Nobody gets too excited about insurance reviews. Many, including myself, tend to act like our politicians and procrastinate these reviews. But the reality is our needs, and the policies, change over time. It makes sense to put certain dates on the calendar each year to see if your home, auto, umbrella liability, life, health, business and disability coverage not only meet your current needs at the right cost, but protect you and your family in case of a disaster.
The past few years have dealt us some pretty significant insurance events – including Hurricane Sandy in the east and the earthquake in Japan. Weather-related disasters, however, should only be part of your assessment – it’s wise to consider if you are adequately insured in case a spouse or partner dies suddenly or becomes disabled or if your business is damaged or destroyed. Since Obamacare enrollment started Oct. 1, everyone is curious as to how the program will affect their health care.
Here are some ways to examine the coverage and cost issues unique to your situation:
• Homeowner’s insurance: It’s always a good to see if you can afford to take a higher deductible to get a lower premium, but first, review whether you have the maximum home replacement coverage on your house and its contents. Go to several agents to see what you would get for maximum replacement coverage in your community. This particular coverage is particularly important because so many homeowners carry big mortgages and probably won’t have enough in savings to cover the difference of what insurance won’t. Also, be clear “replacement cost” means the amount that it will replace your home on the land where it stands – that usually means an amount considerably less than the market value of your home.
Also, make an effort to inventory your collectibles, home office equipment or additional furniture or assets you’ve acquired since you last took an inventory of your home. Make a list of those changes to review with your agent. Then take photos of all significant items and keep them in a safe place – possibly outside the home. Consider liability umbrella coverage to protect your resources. These policies are reasonably priced and can assure that your overall financial situation cannot drastically change overnight.
• Auto insurance: If you’re driving an older car that, if totaled, wouldn’t result in a financial burden to you, you might want to drop collision coverage and/or boost the size of your deductible. Take the money you save and put it in an account for your next new car in case your car is totaled. Also, if you consolidate your home and auto insurance at the same company, you’ll generally get a discount. Review with your agent the parameters of your coverage. Make sure it correlates with your overall finances and financial plan.
• Health insurance: Do you fully understand all your deductibles and co-pays? Does your current plan provide for out-of-network care? Check your prescription coverage to see what options your health coverage provides you for prescription discounts and prescription-by-mail availability so that you can have uninterrupted access to important medications wherever you are. Also, if you travel frequently for work or vacation, check to see what your employer or individual health plan provides in the way of coverage across state lines or outside the country. One uncovered travel-related medial bill can leave you thousands of dollars in debt.
• Disability insurance: Many people get disability coverage through work, but some advisers recommend separate coverage because group policies can be more restrictive and therefore inadequate if you’re out of work for a considerable period of time. Learn your options.
• Life insurance: Talk to a trusted adviser about the right coverage to protect your spouse and children with enough money to help them continue their lifestyle and their educational goals if you die. That includes money for ongoing expenses, mortgage payments and tuition. Your spouse should also consider similar coverage, particularity if he or she is working.
Lastly, remember how external forces affect your ability to buy insurance. Separate of all local factors, though, you’re going to have to keep a very close eye on your credit report. Your ability to handle credit is pricing your attractiveness as an insurance buyer, a homebuyer and as a prospective employee. If you really want to save money on insurance, keep your credit record clean.
Coordinating a comprehensive insurance program requires time and trust. We would recommend finding an experienced agent who can help you in all the areas. Some local agencies have specialists in various programs as it is challenging to be an expert in all these areas of insurance. Shop around and you’ll find a trusted adviser.
• Timothy J. Dooley, CFP, is president of Comprehensive Retirement Resources Inc., an independent firm at 201 N. Draper Road, McHenry. Reach him at 815-578-4217.