Investment News: Annual Insurance Review

As we kick off the new year, it’s a great time to refocus on key aspects of financial health. In celebration of Financial Wellness Month this January, I’d like to share some valuable insights about insurance and financial protection. This is information I came across from the Ohio Department of Insurance, and I believe it’s worth a closer look for anyone seeking to optimize their financial wellness.

Whether you’re retired, approaching retirement, or actively planning for it, keeping your insurance policies in check plays a crucial role in safeguarding your assets and managing your expenses. Insurance often gets overlooked in financial planning, but as your financial situation evolves, so should your insurance coverage. Below are some essential tips and reminders to help ensure your insurance strategy aligns with your financial goals.

Homeowners Insurance: Safeguarding Your Property

Your home is likely one of your most valuable assets, and it’s essential to ensure that your homeowners insurance policy reflects its current value and your protection needs. Consider the following:

• Coverage limits: Your premium is impacted by your coverage limits, deductible amounts, and any endorsements (add-ons like sewer backup or valuable personal property coverage) you choose. Make sure these factors align with your current financial situation and risk tolerance.
• Home improvements: If you’ve made major upgrades to your home, whether a kitchen remodel or a new addition, your property’s value and insurance needs may have changed. Inform your insurance agent to ensure you have adequate coverage.
• Flood insurance: Standard homeowners insurance policies usually don’t cover flood damage, which could leave you exposed in the event of a disaster. If you live in a flood-prone area, or even if you don’t, it may be wise to explore flood insurance options.

Additionally, with the cost of materials and labor rising significantly over the last few years, make sure your policy’s replacement value keeps pace with today’s costs. The price to repair or rebuild your home is likely higher now than it was even a few years ago, so updating your policy limits is crucial.

Auto Insurance: Tailoring Coverage to Your Needs

Auto insurance is another area that deserves a yearly review, as your driving habits and coverage needs may shift over time. Take the following into account:

• Deductibles: The amount you choose for your deductibles on comprehensive and collision coverage impacts your premium. Adjusting this amount could help reduce your insurance expenses.
• Liability coverage: Liability insurance covers injuries or damage you cause to others. However, if your coverage limits are too low, you could be held personally responsible for damages exceeding your policy’s limits. Consider increasing your liability coverage to protect your assets.
• Driving habits: Have you found yourself driving less recently? Maybe you’re working remotely or retired. If so, let your agent know, as reduced mileage can sometimes lead to lower premiums.

Health Insurance: Staying Informed About Your Policy

Health insurance is a vital component of financial wellness, especially as you age. Staying on top of your health insurance policy can help prevent unexpected out-of-pocket expenses. Key considerations include:

• Provider networks: Regularly check that your preferred doctors, specialists, and hospitals are still covered under your plan. Insurance networks change, and staying within your plan’s network can save you significant money.
• Co-pays and co-insurance: Be aware of the costs for in-network and out-of-network care, as well as the impact on your out-of-pocket maximum.
• Explanation of Benefits (EOB): After receiving medical care, review your EOB to ensure your insurance benefits were applied correctly, including deductions for in-network vs. out-of-network providers.

Life Insurance: Updating Your Policy for Life Changes

Life insurance policies should adapt to your changing life circumstances. Whether you’re approaching retirement or have recently gone through a major life event, reviewing your life insurance policy is essential. Consider the following:

• Types of life insurance: Different policies (term life, whole life, or universal life) serve different needs. A change in your marital status, the birth of a child, or significant shifts in debt or employment could mean it’s time to adjust your policy.
• Beneficiary updates: Life changes may also necessitate changes to your beneficiaries or certain policy features, such as adding riders (additional benefits like disability coverage) or adjusting interest-bearing options.
• Policy premiums: Review your annual statement to ensure your premium still aligns with the policy’s costs and benefits. Outstanding loans against your policy may affect the death benefit or the interest credited to your policy’s cash value.

Bundling and Discounts: Saving Money While Staying Protected

Insurance companies often offer discounts if you bundle multiple policies, such as homeowners, auto, and life insurance, with the same company. Additionally, you may qualify for other discounts based on your personal situation. Some common discounts include:

• Good driver discounts: If you’ve maintained a clean driving record, this can result in lower auto premiums.
• Loyalty discounts: Long-term customers often qualify for reduced rates, so be sure to inquire if you’ve been with the same insurer for several years.
• Senior and military discounts: Many companies offer special rates for seniors or veterans. Be sure to ask your agent about any discounts you may be eligible for based on age, military service, or other factors.

The Importance of an Annual Insurance Review

The key takeaway is that reviewing your insurance policies regularly should be part of your overall financial wellness routine. Life circumstances, economic conditions, and even policy terms can change from year to year, so it’s important to stay proactive. Engage with your insurance agent, ask about potential savings, and make sure your coverage reflects your current needs.

By keeping these insights in mind, you can potentially lower your insurance costs while maintaining the necessary coverage to protect yourself and your assets.

Remember, insurance is just one piece of the puzzle when it comes to financial wellness, but it’s an important one. If you need help navigating your insurance needs or have questions about your financial plan, feel free to reach out to me.