When Should I Consider Insurance?
In life your insurance needs and coverages will vary. These changes usually surround significant events in one's life outside the basic Stages of Life.
To understand why, we need to first define insurance. Insurance is the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. In other words, insurance is a form of risk management, where someone seeks to protect against loss, by giving the protected item a financial value and paying a premium to secure that association.
This protection is acquired from an Insurer. The Insurer is a company who agrees to compensate the insured (you) for loss or damage for the protected item. For this agreement, you agree to pay the Insurer a premium.
An Insurance Premium is a regular periodic payment for an insurance policy.
With that said, there are life events which may affect the amount of coverage and kind of insurance one should consider. In general, your coverage should be proportional to your risk, cost of replacement and level of protection you require for your family. Insurance is one finance topic that you don't want to overlook. Contrary to some common perceptions, insurance is not a rip-off. For most people, it is a necessary and valuable financial service.
Life Events
For each of these life events, individuals should revaluate all their coverage and limits. Auto, homeowners and life insurance would be among the first to review, since these areas carry significant liabilities in the case of accidents and can have a dramatic impact on your spouse and dependents.
Change In Income
When you or your spouse get a large raise, experience success in your own a company, come into a large inheritance, or sell something of value, your standard of living inevitably increase. In order to maintain your standard of living, you should review and re-quote your insurance policy.
Nobody wants to sacrifice the standard of living of his/her family. Everyone has to work hard to bring the family's standard of living up. If any should happen to you then your family members won't have to change thier standard of living.
Protecting Your Investments
You work hard for what you have, you should not have to worry or work hard to replace it when accidents, theft or acts of God threaten or destroy these items. For this kind of peace of mind you should review your homeowners or rental insurance. In these policies you are covered for items inside your property. However, the company is only obligated to pay for personal property that you can show ownership at the time of loss. It is a very good idea to keep an up-to-date inventory in a secure place. Also, to help you remember what you had, it is helpful to take pictures of each room and keep them with your inventory.
Buying A House or Move To A New Address
Purchasing a home or moving to a new address can be a very stressful, complicated and expensive task. However, owning a home is a smart financial decision, and a significant liability to you and your family should your circumstances change, you must take the proper steps to protect it. Two recommended options are traditional mortgage life insurance or better yet Term Life Insurance.
Term life insurance is the most affordable and cost-effective insurance protection available. This provides coverage should the unimaginable happen to the providers in the family; Term Life Insurance would protect both your family and your mortgage.
If you've bought a new home and have a mortgage, as most do, you already know that homeowners insurance is required. This insurance needs to not only cover the replacement cost of the home, but the outstanding debt owed to the mortgager. If you've just purchased or are about to purchase a new home, get several quotes before choosing a company to do business with.
Recently Divorced Or Widowed
Being suddenly single is difficult to handle. During this time it will be even more difficult to think of practical matters, however, you must. You may have potentially lost coverage that you once had, encounter increased financial responsibility, (being a single parent) or incur new housing and accommodation expenses. Alternately, you may not have any financial responsibilities for another, reducing your insurance needs.
In this situation it is prudent to review your homeowners insurance and have a closer look at you health coverage. In some cases your rates and premiums may decrease. Save some time by using insurance brokers and quoting tools.
Change In Lifestyle Or Occupation
There are many factors that contribute to your life insurance costs. Some of them relate to poor health, obesity, smoking, and occupations and lifestyles. If any of these change during your life, you should re-examine your life insurance policy. For example, if you were a pilot (or instructor of aviation or scuba diving, mountain climbing/river rafting guide, etc.) but have changed professions to something considered safer, your life insurance rates would likely be lower now. Similarly, if you have lost a significant amount of weight or quit smoking, your rates are likely to go down.
Compare quotes at LCMA Insurance to find the right policy for all of lifes' changes.