With National Insurance Day approaching on June 28, this is a good time to review your current insurance policies to ensure that your coverage is aligned to your needs. Whether life, disability, or property and casualty policies, it is important to review your coverage in light of any life changes.
There are a number of things to consider when reviewing your policies.
Check coverage levels
It is important to check your coverage levels for life and disability insurance. Life insurance provides a death benefit for your beneficiaries; it is important to periodically review if this death benefit is sufficient or if it is still needed at your current stage of life. This might also include estate planning considerations.
Disability insurance has often been cited as more important than life insurance in that it protects your lifestyle. Do you have enough disability coverage if needed due to a disability that keeps you from working for a prolonged period?
As far as homeowners insurance, it is important to consider if your benefit has kept up with increases in the value of your home. Do you have adequate personal and professional liability coverage that is in line with the potential risk?
Important considerations
Your annual insurance review should take any changes in your situation into account.
In the case of life insurance policies, consider if there been any major life changes such as:
- Getting married or divorced
- The birth or adoption of a child
- The death of a spouse
In the case of your homeowners insurance, have you made any major improvements to your home such as an addition, a new garage or others? These could increase the value and the replacement cost of your home, and it is important that your coverage level keeps up with these improvements.
Have you made any significant safety enhancements to your home? This might include adding an alarm system, an upgrade of your heating system, or others that might result in a discount on your homeowners or umbrella liability policies.
With your auto insurance, do you now have a new driver in the form of a teenager in the home? This could increase your costs, and this might be a good time to review your coverage to ensure you are adequately covered at the most reasonable price.
Review deductibles
Homeowners, renters, auto and other types of policies have a deductible. This is the amount you pay out of pocket before the policy’s coverage kicks in. Generally, the higher the deductible amount, the lower your premium will be. In reviewing these policies, if your situation is such that you can afford a bit more out-of-pocket-costs, it might make sense to increase your deductible.
Health insurance also has a deductible and generally works the same way in terms of premiums. If you get your insurance through your employer, you might consider a high deductible plan if appropriate for your situation.
Bundling policies
The somewhat corny commercial we see from a major insurer about bundling is actually spot on in many cases. This may vary from one insurance company to another, but many companies will offer a discount or preferred rate if you bundle several types of coverage with them.
This might include having auto, homeowners and an umbrella policy with the same company. Or it could include a life and disability policy with the same company.
You should look at these options over the course of your annual policy reviews to see if you can save money by doing this. However, it is important to keep in mind that while saving money is good, the most important consideration is the quality of the coverage. Does the new policy provide you with the type of coverage needed?
How to Observe National Insurance Awareness Day
National Insurance Day is a great reminder to review your insurance policies and ensure your coverage still meets your needs. This review can help ensure you have the best coverage for your situation, and in some cases can save you money.
The issues discussed above are a great starting point for this review, but there are many insurance-related issues across the full range of your various policies to consider each year.
If you are not sure where to start with your insurance review, consider consulting with a professional like your Wedbush financial advisor. They can help you review your coverage in light of your overall financial situation.
Disclosure
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
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