Does Your Insurance Coverage Still “Fit”?

As the seasons come and go, many of us reach into our closets only to discover our clothes no longer fit or suit our cur­rent needs. If this has happened to you, you’re not alone. Life is constantly chang­ing. Things that may have worked well in the past often need to be “altered” to fit better as our lives and circumstances change.

The same holds true for your insur­ance. Are your policies still adequate for your needs? If you haven’t reviewed your coverage lately, it’s possible your policies no longer fit your current circumstances. Periodically reviewing your coverage may help you avoid costly insurance gaps. Here are some considerations for the six basic types of personal insurance:

Homeowners Insurance

The largest investment many people will ever make is the purchase of a home. A general rule of thumb is to protect this valuable asset by purchasing enough homeowners insurance to be able to rebuild your home and replace the contents at current replacement costs. Remember, the replacement cost of your home and its contents changes as building costs rise and as you acquire new possessions. It’s wise to periodically review your coverage to make sure it’s sufficient. Even renters should occasionally review and update their renter’s policies as they accumulate possessions.

Auto Insurance

Your main concern with auto insur­ance is to keep the liability limits high enough to protect your income and assets if an accident should result in a lawsuit. To save money on premiums, consider increasing your deductibles.

Personal Umbrella Insurance

It’s possible the liability coverage on your homeowners and auto insurance policies may not provide adequate protec­tion in the event you are sued. Personal umbrella insurance provides a layer of coverage above and beyond your primary limits. It is usually available in million- dollar increments, and it is often consid­ered relatively inexpensive compared with its worth.

Life Insurance

Ideally, one should maintain life insurance adequate enough to replace the income of those upon whom the fam­ily financial responsibilities rest. A very general rule of thumb is to carry coverage that equals five to eight times your annual income. If you’re the main breadwinner, life insurance may help your loved ones continue to pay the bills and maintain their current lifestyles should something happen to you. Be sure to adjust the coverage as your income increases and as you go through major life stages, such as the birth of a child or retirement.

Disability Income Insurance

Your chances of becoming disabled dur­ing your working years are much higher than your chances of dying. Yet, many people do not have disability income insurance, which provides a certain level of income replacement if you are unable to work. Check to see if your employer offers coverage. Being proactive in this arena pays once you experience major health problems, it may be difficult or impossible to obtain disability income coverage.

Health Insurance

Like most people, you may need only basic health coverage. However, lengthy hospital stays and costly medical treat­ment may require a major medical policy. If your employer does not provide health insurance, individual and family policies may be available. If you’re temporarily between jobs, you may want to consider a short-term policy.

Take the time to review your insurance coverage to determine the right cover­age for you and your family. As you can see, having insurance of the right “fit” is important.