When you buy insurance, you buy peace of mind against something bad happening.
Listed below are three types of insurance that will protect you and your family. We’ll also discuss how to save money.
This is essential, in that they both will protect you against loss. If there is a fire, you will be protected. If someone breaks into your place and steals your stuff, you will be protected. You will be reducing your risk. If you have a mortgage, the bank will require it. Some apartments are also requiring it as well. Make sure you shop, as rates will vary. It also pays to shop every couple of years. I just did this and saved around $500.
Only buy term for a stated period of time, like 10 or 20 years. Whole life is not a bargain in that it includes an investment component that has a very poor rate of return. Life insurance is not an investment. It is insurance against the risk of loss of life and you want to make sure your family is provided for. Generally, you should look for 10 to 12 times your salary.
Every state requires anyone who owns a car to have insurance. There are different levels of insurance and you will need to purchase at least what your state requires. Anything above that is up to you. You do want to make sure you protect yourself and have the proper liability coverage. I will also tell you to shop around and review it every two years. I did this recently and increased my coverage and dropped my cost by about $500.
An umbrella policy adds additional protection to limit your risk in personal liability. These policies add additional protection over both your auto and homeowners’ policies. These limits can be anywhere from $500,000 to over $1.5 million.
Long-term care is coverage you will want to consider as you begin to approach age 60. Generally, you want to get this in place by age 60. This coverage will provide for nursing home care. Many cover in-home care.
Other Potential Coverages
Long term disability
Identity Theft Protection
In conclusion, insurance is a necessary part of wealth building. As you build wealth, you will need to protect against loss. The cost is small compared to the potential that your hard-earned wealth could be wiped out with one loss.
Be aware of policies that you do not need. Do not over-buy insurance. Buy what you need. The goal is to transfer risk and protect your hard-earned wealth.
Remember to shop your coverage periodically. Savings can be had. QCBN
By Steven Calabrese, CPA
Other articles on home buying can be found here: bit.ly/3cNSC7G. Steven Calabrese, CPA, is the CFO of Polara Health. He also is the owner/operator of a website known as thebiweeklyadvisor.com, where such topics as budgeting, investing, paying off debt and goal setting are discussed.