As the New Year approaches, it is only natural to reflect on changes that took place over the past year. It’s also the perfect time to assess your insurance needs and take steps to protect your financial future for the year to come.
Schedule a time to speak with your insurance agent if any of the following apply:
Change in marital status: Everything from auto coverage to beneficiaries on life insurance may need to be updated to reflect a change in marital status. Other policies likely to be impacted include medical, homeowners and ancillary policies. Be sure to notify agents about any name changes as well.
Relocation: It’s easy to forget to change insurance information during the hustle and bustle of moving, but auto insurance and other policies are impacted (for better or worse) by zip codes. Make sure all contact information is up to date for all forms of insurance.
Children: Whether you have just welcomed a new addition to the family or sent the last one off to college, children make a big difference when it comes to insurance. Other commonly encountered situations that impact insurance include new drivers and teens traveling on their own.
Change in employment status: Retirement, starting a new business, unemployment and other lifestyle changes require extensive re-evaluation of insurance needs. Everything from auto mileage discounts to medical coverage is likely to be impacted by employment status.
You have spent your lifetime building assets to take care of your financial future but how much time have you spent learning how to protect those investments?
Your business, real estate holdings and other assets could be wiped out with just one lawsuit. Many people are surprised to learn they are more “at risk” than they realize.
Think you are exempt or just not sure you need personal liability insurance?
If any of the following apply to your present life situation then chances are you are at greater risk than you realize:
- You are employed or work in a high-risk professional occupation including private practice or own your own business.
- You own valuable assets including land, rental property or other investments.
- You have a teen or young adult at home or in college; remember, you are responsible for their liabilities until they reach adulthood… including auto accidents or other functions that could put your property at risk.
- You sit on the board of directors, advisory board or other position for a corporation or not-for-profit agency.
Personal liability insurance is affordable and a great safe-guard from potential lawsuits or claims against personal and/or family assets and holdings above and beyond those covered by standard auto, malpractice or homeowners policies.
One of the most affordable types of insurance available, personal liability policies cost between $200 and $450 annually for $1 to $2 million in coverage.
To calculate the size of your policy simply add up all of your assets including financial, real estate, cash or other valuables then subtract the amount of your current coverage.
The remaining figure should be the basis of your coverage.
Be sure to take inflation and recent appraisal values into account by speaking with your insurance agent.
If you have never purchased life insurance or if it has been a while since you bought your policy then you may be under-insured. Use these tips to help calculate your life insurance needs.
Plan ahead for life-changing events: Marriage, retirement, childbirth, starting a business or even buying a home can alter the amount of life insurance required to care for your family. Make a point of reviewing your life insurance needs at least once per year.
Define your goals: Depending upon your life stage, the purpose of life insurance may be to replace a lost income or supplement a retirement pension and health benefits. Whatever the main financial goal may be, include the actual annual amount plus benefits and intangibles such as health insurance, care-taking and help with household duties. Remember, it will be necessary to pay someone else to perform those same duties in the event of an untimely death.
Add Inflation: After you have derived an estimate of the total base benefit amount, include anticipated rates of inflation. Don’t use the average government inflation rate, especially for college or health care expenditures which tend to rise far above those of other goods.
Draw-Down Period: Ideally the “perfect” amount is one that allows your family to use a combination of interest on the funds plus principle until the amount is exhausted.
Taxes: Depending upon how the life insurance is purchased and held, some portions may be taxable.