Annual Insurance Review

Insurance is a pillar of successful financial planning, so it is important to periodically review your various insurance policies and to modify them as your situation evolves. Below is an outline for reviewing your home, auto, and life insurance.  Please review the article Planning for Long-term Care for general information on long-term care insurance.  

Automobile Insurance

  • Ensure your collision and comprehensive coverage is adequate given the value of your vehicle(s).
  • Review changing your deductible to decrease (or increase) your premium.
  • If you have any children on your policy, find out if you are eligible for good student discounts or part-time driver discounts.
  • The miles you drive or are expected to drive affect your premium. Ensure the insurance company is not significantly overestimating the miles you are expected to drive.

Real Estate/Property Insurance

  • Ensure your insurance covers a minimum of 80% of the replacement value of the house.  This is a high priority if your property value has increased substantially or if you’ve made substantial improvements to the property (swimming pool, addition, renovation, solar panels, heating/plumbing/electrical upgrades).
  • Add or inform your insurer of new smoke detectors, security systems, and fire extinguishers.
  • Review changing your deductible to decrease (or increase) your premium and bundle policies to receive multi-policy discounts.
  • If you own a condominium, determine if there are any gaps in the association’s master insurance policy and your condo policy. The association should be able to specify which types of coverage you should maintain.
  • If you are renting, obtain a renter’s policy, or review the limits and deductibles on your existing renter’s policy.
  • If you are a landlord, ensure you have adequate liability protection and consider obtaining an umbrella liability policy. In addition, it is ideal that you ensure your tenants have renter’s insurance.

Life Insurance

  • Determine if your life insurance needs have changed and review the merits of changing your coverage.
  • If you own any permanent life insurance and haven’t reviewed the policy in a few years, request an in-force illustration to review policy performance and longevity.  In addition, review the current premium and how the cash value is accumulating. Will the crediting rate (interest rate) increase/decrease over the near term and how will that affect your required premiums and policy longevity?
  • If you own term life insurance:
    • Review the number of years left on the policy and whether a new policy will be needed.
    • Review the conversion terms and options.
    • If you own annually renewable term insurance, review the policy premium and whether new policies will be more cost-effective.
  • If most of your life insurance coverage is comprised of group term policies, find out if the policy is “portable”–can you take it with you when you retire or change jobs? If it is portable, will your premium increase when you retire or change employers?
  • Review the beneficiaries on your policies.  
  • If you expect your estate to need extra liquidity, consider whether an Irrevocable Life Insurance Trust (ILIT) is appropriate.

If you have any general questions about insurance or if you would like us to review your current policies, please contact us at your earliest convenience.