An important part of a financial plan is protection.  We use insurance to protect against large losses.  Just as Insurance protects us against financial losses, Recovery protects us against causing harm to our self or others which creates relationship and financial losses.

Do you have enough insurance coverage to protect against large financial losses?  You may have several types of insurance – life, disability, health, dental and vision, long-term care, homeowner’s/renter’s, and automobile

Life Insurance

Life insurance replaces income caused by loss of life.  It can also be used to cover funeral and burial expenses, pay uninsured medical costs; pay taxes; pay outstanding debts; and pay for major goals such as college costs.

-There are two types of life insurance coverage.  There is whole life and term insurance.  Whole life insurance has cash value and provides insurance protection for life.  Term insurance provides protection only for the length of the term for which you purchase the insurance.

-If you would like you life insurance benefits to provide for care of a minor child, you can assign a custodian as beneficiary.  If you do not want the child’s surviving parent to be the custodian, you can name someone else like one of your parents or siblings.  The custodian serves as guardian of the money and assets intended for the minor child.  A custodial account would be established to receive valid transfers.  The money transfers to the child when the child becomes of age.  Or you could set up a trust to receive the payout as the beneficiary.

–I know how much life insurance coverage I have.

-I know the face value of my policy.  The face value is the death benefit amount my beneficiaries will get if I pass away.

-I know the current cash value if I have a whole life policy.  The cash value is the savings part of the policy to which you have access during your lifetime.  If you pass away, your heirs get the death benefit value.

-Assume you will need 25% less income if the household breadwinner passes away.

-A rule of thumb is to have a life insurance death benefit amount of 10 to 15 times your income.

-I know how much life insurance I need.

-I have the amount of coverage I need.

You can use the Life Insurance Worksheet to inventory how much life insurance you have.

Life Insurance Worksheet

Disability Insurance

 Disability insurance replaces income if you are not able to work.

-I know the benefits my disability insurance coverage provides.

-I have enough coverage to replace 60 to 70% of monthly income until eligible for retirement.

You can use the Disability Insurance Worksheet to inventory how much disability insurance you have.

Disability Insurance Worksheet

Health Insurance

 Health insurance replaces income losses due to physical or behavioral illness.

–I know the benefits provided by my health insurance plan.

– I have an emergency reserve to meet my deductible, coinsurance amounts, and uninsured medical costs.

-I keep track of what has been paid and has not been paid.  I keep medical records so I can appeal denied claims.

-If I don’t have health insurance, options for obtaining resources include: Medicaid, Medicare, Veteran’s Administration, Supplemental Security Income (SSI); charitable organizations, and PeachCare for Kids Children’s Health Coverage Program – State of Georgia.

You can use the Health Insurance Worksheet to inventory how much health insurance you have.

Health Insurance Worksheet

Dental and Vision Insurance

 -I know how much dental and vision insurance coverage I have.

Dental insurance helps protect your teeth and oral health.  Dental insurance can provide coverage for regular dental visits and more extensive procedures, including:

-Cleanings

-Fillings

-Sealants

-Tooth removal

-Crowns

-Dentures

Vision insurance helps protect your eyes and vision.  Benefits can provide coverage for :

-Annual vision exam

-Yearly allowance toward standard contact lenses— or— a set of eyeglass lenses with minor copay each year

-Options for specialty eyeglass lenses (progressive bifocals, anti-scratch, tinted, etc.)

-Frame allowance every 12–24 months (includes designer brands)-Potential discounts on services like Lasik or PRK

Long-term Care Insurance

 Long-term care insurance covers the cost to care for you when you can not perform activities of daily living such as bathing, dressing, and eating on your own.  People in their mid 50s may want to consider taking out a policy.  

– I have purchased or will consider purchasing long-term care insurance if I am in generally good health and have assets I would like to protect and pass on to heirs.

You can use the Long-Term Care Insurance Worksheet of this lesson to inventory how much long-term care insurance you have.

Long-Term Care Insurance Worksheet

Homeowner’s/Renter’s Insurance

 Homeowner’s insurance covers the cost of losses to the structure of your home and your personal contents in the home.  Renter’s insurance covers the cost of losses to your personal contents that are in a rental property.

 – I have replacement cost coverage; separate coverage on appraised valuables; and an inflation guard. I have a household inventory with photos/videos.

You can use the Homeowner’s/Renter’s Insurance Worksheet to inventory how much

Homeowner’s/Renter’s insurance you have.

Homeowner’s Renters Insurance Worksheet

Automobile Insurance

Automobile insurance replaces losses due to personal injury or property damage.

-100/300/50 liability coverage is recommended.

-The required amount varies by state law.  In Georgia, the required minimum is 25/50/25.  The first number, $25,000, is the maximum that would be paid for injury liability for one person injured in an accident.  The second number, $50,000, is the bodily injury maximum paid for all injuries in one accident. The third number, $25,000, is the property damage liability maximum that would be paid for property damaged in one accident.

You can use the Automobile Insurance Worksheet to inventory how much automobile insurance you have.

Automobile Insurance Worksheet

Deductible and Co-Pay

A deductible is the amount you pay for covered services before your insurance plan starts to pay.  After you pay our deductible, you may be required to pay a copayment for covered services.

A co-pay is a fixed amount you pay for covered services.  The remaining balance is paid by the insurance company.

Maturity and Renewal Dates

-I know the maturity date of the policy.  The maturity date is the date at which the face amount a life insurance policy becomes payable by either death or other contract agreement.

-I know the renewal dates for my policies and renew them when they are due.  Renewal dates are the length of time your policy is in effect and when it needs to be renewed to continue coverage.