Dealing with insurance is one of the least pleasant parts of getting your finances together, because we all know we need back up plans in place, but it's tough to figure out exactly what is both best and the most economical. Still, having enough insurance is a crucial part of protecting your finances; when the unexpected happens (and it will happen), being under protected can decimate your finances.
September was Life Insurance Awareness month, which got me thinking about what it means to be fully protected in all aspects of your life: home, auto, and personal liability. Pre-holiday is the perfect time to take a look at your current coverage and policies to see where the gaps are in coverage and make plans for the "just in case" in life.
Health Coverage
With the recent passing of the Affordable Care Act, we are now required to have health insurance. Even so, 17.6% of Americans between the ages of 18-25 and 22.6% of Americans between the ages of 26-34 do not have health insurance. The number of uninsured is expected to drop as the Affordable Care Act continues to be implemented.
Most of us are eligible for health insurance through our employers. If you're self-employed or otherwise do not have health insurance, you can find health insurance through the insurance marketplace at HealthCare.gov.
Taking It One Step Further: For those who really want to "insurance up," there is now maternity insurance (usually through traditional healthcare provider), and the standard dental and vision insurances to round out your healthcare coverage.
Protecting Your Home & Personal Belongings
Most lenders require homeowner's insurance in order to protect their investment when providing a mortgage; there's no way around it, so get used to it. But be sure to take a look at the contract to determine exactly what is - and isn't - covered.
Many of us that rent do not have renter's insurance, even though we should. Renter's insurance provides protection of your belongings in the case of theft or destruction (which is super important in a rental!) Some policies also cover the cost of another place to stay if you aren't able to live in your own place. The good news is that renters insurance is very inexpensive, and the cost of getting kicked out of your apartment in the event of a disaster can be huge.
Taking It One Step Further: If you live in a high-risk area for a flood, earthquake, or tornado, you can buy additional protection for your home if it isn't already included. Most renters make things simple by bundling renter's insurance through their auto insurance company.
Auto Coverage
Every driver is legally required to have liability coverage to be able to get a license. If you were to get into an accident that was your fault, liability coverage is what pays for the damages on the other car.
Collision coverage covers your car if you're at fault in an accident, and comprehensive coverage protects your car from damage for a variety of sources like storms and theft. If you have a loan on the car, you'll be required by your lender to have very comprehensive insurance.
Taking It One Step Further: Even if you factor in car payments and insurance into your personal budget, many forget to account for maintenance and repairs. New agencies, like Wanted Auto Protect now offer vehicle services contracts for your vehicle when you need a major (read: expensive) repair. Having a service contract in place becomes especially important after your dealer warranty has expired.
And don't forget about roadside assistance. Many car insurance and vehicle service companies offer this feature for an additional cost.
Personal Coverage
Life insurance is a must if you are supporting a family. If the worst were to happen, you wouldn't want your family to struggle to pay the bills.
Some amount of life insurance still makes sense for child-free couples. Consider a small amount of life insurance to cover any remaining debts and to provide enough money to cover living expenses for 1-2 years. Remember, private student loans are not forgiven at death! If you have private student loans, make sure you have enough life insurance to cover your student loans.
Taking It One Step Further: Not every life insurance plan covers the cost of your mortgage specifically, so you may think about investing in mortgage protection insurance. Life insurance may not cover funeral costs, and there's a type of insurance for that too.
Disability Insurance
If you were to become disabled, what would you live on? Some amount of disability insurance is provided through Social Security, but it's not much, and there's also a very strict definition of what it means to be disabled, and it can take months to receive the money.
Most employers provide a long-term disability insurance plan. Participating in this insurance plan can be a great way to protect your future earnings. The money from long-term disability will help you recover or figure out a new career in the event of disability.
Taking It One Step Further: Your life is covered, but what if your pet needed extraordinary measures? Pet insurance, through companies such as HealthyPaws or Petplan can help protect your pet (and your bank account) in the event your pet falls ill or gets in an accident.
With life insurance awareness month behind us, check in on your own insurance policies. Are you protected?