Mike Wells: Protect yourself with smart insurance coverage
May 6th, 2018 by admin
Most of us spend a fair number of dollars for various kinds of insurance. How do you get the most bang for your buck, particularly as you assess how effectively your insurance protects you from your legal risks?
Here are some major areas of personal legal and financial risks, and ways to protect yourself:
- Long-term care insurance: If you go into an assisted-living or nursing-home facility, your significant monthly costs are not going to be covered long term by your health insurance, including Medicare.
As people consider this daunting monthly expenditure (sometimes nearly $10,000 a month for nursing-home care), they may consider buying a long-term care insurance policy.
As you near your mid-to-late 50s, among the most important coverage a policy should contain are coverage for three to five years; and nursing-home care, assisted living and home care. Also, the insuring company should have a solid financial rating—that is, does it have deep pockets?
The companies that write the bulk of these policies now have more accurately projected their costs, despite some past large premium increases, so there is much less of an increase in premiums year to year. For many years, companies could not accurately project their overall exposure, which resulted in dramatic increases in premiums from year to year, and some companies got out of this market altogether.
Also, some preferred companies may have options to convert your life-insurance policies or other coverage in cost-efficient ways — a growing trend.
Without sufficient assets or insurance coverage, your children will have to bear the high monthly expense of a facility, as some levels of care do not qualify for any public assistance. Families sometimes have to consider other elder-planning options in one’s latter years, which can get expensive, without solid long-term care insurance coverage. And your time window and choices narrow over time. So plan ahead on this key approaching expense.
- Underinsurance auto coverage. This is important because we generally think about our own driving habits and skills and whether or not we might be at fault in a wreck. But one of your greatest risks is that someone with no insurance or inadequate insurance causes a wreck, and you have an injury claim that exceeds the coverage of the at-fault party.
Inquire about underinsurance motor-vehicle coverage. Some statistics suggest that 80 percent of the wrecks on our highways that result in significant personal injuries (as opposed to property damage only to your vehicle) are caused by 10 percent to 15 percent of the drivers, some of whom have had their driver’s license suspended for past bad acts. (Yes, some people drive without a valid license, or no insurance, or both.) Any numbers of people have legitimate damage claims that well exceed the negligent party’s coverage. Moreover, the chances that the injured person can collect on a judgment from the negligent party are generally slim to none, which clients are often shocked to hear.
- Your deductibles. Consider increasing them. Years ago, my wife and I beefed up our underinsurance coverage and purchased a joint long-term care policy. The dollars we saved from appropriately increasing some deductibles actually paid for the increased underinsurance coverage we added and a portion of the annual long-term care insurance costs.
You may decide to increase your deductibles on rarely used coverages, or cancel duplicative coverages (roadside service/towing) otherwise covered by an auto/travel policy you already have.
In the next column, we’ll explore other insurance coverage, such as rental-car insurance, replacement-cost coverage, extended warranty/insurance coverage, and work-disability coverage.
Remember: An informed choice is a smart choice.
Posted in: WS Journal Articles