Why You Need an Insurance Checkup
PUP, LTCI, FTI, PIP.
You may be asking what all those letters are and what they mean to you. Well, they’re all acronyms for types of insurance. PUP stands for a personal umbrella policy, LTCI is long-term care insurance, and FTI is foreign travel insurance. Finally, PIP stands for personal injury protection.
Recently, a new client came to me and stated that they seem to be insurance poor — that is, they have too much coverage. As we reviewed their current policies, we realized how many ways people can spend their money on insurance. There’s even title insurance to protect people from having someone steal their identity so they can try to sell your home.
If you are insured for every possibility out there, you’re probably insurance poor, and it may be time to downsize. What is the best insurance out there? In short, the one that’s in effect when you need it.
Now, how many people will need long-term care insurance? Statistics tell us that 1 in 2 people (age 65 or older) will use long-term care in the future. That could be in-home care, adult day care, assisted living, or full-time nursing care. With odds like those, LTCI is a type of insurance worth considering.
Foreign travel insurance is something I started looking into recently. Nancy and I enjoy traveling, and as we get older, things can happen. As we planned our final wishes with our funeral director, he said we might want to buy foreign travel insurance. Why? For $200–$300, if you pass outside of the state or in a foreign country, the insurance will pay all the expenses to bring your remains back home. Though it might seem morbid to some, I like planning for the best outcome possible in every situation.
Meanwhile, Michigan recently changed the rules for PIP insurance, allowing people to purchase lower coverage levels. While you can choose less than 100% coverage, you may do so at your own peril. If the insurance isn’t enough to cover someone’s losses, they could sue you and your family and possibly win damages.
As financial advisors, we invest people’s money. Our job is to make assets grow and minimize our clients’ risks. Insurance does help us minimize the risk in all types of scenarios. The question is: how much are you truly at risk in different areas?
One of my favorite policies to recommend to everyone is a personal umbrella policy. In basic terms, this covers you anytime you’re sued for an injury. So whether someone slips and falls on your doorstep or you run over someone’s foot in a parking lot, all scenarios are taken care of. Coverage generally starts at $1 million, and most personal umbrella policies run for $100 a year or $200–$300 at most. If you ever need it, it’s an excellent return on investment.
This year, my suggestion is to get an insurance checkup. Is the coverage you have right now more than you need, or is it insufficient? Either way, you don’t want policies that will put you in financial peril. Secondly, check your beneficiaries and make sure they’re updated — then look at new taxes that may affect you.
We look forward to working with your insurance agent — or if you don’t have one, we can recommend a preferred provider. Remember, the best insurance is the one you have in place when it’s needed. If you’ll never need it, why pay for it?
-Gary Mattson