Rest Easier - 3 Insurance Policies You May Need
Insurance has always been the safety net that lets us sleep better at night. We insure our homes and cars, and if we're lucky, we have health coverage through an employer. In uncertain economic times it can be wise to look at additional coverage too.
To cover the bases, here are three insurance products to consider:
UMBRELLA LIABILITY
"Suppose your teenager goes out and takes your car and is texting while driving," says Carolyn Gorman, a vice president at the Insurance Information Institute. "They hit a pedestrian who is severely injured and you get sued for $10 million. What are you going to do?"
Although auto and homeowners polices include some liability coverage, a separate policy, often referred to as an umbrella policy, can provide additional protection for your assets in a catastrophic situation like this. Additional liability coverage of $1 million can run only $100 to $200 a year, and additional million-dollar increments may cost progressively less. Gorman advises basing total coverage on your family's net worth. "The reason people have insurance is to protect themselves in the event of something shocking," she says.
LIFE
If your only life insurance coverage is what's provided by your employer, you may be underinsured. "Nobody thinks they're going to die tomorrow," says Steven Weisbart, vice president and chief economist with the Insurance Information Institute. He points to the hidden expenses that families often incur when the breadwinner dies. Not only may there be medical, funeral and legal expenses, but also the mortgage, education expenses, medical insurance and daily living expenses that would have been covered by that paycheck. That's why many experts recommend having the equivalent of 5 to 10 times your annual salary in insurance, compared to the one or two times that amount that may be provided at work.
DISABILITY
According to the Council for Disability Awareness, a worker starting a job today faces a 30 percent chance of becoming disabled before retirement, and the average length of the disability is 2.5 years. First look at disability coverage that may be available through your employer. If you need more, shop for a policy with the longest payout period you can afford, suggests Weisbart. "People should buy protection that lasts for a very long time once they're disabled. Buy [a policy] that lasts until you would have retired or maybe even beyond that."
Take the next step...
Get ready for college. It's never too early to start saving for your child's education. The Principal Financial Group offers several options to assist you.
Plan Ahead. Get Ahead. Magazine, Fall 2008, #6443072010
