Getting your insurance organized can help give you financial peace of mind, avoid surprises, and fill potential gaps in your financial plan. Here are some common mistakes we see in insurance planning.
Waiting too long to buy coverage
- Premiums for life insurance and long-term care only increase in price as you get older.
- Lock in coverage for disability insurance when you are younger and increase your coverage as you grow older, and your salary increases.
Paying too much in premiums today
- Paying premiums annually can lead to immediate savings of 5-8% rather than paying monthly.
- Shopping out coverage on a regular basis (as conditions and markets change) may lead to a lower premium or better coverage at the same premium.
- If you have insurance (such as home, auto, and umbrella) under many different providers, bundling under the same provider may lead to lower premiums for the same coverage.
- Consider the benefits of saving more with a higher deductible and putting those savings towards purchasing additional liability coverage (such as an umbrella policy).
We recommend that you discuss these strategies with your insurance agent before making changes.
Not understanding group vs. private coverage
- Group insurance coverage is often cheaper when you’re younger, but premiums can skyrocket with age. Determine how long you need coverage (e.g. 20 years) and then compare private vs. group premiums.
- Group life insurance coverage is often not portable (sometimes it will void upon a job change). This is especially relevant if you have difficulty qualifying for new coverage due to a major illness, driving offenses, etc.
- Group disability insurance coverage usually has specific exclusions (preventing you from receiving benefits) and is often “any occupation” coverage (you would not receive benefits if you can perform any other job).
- Group coverage can be great if you have health concerns, but private coverage is likely a better deal if you’re healthier than the average American and want portability (see above).
Having out-of-date or not enough property & casualty insurance
- Some homeowners forget to increase their homeowner’s insurance coverage as their house goes up in value.
- Consider including under/uninsured coverage for your auto insurance (this can protect you if a drunk driver hits you and doesn’t have enough coverage).
- Consider having an umbrella policy. An umbrella policy is a type of personal liability insurance that covers claims in excess of regular homeowners, auto, or watercraft policy coverage.
- Consider documenting the contents of your home. A home inventory can make your life easier if you have to replace the contents of your home due to fire or theft.
- Have an insurance agent audit your insurance policies to ensure adequate coverage and discover qualifying discounts. Ask your financial advisor or contact us if you are looking for a trusted agent to perform this audit.
Not keeping your financial plan up-to-date
- We recommend reviewing and updating your financial plan at least once per year.
- Major life events can be good reasons for a financial checkup even if it’s been less than a year since your previous review.
To learn more about our financial planning services and how we can help you, please click here. If you would like assistance documenting and implementing your insurance strategy, click here or tap the button below to schedule a consultation.