Nearly 15% of the public realizes they have too little insurance coverage, while 9% admit they are not sure how much coverage they need. That’s why it’s important to be informed about the amount of coverage you have compared to the amount of coverage you need.
Family Insurance Needs
A good time to re-evaluate your family insurance needs is during life’s changes. Getting a new job, marriage and buying a new home are just some examples when consumers may find that their existing policies aren’t enough.
According to the Insurance Information Institute, Inc., the main purpose of life insurance is to provide financial help to your family should you die unexpectedly. The money your dependents, such as your spouse and children, will receive from life insurance is called a death benefit. You need life insurance if anyone depends on your income. As a general rule, you should buy protection equal to five to eight times your annual income. But each individuals’ and family’s needs will vary greatly depending on their financial assets and liabilities, income potential and expenses.
A new job means new responsibilities, and a new salary and benefits. It is important to compare your new employer-offered life insurance and disability income with what your previous employer offered. Consult with your financial planner or insurance agent to see if adding to your permanent coverage or increasing your disability income insurance to fill any gap is a good idea.
When most people have a new baby one of the last things on their minds is purchasing life insurance for the child, but it can be a relatively inexpensive investment in that child’s future. Policies like Globe Life’s Young American Plan is a whole life policy that builds cash value. Once this policy is issued, it can never be canceled due to changes in health or future occupation.
Buying a new home is an exciting and important time to do a homeowner’s insurance checkup. A new home means a new policy, so take time to do other inventory to be sure that your homeowner’s insurance is adequate to cover total replacement of the home as well as its contents. Answers to questions like, “Could my spouse make the mortgage payments without my income?” and, “If I became disabled, what financial impact would it have?” may also change the amount of life insurance coverage you need.
Health Care Costs
According to the Health Insurance Association of America, the average cost of a nursing home can be more than $70,000 a year nationwide — over $192 per day. An extended stay can quickly eat up retirement income and a lifetime of savings. However, purchasing long-term care insurance can protect your investments and ensure you will be taken care of in the event you need extended care.
Long-term care insurance is designed to cover a wide range of long-term care services. If you are unable to care for yourself because of a prolonged illness or disability, long-term care insurance may pay for the kind of services you need. Such services can include help with activities of daily living, home health care, respite care, adult day care, care in a nursing home or care in an assisted living facility.
Additional Insurance Coverage
Additional insurance coverage to consider are those that cover a range of expenses associated with incidents such as home invasion, kidnapping, car jacking or stalking.
This insurance reimburses the policyholder up to specified limits for various expenses, including fees for medical and psychiatric services, reimbursement for lost wages, fees for professional security consultants and security guards, and the cost of recuperation, improving household security and temporarily relocating one’s residence. The policy also provides a reward for information leading to the arrest and conviction of the responsible party. Covered relatives include one’s spouse, children, grandchildren, parents, grandparents, siblings and their children.
The National Association of Insurance Companies recommends calling your state insurance department or visiting your state insurance department’s website for free tips and up-to-date information prior to purchasing any insurance coverage. They suggest scheduling a routine “check-up” with your insurance providers at least once a year.
Sources:
AnnaMaria Andriotis, "Homeowner's Insurance: Do You Have Enough?" Smart Money, September 13, 20201, (Accessed October 5, 2010).
Richard A. Dulisse, CLU, MSFS, LUTCF, How Much LIfe Insurance is Enough?" NAIFA's Advisor Today, (Accessed October 5, 2010).
Patti Richards - Patti Richards is a freelance writer and editor, former teacher, wife and mother of three. Patti writes children’s books and stories ...
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