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(HealthNewsDigest.com) – Health insurance has been in the news this year as Congress worked to pass health care reform. Americans will gradually see many of the changes in that legislation take effect over the next few years. But other types of insurance protection are also very important in avoiding financial challenges that can cause debt problems.
Insurance provides a buffer against risk. If you encounter a disaster — whether a car accident, fire or theft at home, or loss of a job — the last thing you need is to face mounting debt while you manage the problem. That’s why insurance can be considered a buffer against serious debt in the event of an accident, medical emergency or other unforeseen event. To find out if you have the right kinds — and right amount — of insurance, take a few minutes to do a basic insurance checkup.
1. Health insurance: If you are currently self-insured and your premiums are rising, call your insurer to ask about options, or check with a broker. Workers who have been laid off might be able to continue purchasing coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). If neither choice is affordable for you, research how your state helps cover people who cannot afford medical insurance.
2. Home insurance: If you own a home, your mortgage lender certainly requires you to carry basic property coverage. Check rates every few years to be sure you are getting a good value — and to be sure you have the right coverage, especially if you have high-end finishes in your home or if you own jewelry, art, guns or other valuables. Home-office workers should ask if a policy covers business equipment. If not, business equipment riders are fairly inexpensive. Renters need insurance, too. A renter’s policy covers personal possessions and costs just a few dollars per month.
3. Auto and RV insurance: All states require basic vehicle liability insurance. Insurers often give the best rates to safe drivers who buy multiple policies from the same company. One of the most important things you can do to save money is to avoid moving violations that hike your rates. Before you buy a new car, call your insurer to ask about rates. Features such as turbo engines cost more to insure. Look into cost-saving programs such as safety refresher courses for drivers age 50 or older, or driver’s education for teens. You’ll need separate policies for boats and any self-propelled recreational vehicles.
4. Life insurance: Life insurance provides after your death for loved ones who rely on your income. At a minimum, if you do not have enough cash to pay for funeral expenses, it’s not a bad idea to hold policies to cover those costs for yourself, your spouse and your children. A financial planner can help figure how much coverage your family members would need. If you do not have dependents, you may be able to consider passing on this coverage and saving your money elsewhere.
5. Umbrella policy: For a few dollars a month, you can add million-dollar coverage in the form of an “umbrella” policy that protects you if someone sues you.
6. Disability coverage: As many as one in eight people will become disabled during their lifetime. If you are hurt, disability insurance pays part of your income (usually 50 percent to 70 percent) until you can work again. Many full-time jobs offer disability coverage, as does Social Security. However, the amount might not cover your needs, and the waiting period can be long. If you buy additional private insurance, remember that many policies do not pay until three or six months have passed, making it important to maintain an emergency fund that would cover the waiting period.
A quick review of this checklist and a call to a few insurance brokers can make certain you are adequately protected. Taking the time to protect yourself and your assets can bring peace of mind for years to come.
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