Insurance: A Cost-Benefit Guide to Covering Your Ass

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Insurance: A Cost-Benefit Guide to Covering Your Ass

By: admin

HEALTH INSURANCE

Need it?: Yes. (Or pay a fine. Thanks, Obamacare!)

Baseline coverage: High-deductible, so-called catastrophe insurance.

Sweet spot: If you're under forty and/or relatively healthy, a decent HMO plan (lower cost, less coverage, smaller network); if you're over forty and/or like going to the doctor, an EPO or PPO (pricier, but more options and control).

Agree to no deductible higher than: $1,300

Oh, and: Unless you see a dentist or eye doctor one or more times a year, skip vision and dental (with their high-ish deductibles) and pay out of pocket.

HOMEOWNER'S INSURANCE

Need it?: Only if you carry a mortgage.

Baseline coverage: HO 1 or 2 policy (catastrophic loss to your house or property) based on replacement costs, not actual cash value. (You'll get screwed on the latter.)

Sweet spot: HO 1 or 2 policy. Also. It's probably wise to get liability coverage ($1 million or so) against injuries or damages sustained on your property.

Agree to no deductible higher than: $5,000

Oh, and: Consider supplementary flood, tornado, or earthquake insurance only if such events happen more than once every ten years where you live.

LIFE INSURANCE

Need it?: Only if you have dependents.

Baseline coverage: $5000,000 per child; $500,000 for spouse.

Sweet spot: Thirty-year term life insurance, and renegotiate coverage when you have fewer dependents.

Agree to no deductible higher than: N/A

Oh, and: If you opt for universal/whole life insurance (which has no expiration/renegotiation date, unlike term), you could borrow against it in an emergency for terms often more favorable than those for borrowing against a retirement account.

AUTO INSURANCE

Need it?: Only if you own and drive a car. (So: yes.)

Baseline coverage: Liability coverage (both property damage and bodily injury) to cover damage done to another car as well as to its passengers. (Make sure it matches the value of your assets. If it doesn't and you're responsible for another person's injuries, their lawyers could go after your personal assets to make up the difference.

Sweet spot: Liability and collision coverage.

Agree to no deductible higher than: $1,000. (The national average is $500.)

Oh, and: Look at packaging your auto insurance with other kinds of insurance you might get from a single company. You can rack up significant savings by bundling.

DISABILITY INSURANCE

Need it?: Not really, and your employer may already offer some kind of coverage.

Baseline coverage: Disability income insurance, with a minimum six weeks' salary to pay your bills.

Sweet spot: Same. (You can sign up for long-term, but it'll cost you.)

Agree to no deductible higher than: N/A

Oh, and: You've got three months' expenses in liquid savings, right?

INSURANCE YOU ALMOST NEVER NEED

Cell-phone insurance: The fine print is brutal. And at $7 or so a month plus the inevitable deductible? Forget it.

Travel insurance: Unless you're going to the back end of beyond and planning to do some crazy stuff while you're there.

Rental-car insurance: Your credit-card company or your automobile policy probably covers it. (Check this.) If not, get some.

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