People generally have a love/hate relationship with insurance companies. We don’t like the bills and rising premiums, especially those of us with teenage drivers. But we certainly don’t mind when they pay us promptly for a claim.
When it comes to expenses, insurance can be one of the biggest monthly outlays of cash. But, can you do without it? That depends on your individual situation. Here’s a look at the various types of insurance to determine what is best for your needs.
As we age, the variety of policies and coverages needed will change. Let’s take a look by age group as to the most important coverages.
Teens – Auto is the big one here. Teenage drivers will drive up your premiums, but they have to be covered. Don’t be tempted to cut back on coverage, especially when covering the age group with the highest propensity for an accident with the understanding that you need to also protect your assets. That said, when a teenager turns eighteen, there can be many advantages to putting the title in only the teen’s name and lowering the limits on the vehicle.
Twenties – Ah, the age of invincibility. Who needs insurance? That is often the mindset of the perpetually broke and just out of college crowd. Many don’t have health insurance, some don’t have auto insurance, renter’s coverage is sporadic, and most other insurance is an afterthought. Twenty somethings should be focusing on their future and how best to prepare for it. Lack of health insurance is the number one cause of bankruptcy in the United States. While this age group is healthy, adversity can occur, as was the case with my son, who at 21, was diagnosed with cancer. Fortunately, he had a policy that covered treatment at a top-rated facility in another state. Had he not had coverage, his financial future would be greatly compromised. So too are the futures of others faced with serious illness or injury in this age group.
Thirties – Now you have started to accrue assets and maybe have some children. You probably own a home and have a couple of cars. It is time to make sure that your coverage is up to date too. Auto, home, health and life are all very important. It is probably time for an umbrella policy. If you are married and have children, life insurance is a must. If you are a professional, then make sure you have professional liability. If you own a business, make sure you have general liability.
Forties – These are the years when people generally hit their stride for peak money-making opportunities. Your assets and net worth will rise. Auto, home, health, life, and umbrella are very important. But let’s face it, you are aging. Now is the time to add disability insurance, and quite possibly some additional life insurance. Sure, you can add it earlier, but like any insurance, weigh out the pros and cons of this coverage that can be fairly expensive.
Fifties – Now is the time when the kids leave home. First and foremost, have a discussion with them on the importance of basic insurance. Then re-evaluate your own situation. It may now be time to add secondary health, as well. As we have learned, a lot of the Obamacare policies don’t afford the best coverage, so having something like Aflac may be very beneficial. When it comes to life insurance, you are getting to the point where premiums will be pretty pricey! If you don’t have it, this may be the last opportunity to get it.
Sixties and beyond – Now it is time to look at retirement and the challenges of aging. In addition to all of the coverage you have accrued to date, it is time to consider nursing home coverage. The cost of nursing homes continues to rise and can significantly eat into much of your nest egg. This is a good option to protect your assets. Speaking of assets, don’t forget to provide protection to your heirs in the form of a revocable living trust, which can dramatically reduce or eliminate inheritance taxes for your children.
Now let’s take a look at some coverage that you probably don’t need:
Flight insurance – Flying is one of the safest ways to travel.
Travel Insurance – Conceptually a good idea if you are taking a Caribbean cruise in the midst of hurricane season, but these policies contain so many exclusions that they are very difficult to collect on.
Life Insurance for children – Life insurance is designed to replace lost income. Chances are your children don’t have any.
Accidental death – Like travel insurance, there are usually so many exclusions that even the most accident prone will never effectuate a claim.
Disease Insurance – Spend your time trying to find the best healthcare policy that you can afford. Don’t skimp on the health coverage, but you can skimp here with the right health policy.
Mortgage Life Insurance – If you’ve got a good life insurance policy, then you have enough to cover your mortgage