Protect What You Have and What You Earn
A fire from a candle left burning overnight, a car crash that interferes with your ability to drive, a hailstorm that damages your roof or an illness that leaves you hospitalized for 60 days – none of these are pleasant to think about. In addition to damages to property and person, recouping monetary losses can put your credit score and savings at risk.
In the case that such catastrophic events occur, you need to know what insurance you have and how to make claims.
Evaluate Your Protection
Whether you are employed or carry your own insurance coverages, find out answers to these important questions in the short term:
- What insurance do you have against property losses? Through your auto or home (renters/homeowners) insurances, what is covered and what are your deductibles?
- Which types of health insurance do you have? What premiums do you pay and what are your out-of-pocket costs for co-pays or deductibles? What are your maximum out-of-pocket costs for health care?
- Does your employer offer workers’ compensation? What actions do you have to take if you are injured at work?
- What kind of life insurance do you have and what does your employer offer? Are there options for long-term care or rehabilitation?
- Does your employer offer short-term or long-term disability insurance? When does each type of policy take effect?
- Do you carry liability insurance in case others are injured on your property?
Shop Your Coverage
For a mid-term action, annually review your insurance coverages and your needs. Shop around for different carriers to compare prices. Shopping around is the best way to reduce what you pay and keep more money for your pocket.
As with anyone you hire to help you, make sure your insurance agent or broker is committed to your needs. Insurance policies are not one-size-fits-all. You want to work with someone who understands your goals and will not try to sell you something you don’t need. When interviewing potential agents or brokers, ask:
- Which companies’ products can you offer?
- How long have you been in the business?
- Can you provide references from other clients?
- What discounts apply?
- How are you paid? (This is important because you may be charged a fee.)
Prepare for the Long Haul
Eventually we all will need someone to care for us as we age. For Baby Boomers, the time is now to consider long-term care insurance. Unlike many other insurances though, this one is quite complicated. Make a long-term plan to explore your options. If you are considering purchasing a long-term care policy:
- Plan on spending no more than 5 percent of your income on a policy.
- Choose a policy that covers all levels of care (e.g., home health care, assisted living, nursing home).
- Read the policy, especially the exclusions, carefully.
There are differences of opinion about the best types of coverage, elimination periods, maximum benefit years and other items found in LTC policies. Be sure you consult with experts before settling on specific benefits.