Going through big transitions? Time to review some things. Buying a house, getting married, and starting a family are awesome!
But, what happens *if*?
Homeowners policies have tons of elements to consider, even if renting:
1) Is your deductible right? You’re overpaying for a small deductible if you have a great emergency fund!
2) Does your dwelling coverage cover your whole rebuild cost? Replacement value is important, not just purchase price!
3) Is your liability coverage high enough? Low liability coverage leaves you vulnerable if an accident happens on your property. If you have a good home with lots of equity or have good savings, consider an umbrella policy also.
4) Does your coverage include enough for valuables in your home? Items that aren’t specifically listed have arbitrary and low max values. List expensive jewelry items and collectibles specifically!
Auto policies have similar elements to 1-3 above. You also need to add in:
1) Does your policy cover ancillary things like car rentals during a repair?
2) If you work from home, does your policy factor in your low mileage? You could save some money if not.
Life policies are a little more complicated. There are three main types – term, universal, and whole life. Term life is sufficient for most young professionals. These policies have no bells/whistles and pay out if you pass away during the term.
How much should you get though?
How Much = Burial Costs + Debt Payoff + Income Replacement + Goal Funding
It can be a lot! But you can get a lot of term insurance for cheap.
How long should it last?
Long enough that your needs have passed by. For a 30-something, this means 20 years may cover kids getting out of the house, house debt paid low, and retirement savings accumulating. 30 years would cover you almost all the way to retirement. Hard to know for sure, though.
Disability is the final and sometimes most important insurance.
If you are W-2 employed you likely have some disability coverage. Once you achieve high earnings or do some work outside of W-2 though, you likely need more disability.
What is important in a policy?
1) “Own Occupation” The policy will cover you if you can’t do YOUR job, not just any job. Particularly important if you work with your hands at all (surgeons, trades), but also important if you do any job that helps you earn above average for your field.
2) “Guaranteed Renewable/Non-Cancellable” Policy will stay in force with minor/no modifications as long as you pay your premium.
3) Another important element is being able to buy more/have the policy automatically increase in the future if you earn more.
There’s more to talk about here. Insurance is purchased as a contract, and all contracts are different. Work with a broker and a financial planner to make sure you understand what you have and that it suits you.
If you have questions, visit my calendar at openworldfp.youcanbook.me and book some time to talk!