Last week's FPU class was all about insurance. That stuff we have to have but we hate to have t so we skimp when we can.
Well, I'm here to tell you that you need to be careful about what you skimp on! Because I used to be an insurance agent. And I keep very close track of our coverage. With our litigious (that means sue the pants off you if I spill hot coffee in my lap) society you have to be covered.
Our goal is to transfer our risk now (or buy insurance) so that, in the future, we can self insure (not buy insurance).
Here's what you need:
- Homeowner's or renter's insurance
- Auto insurance
- Health insurance
- Disability insurance
- Long term care insurance (at age 60)
- Identity theft protection
- Life insurance
Yeah, I know that's a lot, but bear with me.
You already know about home and auto, right? Wrong. Check your homeowner's policy. Is your house insured for "guaranteed" replacement cost? Probably not- most companies don't write that kind of policy anymore. Most likely you have a cap on the cost- usually about 20% above the declared value of your home when you wrote the policy. Make sure you keep the value of your home correct. You should sit down with your insurance agent once a year to review.
And on your auto... What are your liability limits? Most people have them at the state's minimum (usually 100/300). Do you know what those numbers mean? They mean that if you hit a car full of people your insurance will pay $100,000 per person or $300,000 per incident. That's not a lot of money when it comesto hospital bills. Look into higher liability limits.
On top of those two coverages ask your agent about an "umbrella" policy. For pennies a day you can add a million dollars of coverage- just in case. If you own anything- anything- you need this coverage.
Health insurance... Ugh. There's a sore topic right now, huh? I'm going to tell you right now that government health care is not the answer. I have friends in Canada who pay more a month for their "free" health care than I pay to supply my own. If you're healthy look in to an HSA. Love, love, love it! It's a large deductible but if you're healthy it's the best deal around. Look in to it. For more read "Do I really need health insurance?"
Disability insurance... I have mixed thoughts on this. If you are in a skilled labor position get this NOW! We honestly don't have it for Doug because he would have to lose both arms and the ability to speak before he would get pay outs from disability. OK, so that may be a bit extreme. But desk jockeys pay low rates for a reason. It's an easy insurance to get, it's a hard insurance to get, if you get my meaning. Here's more...
Long term care... People are living longer. How likely are you to have your parents move in with you? Do you want to move in with your kids? 'Nuff said. If you're 60 or older get some.
Identity theft protection... Ugh. I've had my identity "borrowed". It sucks. I use Lifelock now. For just over $230 per year they monitor my credit, Doug's credit and the credit of both the girls. Noone even peeks at our credit reports without me knowing it. Yes, it sucks that you need this. But the alternative is worse. Trust me. More on how to Protect yourself from identity theft...
Life insurance... is not an investment vehicle. Returns are low, the insurance company keeps the cash value when you die (betcha didn't know that, did you?) and fees are high. Buy level term life insurance and invest the difference. Don't buy any options (like accidental death. You aren't any more dead. If you want more life insurance just get more.) For more in depth see "The truth about life insurance"
Now that you made it here I bet you feel pretty overwhelmed... I know I did. And I was already doing most of this stuff! Here's something to help you feel better- follow
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