Written by: Grant Wilburn
Insurance, like cars and phones, is something nearly everyone has, but relatively few understand. There are the basic types of insurance, like life and health, and the niche, like errors and omissions. Beyond determining what type of insurance you need, there are even more factors to consider: What should the coverage limits be? Should it be individual or business coverage? Are there riders, or additional coverage options, that I should consider? And there’s more – we haven’t even started to touch on what each type of policy actually covers, or how they actually work.
All that being said, one of the only obvious things about insurance is its level of complexity. Agili is open to discussing any and all insurance topics with our clients, but there are a few coverage areas that come up more frequently than others. We’ll go over three of those subjects below: Long Term Care (LTC) Insurance, Umbrella Insurance, and insuring personal property.
Long Term Care
The specifics of LTC insurance would warrant its own blog post, so for those unfamiliar with the subject, AARP presents the basics in the article Understanding Long-Term Care Insurance. Because most of our clients are familiar with LTC insurance, the biggest question we get is a simple one: “Should I be covered?” Since the answer to that question is truly case-by-case, one of the first discussions we have revolves around their lifestyle at the time when benefits would actually be claimed. When thinking of LTC costs in the future, it’s easy to simply add them on to your current cost of living. While this might make a good conservative estimate, what many don’t consider is that the cost of LTC is more likely to replace some of their lifestyle expenses – not add to them. Entertainment and dining costs, for example, will likely drop significantly when LTC benefits are being claimed.
Another source of LTC funding that people commonly overlook is their home. Many retirees choose to move to an assisted care facility or retirement community, enabling them to sell their home and use the proceeds to cover the cost of care.
Unlike many things in finance, umbrella insurance functions almost exactly as the name implies. Policies work by extending a second layer of coverage – an umbrella – to the liability coverage on your home and auto policies, making umbrella insurance a great way to add more insurance protection to personal assets. With a million dollars of coverage commonly being available for $500 or less, individuals with a sizable net worth have little reason not to be covered by an umbrella policy. As an added bonus, getting an umbrella policy through your auto or homeowners provider will often result in a “bundled coverage” discount.
Insuring Personal Property
While insuring your personal property may sound like a no-brainer, many people find that they’re underinsured at the worst possible time. One of the most commonly underinsured items is jewelry; many assume that jewelry is covered by the personal property portion of their homeowners’ policy, and are shocked to learn that standard policies only replace jewelry up to $1,500. Items like art, musical instruments, coin collections, and more get similar treatment. The good news is that all of these items can be insured through personal property riders that are easily and affordably added to your homeowners’ policy.
It’s also worth noting that, these days, nearly anything can be insured. Lloyd’s of London, for example, has famously insured more than a few oddities, some of which include body parts and travel on Richard Branson’s private spaceship. It’s also not uncommon for athletes, like Andrew Luck and Sam Bradford, to take out policies that would protect their future earnings in the event of an injury.
At Agili, we make it a goal to review our clients’ insurance policies on a regular basis to “insure” that they have adequate coverage. Please don’t hesitate to reach out to your Financial Strategist if you have any questions about the above or if you would like to discuss your personal insurance situation. Small business owners may also be interested in Michael Joyce’s article in Lehigh Valley Business regarding insurances essential for peace of mind.