Last week, I started us on a journey down the path to learn what types of insurance are out there and whether or not they are something you should consider. Of course there are plenty of opinions out there and so I hope my post, plus the comments that got added, helped you if you were trying to figure all the insurance mess out for yourself. Today, I’m continuing with some additional insurance types and we’ll see where we land at the end. Let’s dive in.
Homeowner’s / Renter’s Insurance
What happens if while you’re on vacation, the water line to your ice maker bursts and floods your kitchen and entire basement? We had some friends that had this happen. What happens if you decide to grill those burgers a little too close to the house and catch the place on fire? What happens when a thunderstorm blows the big tree in your front yard into your bedroom via the newly-created hole in your roof? What happens when a burglar decides your stuff is now his stuff? You get my point. Whether you own or rent – have insurance. If you own, get replacement cost insurance. If you rent, be sure your renter’s insurance covers all the stuff you would miss if it were to disappear.
Disability / Long-Term Care Insurance
People get hurt all the time. AFLAC makes millions with their little duck telling people they need money if they can’t work and he’s right – if you can’t work, how do the bills get paid? Many companies offer short-term disability as an employee benefit, but after that, then what? Your emergency fund (you have one of those, right?) will cover you for a while, but if you don’t have long-term disability insurance, you are risking a lot. Some employers offer both short- and long-term disability to employees. If not to you, check into this. It usually isn’t too expensive and will help you sleep at night. Once you reach about age 60, you also NEED long-term care insurance. If you make it to 60, chances are you will live to be old enough to need some assistance. Whether it be a full-blown nursing home or a simple assistant to periodically check in on you, long-term care is EXPENSIVE and it will drain your bank account fast if you don’t have this type of coverage. Until you reach 60, this isn’t a big deal. But once you’ve celebrated the big 6-0, get this.
Pet Insurance
Hate me if you will, but I think pet insurance is ridiculous. Pets will get sick and sometimes the care costs a lot. But based on what it costs, pet insurance is a ridiculous, emotion-based coverage that isn’t worth it. Before you call me a heartless and horrible human being who hates all animals, let me tell/remind you that I’m a parent to a “furry daughter” (Dottie – our dog), whom I love very much and consider to be one of my children. We’ve also had to spend some money on her medical needs, even to the point of seeing a specialist for her back issues (she’s a Daschund).
Umbrella Policies
There may be a point at which you have some significant assets. If you’re someone who may be the target of getting sued because you’re a “bigger fish” than the normal guy who might get in a car accident or have someone hurt on your property, you should consider an umbrella policy. How does it work? If your auto policy covers $250,000 worth of liability, an umbrella policy would pick up where that policy leaves off to protect you further. For the average person, $250,000 is plenty, but what if you are sued for $1,000,000 and lose!? In our litigious society (in other words, we live in a world that chases “easy money”), an umbrella policy basically adds some extra cushion to any of your other policies. I don’t have one of these policies but when we have some more assets that insurance may not cover, I plan on getting one.
Shew…between last week’s post and this one, that was one big list! I could keep going with lots of other insurance types, but I think I’ve hit all the big ones. Feel free to add your thoughts on any you like in the comments below and I’ll add my thoughts on those as well. If you’re trying to navigate the mess of insurance options out there, I hope this has given you some food for thought.
myersbr2 says
July 27, 2013 at 10:28 pmHey Katrina, I discuss this a little in my first post on insurance (http://www.stacymakescents.com/insurance-part-1) but it really boils down to this: medical insurance is not a catch-all to pay for every possible expense that will arise. Instead, it is to make sure a medical expense doesn’t sink you financially. So…it all depends on what your medical needs are vs. your budget vs. your savings to cover unexpected medical expenses. I wish I could be specific but it boils down to that.
Katrina T says
July 24, 2013 at 5:43 pmAny guidelines on choosing health insurance? I will no longer be on my husband’s insurance and I have to find a new plan.
Kelly says
July 3, 2013 at 6:23 pmA little late to the party, but I thought it was important to mention that if you live on the west coast, you should have earthquake insurance. It’s about $25 a month, and you’ll appreciate it when your foundation splits clean down the middle or the hill you live on becomes a landslide in the next Big One.
Stacy says
July 3, 2013 at 9:54 pmThanks for chiming in, Kelly…and it’s never too late. 🙂
Sarah says
June 12, 2013 at 5:11 pmInsurance can be so frustrating! I have a finance question for Barry – we have put off investing our retirement income for too long. My husband’s in school and I just started working again, so we don’t have much in there right now, anyway.
The reason I’ve put off finding a place to invest our retirement funds is that I want to make sure my money is not going to go toward buying stock in companies I don’t believe in. We try to support responsible businesses whenever possible, and I want to use this same principle in investing. I’d LOVE a post about socially responsible investing (SRI) – whether it’s worth it, what are the risks, pros, cons, how to go about it, etc.
Barry says
June 13, 2013 at 9:46 amHey Sarah, this is a great post idea. I’ll add it to my list and write something ASAP to address this concern. Thanks for the idea!
Sarah says
June 15, 2013 at 4:20 pmI’ll be looking forward to it! I’ve had so many questions about this and I couldn’t find anyone with any answers. I almost wrote Dave Ramsey, then I remembered you, and I know I can trust your advice!
Traci says
June 10, 2013 at 12:12 amThank you so much for this information. AS a husband with Type 1 diabetes, we are always hit up for expensive insurance of some kind. Thanks for the information.
Sandy says
June 8, 2013 at 1:56 pmHey Barry,
Our house will be paid off in less than a year and I was wondering should we get an umbrella policy then to protect our home or still just depend on homeowners in case someone gets injured on our property or one of the horses gets out. Also, my husband will be turning 60 in a couple of years. Any suggestions on companies that we could check into for long term care insurance. Thanks. Happy Birthday!!
Barry says
June 10, 2013 at 8:27 amIf you have replacement cost homeowner’s insurance then you should be covered on the house and while you’ll have liability limits with any policy, I suspect you’re not at any higher risk of being sued than anyone else. For those reasons, you’re probably safe. As far as the horses, I have no clue – I really don’t know how that would work (sorry!). Because Dave Ramsey endorses them and I’ve used them for life insurance, I’d recommend you check out Zander Insurance for the Long-term Care coverage (http://www.zanderins.com/other/longtermcare.aspx). Thanks for the birthday wishes!
Sandy says
June 10, 2013 at 9:38 amThank you
John Chiasson says
June 8, 2013 at 1:22 pmHere in Halifax, Nova Scotia most landlords require you to show proof of Tenant’s Insurance before you can rent an apartment. Mine only costs $16.25 a month, and gives me peace of mind.
Chris says
June 8, 2013 at 12:13 pmI know first hand the benefits of having a good car insurance policy. While riding my bicycle I was struck by an uninsured motorist. MY car insurance paid for all my medical bills because I have uninsured & underinsured motorist on my policy.
Sarah says
June 8, 2013 at 10:03 amI agree with you on the pet insurance. One suggestion I’ve heard is to find out how much pet insurance would cost for your animal, then instead of signing up for a policy open a separate bank account and have that amount transferred there every month. That way, in a pet emergency you’ll have some funds available to get your pet the help it needs without having to worry about money. And if its never needed you could put that money into your savings.
Barry says
June 8, 2013 at 11:52 amIf you’re prone to having higher pet costs and can make it work in your budget, this is a great idea. We’ve always either planned for pet expenses as a part of our normal budget or for unexpected larger expenses it may be an emergency fund issue.
Miranda says
June 8, 2013 at 9:23 amHi Barry! My husband is self-employed so I am wondering if you have any advise on where to look for short/long term disability insurance that we could purchase ourselves. Thank you!
Barry says
June 8, 2013 at 11:50 amDave Ramsey recommends Zander Insurance (www.zanderins.com) and we used them to purchase my large term life policy. They do disability insurance and especially if you’re self employed this is a MUST!
Miranda says
June 8, 2013 at 1:24 pmThank you! We will check it out.
Foodie in WV says
June 8, 2013 at 8:33 amI agree about the pet insurance, I’ve never had it and I don’t see the point. When our dogs get sick we take them in, plus a lot of things you can treat at home.
Heidi says
June 8, 2013 at 8:05 amWe got an umbrella policy several years ago because, while doing a re-assessment with our agent, we found out we could get more coverage for less money by having one. Since we have both cars and our home with one company (disability and life are somewhere else) our agent showed us how we could lower our monthly premium, but increase the amount of coverage we had by going to an umbrella policy. We’re hardly “big fish”, but that sounded like a good deal to us so we went with it 🙂 We’re still fully covered with our cars and home.