Does Your Insurance Match Your Risks?

Compare your insurance coverage to your potential risks is the next step in reviewing your insurance policies. The goal is to determine if your insurance coverage still fits your needs. You may find that you have insurance coverage that is no longer needed or can be reduced. You’ll also be able to see if there is coverage that you should purchase.

Coverage you may no longer need:

  • Auto insurance (comprehensive and collision coverages). Consider dropping collision or comprehensive cover if your car is paid off and old enough that you not repair it if it were damaged.
  • Disability insurance. Terminate it if you are retired. Between ages 65 and 70, the benefit period on disability policies will decline to one year of benefits.
  • Life insurance. Terminate coverage that you no longer need, for example, if your children are no longer financially dependent upon you.  Or if you have accumulated sufficient assets to offset the need for life insurance and don’t need the liquidity. 
  • Accidental death and dismemberment (AD&D) insurance. Coverage is limited. If you need life insurance or disability insurance, you should purchase coverage so that you are covered for any type of disability or death, not just accidental. 
  • Policy riders. Many insurance policies have riders that you may not need. For example, you probably don’t need a waiver of premium rider on your life insurance policy if you have disability insurance. 

Coverage that is often missed or under insured:

  • Disability insurance. If you are dependent upon your income, then you need disability insurance. If you have group disability insurance, you should consider supplementing it with an individual disability insurance policy. Group DI policies are subject to maximum monthly coverage amounts, 40-60% of salary and may not cover bonuses, commissions or stock options. 
  • Earthquake and flood insurance. These are not covered under most homeowners or renters insurance policies. Earthquake and flood insurance must be obtained either through a policy endorsement or as a separate policy. 
  • Renter’s insurance. If you are a renter, your landlord’s insurance coverage will not cover your possessions (the contents of your rental) in case of a fire, burglary, or other claim event. 

Remember insurance is leverage to protect you against a specific risk. If you have a risk, you should consider insurance. If you no longer have a risk, then you no longer need insurance.  

Action Step: Review your updated insurance worksheets from the Get Ready Toolkit (here) or your Get Ready Planner (learn more here). 

The insurance worksheets include the insurance company name, policy number, insured, coverage amount, deductible, premium and other details.