INSURANCE PLANNING

Lawsuits, death, disability, poor health are events we see often in our society. By setting up our insurance properly, we greatly reduce the risk that these events will destroy us financially.

Type of insurance Things often overlooked:
Life For a young family, this is a must. The risk of death of the family provider is far higher than the risk that our food supplies will be cut off. Life insurance is amazingly cheap for the young and healthy. Example--$500,000 benefit, level annual premiums for 10 years, male:
Age 30 = $180
Age 35 = $180
Age 40 = $225
Age 45 = $355

An individual policy is more secure than a group policy you buy through work.
Auto An at-fault accident can easily cost you $1 million+. If you have significant assets, they are at risk. Never select the state minimum coverage. Additional coverage is relatively inexpensive. Consider $500k liability and an umbrella policy (see below).

Also, get high amounts of uninsured/underinsured protection so you have benefits in the many cases where the other driver illegally has no insurance.
Home Most insurers offer deluxe policies that cover more risks. Consider going with a high deductible on their best policy. Again, if you have assets, an umbrella policy is a must.
Umbrella—excess liability coverage This policy gives you liability coverage above the limits of your auto and homeowner insurance. It is surprisingly affordable. $1M may cost around $170 annually. If you have a good income or own significant assets, you are a target for liability lawsuits. The best asset protection is having sufficient insurance.
Disability Risk of disability during the working years is much higher than risk of death. A disability policy replaces your income if an injury or sickness prevents you from working. Individual policies are the highest quality and have guaranteed level premiums to at least age 65. Group policies through work are less expensive, but less permanent and more limited. White collar workers such as executives, accountants, doctors, dentists, engineers, and attorneys should consider an individual policy even if they have group coverage through work. Look for association discounts to get a better price.
Health If you don’t make many health insurance claims, consider a high deductible plan to get costs down. Also consider a Health Savings Account for tax benefits.
Richard Eberting May 2012