Although most of my posts are focused on prevention, I carry a certain level of insurance in case my own awareness and decisions are not enough to protect us from everything.
But what insurance should you carry? How much and for what incidents? There are all kinds of sites that will help you understand the ins and outs, and why you should or should not have a particular insurance. And they don’t all agree on very much. There are some that will tell you that for life insurance, only choose term insurance. Whole life policies are a bad investment. That may be true, depending on your particular circumstances, how you are saving, and how much monthly cash you have available for this purpose.
Just as important is to routinely look at your insurance in light of changes to your pay, your lifestyle, the economy, and even your outlook. Here are some situations where you might want to consider re-evaluating your insurance purchases.
- You have established a good emergency fund. Whether or not you are a Dave Ramsey fan, you have tried to save into a rainy day fund. You have likely encountered need for extra cash from time to time. A household emergency fund is for addressing some of the real life things that happen. Your refrigerator fails and you need to buy a new one. You have an accident and have to pay the deductible on your auto insurance. If your emergency fund is getting rich enough, you should consider raising the deductibles on your auto and homeowners policies. You can use the reduction in premiums to increase what you are putting in the fund!
- A change in any family member’s life status. Sometimes a change means they are no longer covered on your employer-supplied health care plan. My son is only covered until age 23, and only if he remains a full time student in the meantime. We will go off family coverage at that point, but he will have to have his own coverage (or not – but that’s just crazy as he is diabetic).
- Your cars are getting older. If you carry collision insurance, there comes a time when the cost of the insurance is just not worth it. The insurance company will total the car in a situation like this. Cancel the collision and put the money saved in the new car fund.
- Age. As my family grows older, I need less life insurance. It’s time to reduce my term coverage as my youngest becomes self-sufficient.
- Real estate values. Do you have replacement coverage? Does the replacement value automatically escalate each year? Is it enough or are you possibly over-insured? This might be worth looking at.
- Accumulation of “stuff”. Have you documented the valuables in the house, including jewelry and electronics? Laptops, plasma screen TVs, and high value electronics may all be in the house when the fire hits. Is your coverage good enough?
- Because you have choices. Why do you think Geico has those creepy eyes looking at you? And when your friendly HR rep reminds you that it is time for annual enrollment, do you look at the new choices or just the bottom line difference for same coverage? Change is hard sometimes, but there may be a value in considering a move from the PPO to the HMO. Of course YMMV.
What other reasons have you had to reconsider your insurance purchase? Please feel free to share you wisdom in the comments.
Thanks, and let’s be careful out there.
Anna at abdpbt is responsible for the effort to Fight Listless Mondays. Find other list links on her blog. Her lists and the others linked there always give you something to think about, and may even make you smile!