Insurance Checkup Time

With the new year now in it’s second month, it is time to start honoring those resolutions to save more money. One of the ways to save money is to reduce expenses on insurance.

An important part of building wealth is understanding and dealing with the risks that life throws your way. Although insurance can be considered a cost by some, it really is a risk reduction strategy that you need to employ on the road to wealth.

Having said that, there is no reason you need to pay more than necessary for coverage, so now is the time to review your health insurance, life insurance, house insurance and etc to make sure you are getting the coverage you need for the best cost.

Not everyone needs all kinds of insurance, but everyone should review their needs and buy appropriate types of insurance. One uninsured health problem, house fire or car accident can have devastating financial impacts.

• Home owners – anyone who owns a home should consider carrying home owners insurance. Anyone with a mortgage is usually required by the mortgage holder to carry it. Be aware of what it will and won’t cover. A lot of policies have limits on specific categories of things (like firearms, jewelry and art). As with other types of insurance, the higher your deductible, the lower your premiums – just make sure your emergency fund can handle the higher deductible. The best policy will cover the market value of the replacement costs of your home.
• Renters insurance – may or may not make sense. If you have a lot of expensive things, then you might think about the cost vs. the payout on those possessions. Renters insurance typically covers the contents of your apartment, or rented condo or house.
• Health – if you are employed, your company probably provides a group health insurance plan as part of your benefits package. It may also include coverage for vision and dental. If you don’t have coverage, look into buying group coverage from an association to which you belong or can join. Pay attention to what is covered and what is not. Typically you will pay a monthly premium plus a co-payment amount per incident plus whatever is not covered.
• Life – if you have dependents you probably should consider buying life insurance. Your company may offer some free life insurance coverage and some paid life insurance coverage. Life insurance premiums increase as you age (if you wait to buy life insurance you pay more and some policies have a built in increase as you age). Life insurance often involves a physical exam in order to get coverage. Term life insurance costs less than cash value life insurance, for the death benefit provided. However, it can be typically be canceled by the insurer at the end of the term. Cash value life insurance (whole life or universal life) has a more expensive premium but is usually in effect for your life and will usually build up small amounts of cash value that you can borrow against or cash out.
• Liability – anyone who drives a car should be covered by some kind of liability insurance, unless of course you are already rich enough to pay off anyone with whom you may have an accident. Property owners, corporate executives, landlords and business owners may want to consider an additional umbrella liability policy. This policy will cover additional amounts if someone injures themselves on your property, sues you and etc (as covered under that specific policy).
• Disability – anyone who has dependents relying on their income might consider disability insurance. If you are employed, your employer may offer either short term or long term disability or both. You may have free sources of disability coverage, such as workman’s compensation, social security disability, veterans insurance and state disability programs.