Cook Wealth Management Group

Are You Covered? Schedule an Insurance Review

Insurance, or risk management, is a significant piece of your financial picture. Your insurance needs should be assessed each year, checking for adequate coverage and in some cases, excessive spending. Even if nothing in your life has changed, it’s possible that the insurance market has.

Do you have the best policy for your unique situation? And are you sure you’re adequately covered? How do you know? Don’t put off an annual insurance review; it’s an important annual check up. Like your doctor examines the wear and tear on your body each year, so should you and your financial advisor assess your insurance coverage regularly.

Here a few options your financial advisor may present during an insurance review:

Life

  • If your policy has lost value, consider exchanging it – a new policy may be worthwhile.
  • If your policy is underfunded, your advisor can help you determine a payment schedule to catch up.
  • If your policy is no longer needed (if taking care of dependents is no longer desired, your asset base is sufficient, your house is paid for, etc.) you may choose to reduce or eliminate coverage.

Disability

  • If your employer offers disability insurance, evaluate the coverage, the maximum benefits, and the percentage of income. You may need supplemental disability insurance – or a private policy instead – to get what you need at the right price.
  • If the policy is paid with pre-tax dollars, consider the tax implications.

Long Term Care

  • If you don’t see the value of this insurance, which can cover home health care, assisted living  and nursing home costs, ask your advisor to explain long term care in more detail.

Property & Casualty

(including Auto, Homeowners, and Umbrella coverage)
  • If you drive an old car, your collision insurance may be a wasted expense.
  • If you have a household employee, ask your advisor about personal liability protection.
  • If you decide against flood insurance, consider covering plumbing mishaps, which can cause flood-like damage.
  • If you increase your deductibles, not only will you reduce your premiums, but you could use the cost savings to purchase valuable umbrella coverage to protect from personal liability.

Insurance rates and offerings change often. Wouldn’t you like to know if you’re paying too much, or if you could pay a little more for a lot more coverage? Occasionally, an insurance review may reveal that sky high premiums are not only unnecessary, but unhelpful. More commonly, you may find that you have too little insurance; the lowest deductible or the lowest premium could hinder your financial plan.

Good risk management is about balance – sufficient coverage at a price you can afford. Reviewing your insurance coverage each year is a great way to protect your assets and to minimize excessive spending, whether it’s cutting down on premium payments or paying more now to pay less later. Consult your financial advisor to determine the right balance for you.


–This article is based on content from “Prudent Policy,” by Donald Korn. Financial Planning, Dec. 2009.

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