PF-BB

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INSURANCE CHECK LIST

1.Insurance is something you must buy BEFORE you need it.

2.Why is it sometimes called “RISK MANAGEMENT?”

3.Why do you put all of your assets and future earnings at risk, if you are not properly insured?

I.AUTO INSURANCE

1.The minimum coverage amounts required by state law are definitely NOT adequate.

2.If I had your auto insurance I could not sleep at night.

3.For the proper levels of coverage you should have, see separate handout (PF-AA).

II.HOMEOWNERS INSURANCE

1.You want the “ALL RISKS POLICY”, sometimes referred to as HO-3. It covers basically everything but earthquake and floods.

2.The minimum liability coverage should be $100,000.

3.Be sure to insure CONTENTS for “replacement value”.

4.Flood Insurance is available from the Federal Government. It costs approx. $300 per year per $100,000 of coverage and must be in effect for at least 30 days. If your home is in a “Flood Zone” you should have it. A regular insurance agent can help you get it.

5.Earthquake Insurance is available through private insurance companies. Cost is determined primarily by type of construction, value, and location.

6.If you are renting you need a “Renters” or “Tenants” policy.

III.LIFE INSURANCE

1.What factors determine how much Life Insurance should be on the Breadwinner(s)

  • Present Lifestyle
  • Number & Age of Dependents
  • Present Debts & Assets
  • Job Skills of Spouse
  • Education Fund for Children
  • “Final Expenses” (Funeral)
  • How Much Can You Afford
  • Risk Level of Job & Hobbies
  • Home Mortgage Loan Balance
  • Special Needs (Handicapped Child)
  • Inflation (Less Purchasing Power)
  • Excess Medical Expenses
  • Possible Need to Help Pay Estate Inheritance Taxes
  • Breadwinner’s Age & Health

INSURANCE CHECKLIST (Continued)PF-BB

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2.How much should you have on a non-working spouse? ______

3.How much should you have on your children? ______

4.If you have Free Group Term Life Insurance through your work, be sure to pay the small amount extra to maximize the coverage (double or triple).

5.Your insurance through work should not be your main Life Insurance program. You need more and usually family members cannot be added.

6.What about the various types of Life Insurance i.e., Term, Whole Life, Universal Life, Variable Life, etc.

IV.HEALTH INSURANCE

1.Obviously cheapest through your work.

2.Be sure to notify your benefits department when changes occur in your family (births, deaths, marriages, divorces, etc.).

3.What if Health Insurance is not available through your work?

4.What is the COBRA Act andhow can it protect you between jobs?

5.Once you reach 65 and/or retire, Medicare is NOT enough coverage. You MUST have a MEDIGAP supplemental policy for parts A, B & D.

V.DISABILITY INSURANCE

1.Protecting your income stream in the event of accident or serious illness.

2.You are eight times more likely of becoming disabled than you are of dying prior to the age of 65.

3.The cheapest insurance is through your work. Be sure to pay the small amount extra to maximize the coverage (double or triple).

4.Disability Insurance is also available from most Life and Health Insurance companies.

VI.LONG-TERM CARE INSURANCE (Nursing Home)

1.60% of everyone over the age of 65 will need some form of long-term care.

2.This is NOT covered by Medicare and the costs are very high (i.e. $38,000 per year).

3.This Insurance product has been dramatically improved in the last 10 years.

4.It is available from most Life and Health Insurance companies.

5.“Self Insurance” concept for long-term care. If you become a millionaire, you probably won’t need it…