All The Insurance You Need

Proverbs 27:12 reads, “The prudent sees danger and hides himself, but the simple go on and suffer for it.”

The word “insurance” isn’t in the Bible, but God’s Word does say that it’s wise to protect your financial holdings and insurance is one of the best ways to do that. Unless you have tens of millions of dollars spread across dozens of investments, you’re going to need insurance for several things. So what insurance do you need?

Some types of insurance leave you little choice in the matter. Auto insurance, for example, is usually required by law, if you own and drive a car. Homeowners insurance is also required if you have a mortgage and it would be foolish not to have it even if you don’t have a mortgage.

You can usually save money by bundling auto and homeowners insurance. While you’re at it, look into the option of an umbrella policy. Premiums usually start at around $200 a year and may give as much as $1 million in coverage. An umbrella policy will protect your assets in case you’re sued and the settlement exceeds limits set by your auto or homeowners policies, which is easy to do these days.

By the way, if you’re a renter, you need to have renter’s insurance. It’s a bargain that can be a life saver. A renters insurance policy will cost around $15 a month. It not only protects your property inside the rental unit, but also covers you if you’re sued by your landlord or someone else for negligence.

Obviously, another “must have” is health insurance. If you think it’s too expensive, consider not having it. The average cash cost of a doctor visit is $100 to $150. Paying cash for an emergency room visit will cost you around $2500, and a one-day stay in the hospital without insurance can set you back around $9300.

We get a lot of calls from folks asking if they need life insurance. You don’t need it unless someone depends on your income. When the kids are grown and out of the house, you may not need it at all or perhaps you can downsize your policy to provide for your spouse only. Always get a term life insurance policy, not whole life. You don’t want to mix insurance with investing.

Once you reach your 50s, you need to look into long-term care insurance. If you don’t think you need it, consider that 70% of 65-year olds will need some type of long term care, according to the latest data from the Department of Health and Human Services. Women typically need this care for 3.7 years; men for 2.2 years. At an average cost of $8,000 a month, that’s plenty of time to wipe out all or much of your assets before Medicaid takes over paying for your care.

Long term care insurance is generally expensive, but again, consider the cost of not having it. Most people purchase it between ages 55 and 65. Start looking at policies in your early 50s and select one with the longest term you can find.

Another form of insurance you really should have is long-term disability insurance. If you are incapacitated due to an accident or illness, you could be without a paycheck long enough to wipe out your emergency savings.

A long term disability policy will cover you in that event. Plan on it costing between one and three percent of your annual salary. Premium amounts are tied to how much you make, so the higher the salary, the higher the premium.

Some types of insurance you probably don’t need include title “theft” insurance. Unlike the commercials imply, these policies don’t really “lock” your title. However, if someone files a false deed and takes out loans on your property, you can’t be foreclosed on because it won’t hold up in court. Also, you can sign up for free monitoring now with most county deed offices.

By the way, don’t confuse title theft insurance with regular title insurance, which you really do need to get when you purchase a house. That protects you in case there’s a legitimate challenge to your ownership of the property and in many cases will even protect you from a fraudulent claim.

Finally, there’s identity theft insurance, which we’ll put in the “maybe” category. It’s another type of policy that claims to “lock” your credit, but you can freeze your credit all on your own for free with the three credit bureaus, Experian, Transunion and Equifax, which you really should.

You can freeze and unfreeze your credit any time you want. Once you freeze your credit, identity thieves won’t be able to open accounts in your name because lenders can’t check your credit if it’s frozen.

Still, credit monitoring services can be valuable. Many times when there’s a data breach somewhere and you have to get a new credit card number, for example, you’ll be offered free credit monitoring, perhaps for a year. Always sign up for that. It will alert you if someone tries to open an account in your name.

You can also sign up for free credit monitoring** services at Credit Karma and Credit Sesame. There’s no need to pay hundreds of dollars a year if you can get it for free, and your credit is frozen.

Of course, paid services that offer to repair your credit in the event of identity theft sound great, but if thieves can’t do it in the first place, do you really need that coverage? Probably not.

You can also listen to the related podcast on this topic.