most important assets as a step toward having a solid financial plan.  Having the right policies in place when you need them will aid you toward a long term plan of safeguarding your wealth accumulation and keeping yourself and your possessions whole in the case of a loss.  In this article we are going to discuss 5 Insurance Policies You Need and should have in your arsenal.

 

Homeowners/Condo/Renter’s Policy

These policies don’t just give you protection against a catastrophic loss from wind, hail or fire.  They are a solid first step in protecting your assets through Personal Property coverage, Personal Liability, Sewer and Drain backup, Identity Theft…. The list is long.  The most likely cause of a loss is wind and second is non-weather related water damage. Replacing your home and possessions are expensive propositions in the case of a catastrophic loss due to a tornado.  Having a Homeowner’s policy in place at the time of loss certainly takes a lot of the burden away, but make sure you choose your deductible wisely as well.  When looking at a Homeowner’s policy, make sure you know what your options are and either include/exclude as your appetite for taking the risk or not would have you decide. 

An important consideration when looking at homeowner’s policies is the Replacement Cost of your home.  When your home is undervalued at the time of a loss, it’s the policyholder who pays for that mistake.  Go the extra step of having your broker show you the details they went through to value your home and make the corrections as necessary.  The devil is in the details!

 

Life and Long Term Care Insurance Policy

If you die tomorrow, what are you leaving behind when your income and duties cease to help your household and those who are dependent on you?  If anyone would face financial hardship if you passed away, life insurance should be high on your list to take care of those you care about.  When purchasing life insurance, multiplying your yearly earnings by 6-8x will most often suffice.  However, this is the most basic way to calculate your Death Benefit.  You should really lean on your broker to provide you with a road map for calculating what liabilities you need to be assured are taken care of.  If they don’t have a method for you to follow, move on to a professional who does.

In the recent past, Long Term Care and Life Insurance policies have blended to give the insured and the beneficiaries the benefits of both.  Because we are living longer, the need for care as we grow older becomes much greater.  Having recent personal experience with the benefits of a Long Term Care policy, I can’t sing the praise for it enough. For example, in 2018, the Alzheimer’s Association estimates the lifetime cost of Alzheimer’s and dementia care at a staggering $341,840. 

 

Auto Insurance Policy

In most states, having insurance for your car is required by law with minimums established by the state where your car is garaged.  Even if you have an old jalopy which has no intrinsic value in a state which doesn’t require insurance, you should not overlook having auto insurance.  When you’re in an accident and someone’s injured and/or their property is damaged you could likely be the defendant in a lawsuit which would quickly eat up your personal assets and cost you a great deal more than you have.  When shopping for auto insurance, keep in mind the deductibles which have to do with damage to your vehicle, but also keep in mind the injuries which can/will happen to others inside and out of your vehicle in the accident you’ve caused.  How would you feel if the $5 you saved per month could have covered the higher limit and paid for the $250,000 hospital bill when you hit the mom driving her kids to the zoo?

 

Health Insurance

We are and have been at a crossroads for our medical care expenses and the increased cost of our family’s health care.  A simple checkup at your family doctor could result in costly tests and an inflated bill.  Injuries which require a one or two day hospital stay could equate to the same as your family going together to a week long stay at a 5-star resort.  Health Insurance is a tough cost to manage, but if you have to pay for it yourself, the burden of not having it in the case of an injury or significant health issue can cause serious financial hardship.

 

Disability Insurance

The prospect of a long-term disability can be so overwhelming that some people choose to ignore it.  We all have an ‘it won’t happen to me’ attitude, hoping that nothing will affect our future earning power and it’s quite simply not a good idea.  Instead, purchase a Long-Term Disability Insurance policy with enough coverage, allowing you to live your current lifestyle.  

 

What important points do you need to take away from this article?

  • Choose your Home/Condo/Renter’s policy with care.  Knowing the details of coverages available will only help you.
  • To protect your loved ones who are financially dependent on you, Life Insurance with a Long Term Care rider should be a high priority.
  • Auto Insurance is a necessity, even when not mandated by your state.  In the case of an accident it aids all parties involved through appropriate coverage.
  • Health Insurance has become a necessity.  A small health issue can cost you 10x your insurance premiums.
  • Make certain you choose a disability policy which provides ample coverage to enable your current lifestyle if you are no longer able to work.
  • Read and understand your policies.  Take the time to dive in and ask questions so that you have clarity on what your policies do for you.
  • Lastly, and most importantly, choose your Independent Agent carefully.  They need to have experience and understand how to match your needs with the most appropriate coverages available.  They should also help to educate you on the options available and how they work to benefit you.

 

Own a business?  You need insurance too!  Take a look at our Blog regarding the most important policies for Commercial coverage!

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